Research On The Legal System For Risk Prevention In Presale Of Commercial Residential Houses

Since the system of presale of commercial residential houses was established in 1994, the real estate industry experienced a period of rapid development. On the one hand, the system of presale of commercial residential houses provided an important way of financing for real estate developers. On the other hand, it fulfilled the needs of people live and work in peace. However, during this period, many risks were covered by prosperous appearance of real estate market, which was caused by presale of commercial residential houses. The real estate industry of China went through a period of ups and downs in 2015-the market reinforced polarization. Parts of first-tier and second-tier cities were at a bloom while the third-tier and forth-tier cities faced severe pressure of destocking. The rapid development of our real estate industry came to an end, and whole industry is facing pressure of transformation. There is no doubt that the real estate market’s development has entered into the new normal of medium-high-level growth and the risks of presale of commercial residential houses are presenting some outstanding forms of expressions. It is important to improve related legal system to govern this situation.All risks that happened in presale of commercial residential houses will affect the health and stable development of our real estate market. One side, presale of commercial residential houses appears different characteristics in different period of economic growth and so as risks of presale of commercial residential houses. For another, legal prevention of presale of commercial residential houses is of a developing process and specific measures should meet realistic need. So how to improve related legal system to govern risks of presale of commercial residential houses is of great importance.This article is divided into five parts:In the first part, the author discusses the effect of risks that happened during presale of commercial residential houses process would make huge impact on advance buyers and society through two typical cases. Then based on literature review, the author finds there is a time lag between related analysis of risk prevention of presale of commercial residential houses and realistic status. Mostly they were giving recommendations to specific problems, and lack of legislative suggestions on systemic prevention. Lastly the author introduces research directions and methods.In the second part, the author summarizes present main forms of the risks of presale of commercial residential houses; including contract dispute of presale of commercial residential houses is increasing, risks of real estate development projects are increasing, fake mortgage loans and information asymmetry in real estate market makes it is difficult to carry out related risk prevention. Then the author analysis the reasons of all these risks; including the mechanism of real estate market access and withdraw is imperfect, lack of risk hedging mechanism, the supervision of presale of commercial residential houses funds is imperfect and mechanism of information disclosure is not strict. All these reasons will provide with basic realistic background.In the third part, the author introduces the key system of presale of commercial residential houses-supervision of presale of commercial residential houses funds. Firstly, the author introduces extraterritorial systems, including America, Singapore, Hong Kong and Taiwan Province. Then the author chooses Beijing, Nanjing, Guangzhou and Shenzhen to analysis through mode of supervision, parties of supervision contract, scope of supervision and time of supervision. By comparison, the author finds supervisor and supervision measures are confused and in disunity. Besides, the author thinks when facing conflict of freezing and deducting presale of commercial residential houses funds, we should take appropriate measure to balance judicial activities and supervision system. Lastly the author concludes the advantages of extraterritorial supervision systems in order to give suggestions to improve our legal systems.In the forth part, the author introduces the legal principles of prevention for presale of commercial residential houses risk; including rule of law principle, prudence principle, effectiveness principle and coordination principle. All these principles will provide legal basis for recommendations to improve prevention of presale of commercial residential houses risk. Then the author introduces the four main parties of presale of commercial residential houses market and their responsibilities for guard against presale of commercial residential houses risks, including government, real estate developers, advance buyers and banks.In the fifth part, based on problems in legislation and legal practice, the author gives his own recommendations to improve the legal system of presale of commercial residential houses prevention through legislation and administration. Legislation: improve the supervision of presale of commercial residential houses funds, consummate related responsibilities of presale of commercial residential houses, perfect the mechanism of real estate market access and withdraw, establish the credit system of real estate developers, set up risk guarantee funds for presale of commercial residential houses and regulate the presale of commercial residential houses information disclosure system. Administration:build dynamic monitoring platform of real estate development projects, form mechanism of joint meetings for presale of commercial residential houses supervision, strengthen law enforcement of presale of commercial residential houses supervision and realize de-administration of real estate industry organizations.