Conflict And Balance Of Interest In Lease Legal Relation Of Real Estate Collateral

With the development of the market economy and the progress of the times, the concept of “make the best use of everything” has been widely accepted. The way of mortgage prior to lease in the same real estate, making full use of the value in use and value in exchange at the same time, is a profound manifestation of this concept. Mortgage and lease coexist in the same real estate has also led to a diversity of interests involved- the mortgagor(usually for the owner of the object) and the mortgagee, leaseholder. Complex legal relations and diverse stakeholders significantly increased the possibility of conflicts of interest and the occurrence of legal disputes. How to balance the interests of parties concerned will become a crucial issue, If conflicts and disputes actually occur. It is, however, regrettable that there has been no uniform solution whether in theory or in practice. Therefore, this paper will sort out the different types of conflicts of interest in the situation that mortgage prior to lease in the same real estate. Then, this paper will put forward specific coordination scheme for every type of conflicts, thus providing more comprehensive guidance that how to balance the interests of all parties concerned to our legislation and judicature.In addition to the introduction, this paper is divided into four parts:The first part focuses on the origin of the issue. Through the analysis of relevant statistical data and typical cases, we may draw a conclusion that the problem about how to balance the interests of parties concerned in the judicial practice is mainly about the diverse reason behind judicial decisions and the different results of similar cases in the situation that mortgage prior to lease in the same real estate. This problem can be rooted in value judgments. Conflicts of interest in the situation that mortgage prior to lease in the same real estate can be divided into three different types when focusing on time.The second part is about the remedial measures when lessee is not appropriate to use the lease item before the realization of the mortgage. According to different consequences of improper use of the lease item, it can be divided into three different types. when lessee is not appropriate to use the lease item before the realization of the mortgage(in the situation that mortgage prior to lease in the same real estate),claim of keeping the value of mortgages which stipulated in the Art.193 of China Property Law can not provide effective relief to the mortgagee; The right of the real claim which stipulated in the Art.34-35 of China Property Law also can not provide feasible completely measure for mortgagee; However, the Sec.2 of Art.190 of China Property Law may provide more effective and more comprehensive relief program for mortgagee.The third part explores whether the lease legal relationship shall be terminated during the enforcement of hypotheca. The Sec.2 of Art.190 of China Property Law has revised the Art.66 of Judicial Interpretation of the Supreme People's Court on Some Issues Regarding the Application of China Guarantee Law. In the academic circles, the scholar's claims are also not consistent. Based on the credibility from registration, the comprehensive protection of the interests of all parties, the coordination of substantive law and procedural law and the comparative law, It is not feasible to terminate the lease relationships directly. It means that whether terminate the lease relationships should be determined by its specific impact during the enforcement of hypotheca. Based on the fact that there are different means of realizing the mortgage right, the specific judging method for whether terminate the lease relationships are diverse.The fourth part explores the ways to protect interests of the lessee after the mortgage relationship has been terminated. The lessee shall bear the loss of the lease's termination. Lessees who are usually in a weak position deserve special protection of laws. However, in this aspect, there exist great legislative defects in China's current law. For this reason, it is necessary to draw lessons from foreign advanced practice, such as grace-period system of United State.