Research On The Transfer Rules Of Movable Property Mortgage

Article 406 of the Civil Code establishes the free transfer mode of collateral,which negates the attitude of Article 191 of the Property Law towards the transfer of collateral and recognizes the retroactive effect of mortgage rights.This transformation has strengthened the market demand for maximizing the use of resources,which is beneficial for the urgent financing needs of market entities,but has also sparked many new issues and controversies.The mortgage transfer system in China has gone through four stages:strict restriction on transfer,permission for registered mortgage transfer,re restriction on transfer,and permission for free transfer.Legislators have ambiguous attitudes towards whether movable collateral can be freely transferred and the effectiveness of mortgage rights.The mortgage transfer system involves two types of fields: real estate mortgage and chattel mortgage.Due to the natural nature of strong spatial mobility of chattel mortgage,in practice,compared to real estate mortgage,the situation is more complex and varied.Therefore,the application of regulations for the protection of the interests of the mortgagee and transferee in the process of chattel mortgage transfer,as well as the disputes that exist,deserve more attention.The scope of application of the rules on the transfer of chattel collateral is centered on Article 406 of the Civil Code,combined with the relevant norms in legal documents such as the "bona fide third party system" stipulated in Article 403,the "normal operation buyer rule" stipulated in Article 404,the "third party settlement system" stipulated in Article 524,and the judicial interpretation of the Security System.In the process of transferring chattel collateral,it is inevitable that there will be conflicts between the recourse of the mortgage right and the assignee’s expectation of property rights.After analyzing and summarizing the norms for the protection of mortgagees and transferees,for mortgagees,firstly,it is necessary to strengthen the protection of their right to timely information;secondly,it is necessary to refine the rules of subrogation in terms of value and property when it is difficult to realize the mortgage,and clarify the situations where the "potential damage" to the mortgage may occur;For the assignee,the main focus is to strengthen the protection of their expected interests in property rights.Firstly,it is necessary to clarify the scope of application of Articles 406,403,and 404 of the Civil Code.Secondly,it is necessary to explore the establishment of a system of elimination rights to seek the legitimate scope of the assignee’s settlement on behalf of the assignee.