| The proposal of right of habitation in the Property Volume of Civil Code(draft),the strengthening of the protection towards tenants in the Contract Volume,the idea that tenants shall enjoy the same rights as real estate buyers,as well as the highlight of the financing function of the mortgage right and the hot rental market,all leads to an urgent need to settle the legal disputes involving the rental right and the mortgage right.However,China's current legislation and judicial interpretations do not have specific rules and regulations regarding this issue.To specify,the mortgage right and rental right referred to in this paper only concerns “houses”.Firstly,before clarifying the issue regarding leasehold in claiming the real estate mortgage right,it is necessary to define the concept and nature of the leasehold,and the priority between two rights.The author thinks the nature of rental right is neither creditor's right nor property right,it owns the nature of both,i.e.the creditor's right with the characteristic of property right.Also,under Chinese legal system where“Registration Antagonism” has not been officially established,the lease contract could only means that the tenant(“lessee”)can act as a creditor solely towards the landlord(“leaser”),he cannot claim his leasehold to a third party,let alone to a registered mortgage right.To regard the lease registration just as an administrative management method and completely ignore its effect of publicity and antagonism would be impractical considering the current situation in China.Therefore,the author believes that China should adopt the “double-track system” at this stage,which means the rental right could have the effect of antagonism towards any third party only if the lessee practically possess the house or file for lease registration for reference;moreover,the actual possession of the house should have stronger antagonism than registration.With regard to the real estate lease in special situations,the author comes up with the following views after analysing the judicial judgements: both paying the debt with lease and borrowing free without consideration are against the legislative intent of the lease contract,therefore should not have the effect of antagonism in leasehold;thelessee of a legal sublease could enjoy such antagonism because of the consistency between the former and later lease contract,since the sublease is based on the original lease contract and the consent of the original leaser;the renewed lease should be seen as a new lease legal relationship,the leasehold and the antagonism effect starts only when the lease is renewed,there is no retrospective effect.With regard to the priority of the mortgage right,the author thinks it should strictly follow the “Registration Effectiveness”,namely only the registration of the mortgage right can establish such a right and create an effect of antagonism in the property right.The situation where the lease hold happens before the mortgage registration and after the establishment of the mortgage contract,the mortgage right has no priority than the leasehold.This is also the foundation of this paper's research upon the issues regarding leasehold when the mortgage right is prioritised.Secondly,the effect of lease relationship when the mortgage right is prioritised.Based upon the study of existing cases,the author finds out that the court's judgment of the effect between mortgage and rental rights in China's judicial practice is not specific,and the conflicting rules and judicial interpretations even worsen the situation.The mainstream opinion in judicial practice is that,in the case of where the mortgage right is set up before the rental right,the rental relationship cannot constrain the mortgagee or the buyer,which is also comply with Article 66 of the Judicial Interpretation of Guarantee Law and Article 190 Section 2 of the Property Law.However,complete denying the legal effect of the leasehold when the mortgage right is claimed seems over protective towards the mortgagee and under towards the lessee,it could even damage the mortgagee,the mortgager,the lessee and the buyer at the same time.Thus,the author thinks that when there is a conflict between the mortgage right and the rental right,which are both legally established,the law should provide equal protection from the point view of balancing the interests of both parties while considering the specific situations.In other words,the lease relationship only loses its effect when it would undermine the exercise of the mortgage right,rather than makes it invalid once it established after the mortgage right.As stipulated in Article 31 of the Provisions of the Supreme People's Court on the Auction and Sale of Property in the Civil Execution of the People's Court,the validity of the lease legal relationship at the time of carrying out the mortgage right should be judged upon the actual impact it has on the realisation of the mortgage.The regulation in Article 190 Section 2 of the Property Law where the lease relationship cannot antagonise against the registered mortgage,should be interpreted follow the idea of liberalism and from the perspective of balancing the interests between parties;it should be analysed from the concept of mortgage right and leasehold,the comparative law study,the legislative intent and the legal system as a whole.All in all,it should be interpreted as “the lease legalrelationship should not interfere with the realisation of the registered mortgage right”.When refer to the issue regarding whether the lease relationship could influence the mortgage right and whether or not to eliminate the right,the author disagree with the idea which see the result of the first auction as a criterion,or the “double auction system” that transplanted straightly from Switzerland.The author considers the autonomy of the parties as the most important principle;the law should provide parties the right to choose between the criteria like the evaluation or the auction result.The Provisions on the Auction and Sale of Property should only take into effect when the parties enters judicial process,where the court could judge upon the evaluation result before the auction.The author believes that this method is more effective,practical and reasonable.Thirdly,as for the legal relationship of the parties after the exercise of the mortgage right,the author thinks that transferring the possession of collateral should be regulated by the Contract Law.Article 229 of the Contract Law establishes the general rule where except for specific rules in special law,the rule of “purchase of real estate should not interfere with the existing lease contract”(“sales cannot break lease”)should be strictly complied.Article 66 of the Judicial Interpretation of the Guarantee Law should be read restrictively,as the buyer is not constrained by the above rule;when the lease relationship has no impact on the mortgage right,Article66 is not applicable,the lessee could still claim his right against mortgagee upon possession,and the mortgager could withdraw completely from the lease contract being protected by the “sales cannot break lease” rule.Also,as said by Professor Cheng Xiao,Article 31 of the Provisions on Issues Concerning the Implementation of Objections and Reconsiderations and Article 20 of the Interpretation of House Tenancy,it is quite improper to put the interests of the lessee after that of the buyer.The author thinks these two provisions should be read restrictively as Article 66 of the Judicial Interpretation of the Guarantee Law,i.e.when the lease contract is established after the mortgage,the lessee could enjoy the right of “sales cannot break lease” to some extent,on the condition that the lease relationship would not interfere with the realisation of the mortgage right.This is also the way more complied with the judgment of the Supreme Court and the local courts.When the lease is eliminated,the mortgagor is still liable to the lessee based on the lease contract,and the lessee should also enjoy the preemptive right towards such collateral,and such preemptive right should prior to that right of the mortgagee.Lastly,the author comes up with some ideas about the issue of real estate leasing and mortgage registration in China.Although it is more in line with China's current situation to decided the antagonism effect upon possession or registration,from the perspective of efficiency,transaction safety and the legal characteristic of the rental right,it is more reasonable and practicable to demonstrate the rental right's publicityby filing registration for reference.Therefore,the author suggest a more integrity and sound registration system to gradually legislate the leasehold system under the“Registration Antagonism”.Apart from the chronological priority of the mortgage right and the leasehold,the scope the priority of the mortgage right is also critical to the judgment of whether the mortgage right is affected by the lease relationship.Hence during the perfection of the registration system of real estate mortgage,the subordinate rights like liquidated damages and interests in the mortgage should also be registered completely and clearly,in order to make a better judgment regarding the elimination of the leasehold,which is also more complied with the principle of “Registration Effectiveness” and“Publicity of the Property Right” in real estate mortgage.Moreover,from the comparative study point of view,the special legislation toward the protection of lessee in Japan,the United States and Taiwan(China),like the short-term protection system of the lessee,is also worthy of reference for China. |
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