On The Application Of The Law Of Guarantee-based Repayment Of Debts

The parties agreed before the expiry of the debt performance period to provide guarantee for the debt by signing the sale contract,which is the guarantee type of property for debt.The guarantee type of property for debt can be divided into two situations: property for debt which has not been publicized and property for debt that has been publicized.For the unfinished public guarantee type of property for debt,its essence is that the parties sign a contract to guarantee another contract,which does not involve the issue of transferring guarantee.Because the agreement of property for debt is reached before the performance of the debt,the provisions of Article 186 and Article 211 of the Property Law of China should be applied by analogy.In order to prevent creditors from abusing their dominant position by the debtor’s urgency,and obtaining huge profits by lowering the value of the collateral,fluidity provisions should be deemed invalid.Although fluidity provisions are invalid,the creditor can repay the debt by means of discount,auction,sale of debt property and so on when the debtor fails to perform the debt.In addition,where the subject matter is movable property,the creditor may request the debtor or a third party to deliver the subject matter in order to obtain a security interest.Due to the unfinished publicity,that is,the movable property has not yet been delivered and the real estate has not yet completed the change of ownership,the agreement cannot have the effect of real right,that is,the creditor cannot claim to have the priority to receive compensation for the change in price realized by the property for debt.For the guarantee type of property for debt that has completed the publicity,although it may constitute a fluidity provision,it can be dealt with in accordance with the transferring guarantee.The transferring guarantee of prior vesting is prohibited but it will still produce the effect of creditor’s rights,and the agreement excluding fluidity provisions is still valid.At this time,the agreement of property for debt should be recognized as atypical security and have the effect of real right.Thevalidity of real right here has the priority to receive compensation,which refers to the security real right with the most similar applicability.The debt repayment has the effect of transferring guarantee as it has been publicized accordingly.For the guarantee type of real estate for debt and the real estate has been registered in the name of the creditor cannot produce the effect of real right transfer,the law can take supplementary explanation as the interpretation path,that is,to explore “assume the thought of party”.Based on the principle of good faith and considering the habit of transaction,the act of transferring the real right of real estate can be divided into mortgage guarantee and fluidity contract,that is,a behavior can be divided into two kinds of legal facts,one is mortgage guarantee,the other is fluidity contract.According to the prohibition of fluidity contract,the effect of the change of ownership should be denied,but creditors should be recognized as having obtained the mortgage.Although the Minutes of the National Court of Civil and Commercial Trial Work Conference made a number of cutting-edge provisions on atypical security,the provisions on the guarantee type of property for debt were not comprehensive.The solution on this problem can only be hoped for in the coming Civil Code.