On The Protection Of Consumers' Rights In The Bankruptcy Of Real Estate Development Enterprises

In recent years,due to the fluctuation of China's capital and the real estate market and the adjustment of policy,more and more real estate development enterprises have entered the bankruptcy procedure because of capital chain rupture.The complicated fund chains and diversified creditors of real estate development enterprises lead to the intertwining of the rights and interests of all parties and this directly influences social stability.As consumers are the largest creditors in the bankruptcy of such enterprises,both academia and practice community are trying to find various ways to give special privilege to the consumers.However,how reasonable is this approach? How to establish specific rules? How to effectively link the institutional measures of the priority protection of consumers with existing law? The most critical problem is how to seek a balance between consumer protection and the security and predictability of transaction? We have to face these problems in reality.These problems are also the focus of this article.Apart from the introduction and conclusion,this paper is divided into five parts:The first part-the particularity of the bankruptcy of the real estate development enterprise and the reasons for the special protection of the consumer.Compared to other enterprises,the bankruptcy of the real estate development enterprise involves many stakeholders,the applicable laws are complex,and most of the bankruptcy property are mortgaged land use rights and projects in progress.Among the numerous complex stakeholder interest,consumers are in a weaker position compared to investment buyers in all aspects of information ability,economic ability and psychological endurance.Therefore,consumers should be given special preferential treatment from the standpoints of either meeting the requirements of substantial fairness or safeguarding the right to life and maintaining social stability.The second part-The review of the Enterprise Bankruptcy Law on the protection of the consumer.Enterprise Bankruptcy law does not distinguish between the consumers and investment buyers,the two are both to be protected as a whole.According to Enterprise Bankruptcy Law,when a home buyer pays all the money but does not meet all requirements of requisition right,or under the circumstance that he pays some part of money,but the manager cancels the contract,his claim can only be paid as general creditor's rights.Facing with the construction contractors and mortgagees who have priority of payment,the rights and interests of home buyers cannot be guaranteed.The third part-The rationality and problems of the protection of the consumers by the judicial interpretations including Official Reply to Priority of Payment.Given that Enterprise Bankruptcy Law cannot cover the interests of consumers,the Supreme People's Court has formulated the Official Reply to Priority of Payment and other related judicial interpretations which stipulate that priority of payment for construction work is not against the consumers who pay all or most of the purchase money.This section reveals the reasonableness of the judicial interpretation and at the same time analyzes the problems such as lacking of legal basis,public display system and ambiguity.The third part-The rationality and problems of the protection of the consumers by the judicial interpretations including Official Reply to Priority of Payment.Given that Enterprise Bankruptcy Law cannot cover the interests of consumers,the Supreme People's Court has formulated the Official Reply to Priority of Payment and other related judicial interpretations which stipulate that priority of payment for construction work is not against the consumers who pay all or most of the purchase money.This section reveals the reasonableness of the judicial interpretation and at the same time analyzes the problems such as lacking of legal basis,public display system and ambiguity.The fourth part-The legal route for the consumers' priority.In view of the problems existing in the current laws and regulations,this part puts forward suggestions on the realization of the protection of the consumer.First,the priority of the consumer and the order of payment should be clearly defined through Enterprise Bankruptcy Law.Moreover,in order to balance the safety and predictability of the transaction.The scope of consumer should be strictly limited,and advance notice registration is also necessary.At the same time,other ways other than bankruptcy procedure can be considered to protect the interests of consumers to overcome the limitation of bankruptcy law.The fifth part-The establishment of specific rules for the consumers' priority.This section elaborates on the design of specific rules based on the priority of consumers.For consumers who meet the priority requirements,the right of them transfers from the claim to the ownership at the time the house is built.Under the condition that the house has not been built,the right of the housing delivery will be partly promoted to the defective property,and partly converted to the claim for the return of the house purchase money.If the consumer voluntarily cancels the contract,the claim for the return of the house purchase money shall be deem to common creditor's right.For the consumers that do not meet the priority requirements,considering the vulnerable position of the consumer,we can refer to the United States laws on deposit rules to protect consumers.