The Research On Transfer Of Mortgage Property In The Chinese Civil Code

This article mainly discusses the interpretation and application of the collateral transfer system on issues of the Article 406 of the Civil Code RPC which changed the restrictive-transfer legislation previously adopted on this issue in China,and reverted to the free-transfer legislation,and provided for a system of retroactivity of mortgage whoever own it.Notwithstanding the new legislation is not clear and the supporting system is not perfect.Therefore,it is necessary to study it and do the research on hermeneutics.The introductory part of the article analyzes the collateral transfer system based on Article 191 of the Property Law,and introduces the current discrepancy in the area of judicial practice and theoretical circles in China on this issue.In theory,the mortgage transfer system is divided into free transfer theory and restricted transfer theory.The former deems that the mortgagor shall freely transfer the mortgaged property without interference from the mortgagee;the latter holds the opposite view.As a result,two different types of legislation have been derived,namely,free-transfer legislation and restrictive-transfer legislation.The first chapter discusses the free-transfer legislation established in Article 406 of Civil Code of RPC,including its subsidiary system,and unique problems.From the perspective of legal transplantation,PRC emulates Germany and France rules on the transfer of mortgaged property and the supplements of it that the system of retroactivity of mortgage right based on the legislation of free-transfer.On the other hand,the legislation uniquely gives the agreement between mortgagor and mortgagee a special effect of priority.Where the parties agree to restrict the transfer of mortgaged property,this provision inevitably leads to doubt.Combining foreign legislation and the basic legal principles of transfer prohibition,this article shall express that the parties' agreement can only take effect between the parties and does not affect the effectiveness of the external transfer of mortgaged property.Chapter II further discusses the mortgage right tracking system established in this article.This legislation has never been established in PRC before,so it is necessary to elaborate the content,requirements and applicable exceptions of the retroactivity of mortgage right which means that the mortgagee shall retain the security interest on the mortgaged property even if it had been transferred.And the other rights of the mortgagee to the mortgaged property shall not be affected by the transfer.Accordingly,the assignee may also invoke the rights of the mortgagor.At the same time,Articles 403 and 404 of the Civil Code also provide for exceptions to the application of the retroactivity of mortgage right when the mortgage is movable property.Chapter III explains the rights of the mortgagee under Article 406,paragraph 2.The obligation to notify mortgagee shall correspond to the mortgagee's right to know,which is rooted in the collateral obligation according to the mortgage contract.When the obligation is breached,the obligor shall bear responsibility for the violation of the collateral obligation or tort obligation;Where it proves that the transfer of the mortgaged property may damage the mortgage,the mortgagee may request the mortgagor to pay the debt or deposit to the mortgagee in advance.However,the main application of this rule shall be limited to the loss of the right of retroactivity or the risk of mortgaged property or the cost of realizing a mortgage may increase.Chapter ? mainly seeks the relief of the buyer under the free-transfer legislation system that protects the mortgagee too much which leads to unbalance of interests between mortgagee and mortgagor.According to the Civil Code,it was found that only the alternative settlement system provided for in Article 524 shall be used.In addition,China has not provided for the issue of recovery between the mortgagor(seller)and the buyer after the transfer of the mortgaged property,and such recovery can only depend on the parties' agreement and the explanation of the contract.For the buyer,therefore,it is especially necessary to exercise caution in the transfer of mortgaged property to avoid possible legal disadvantages.The last chapter is the main conclusion of this article.