Legal Issues Of Real Estate Investment Trusts

REITs dates back from business trust in the19th centry in Massachusetts, primarily aiming to steer clear of the control regarding forbidding owning real estate. However, as the increasing number of investors and the urging demands of real estate investment, United State Congress formally allowed to establish REITs by commending Internal Revenue Code in the1960s, and released the first REITs of the world in1961. Due to the low requirement and risk of investment, as well as the stability of expected benefits, REITs has become one of the most important investment tools, and has been intimated by many countries round the world. As China has strengthen the macro-control of the real estate industry, the real estate corporate financing is becoming increasingly difficult; to overcome the difficulty, China real estate industry started to join hands with the trust industry, and gradually began to emerge a number of real estate trust projects based on the existing trust legal system. Essentially, although those are not the real REITs, some projects such as Tianjin AUCHAN project has the basic shape of REITs. In the wake of asset securitization and campaign relating to generalized asset, there comes a calling for promotion of real estate industry, and it is imperative to introduce REITs legal system.Therefore, this paper tries to take law existing and to be enacted in the near future as clues, make full use of the opportunity which is the draft concerning trust investment pilot plans of REITs, and further, definite the basic concept of REITs, explore the operational mode and construction of legal system.This paper would spread out discussion of REITs by four parts:Part Ⅰ, laying out the accurate connotation and denotation of REITs, and comparing with relative concepts; and moreover, while learning about the advantages of REITs, we should take note of the risk of itself, in order to lay the ground for discussion about import this system into China. Finally, we analyze the necessity and actionability of importing REITs.Part Ⅱ, on one hand, evaluating and describing the infection of developing RETIs by analyzing the related existing regulation; on the other hand, in this part we deeply discuss the legal issue in order to support the later presentation.Part Ⅲ, this chapter expand the introduction of REITs market in the United States today, and comparatively analyze the market situation and characteristics of Hong Kong REITs. The law of REITs in United States is the most developed in the current world and has a typical meaning and value. Therefore, we focuse on the development of the legal system of the United States Trust and the current structure of the transaction in the course of development. By comparison, the in strict accordance with the development and operation of the existing legal framework, and more conservative REITs market, it is hoped that we can find some reference of the actual situation of China’s real estate marketPart Ⅳ, firstly, we introduced the C-REITs instance that currently exist in our reality, in the hope of have a direct infection of the current REITs on which basis we expand the discussion of REITs mode; finally, there are some views and suggestions of establishment of Chinese legal system REITs in the future.