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Sun Xianzhong :Law on Property Rights Being Drafted

By staff reporter Duan Hongqing

China’s legislature held a meeting on October 22 to discuss its draft law on property rights, a vital step in the country’s efforts to complete its all-inclusive civil code.

This is the second time the Standing Committee of the 10th National People’s Congress (NPC) has discussed the draft. The first round of discussion was held in December 2002. Sources tell Caijing that the NPC Law Committee will further conduct a detailed, item-by-item discussion from Wednesday, November 3 to Friday, November 5, with the revised version expected to be submitted to the NPC session next spring for examination and approval.

In March of this year, the landmark article "private property legally obtained shall not be violated" was written into China’s Constitution. In China, however, the Constitution cannot be directly cited in court rulings, and so a detailed property law is indispensable in clarifying ownership in property disputes.

The 55-page property rights draft contains 297 articles divided into 22 chapters in five parts. It addresses controversial social issues, including farmers’ contracted land use rights protection and ownership disputes between house owners and realty management companies an. It stipulates, for example, that farmers’ contracted rights of land use can be transferred, leased, swapped or sold. Analysts say the new legislation, if it is passed, will serve as a powerful legal guarantee for protecting individual property rights.

One of the core issues in the drafts concerns the demarcation between state, collective and individual properties, analysts say. Some legal experts suggest that state, collective, and individual properties should all be protected on equal footing. Others hold that this differentiation of ownership should be excluded from the law, and instead, should simply state that all properties, if they are obtained legally, should be protected equally.

Sun Xianzhong, a civil law expert from the Chinese Academy of Social Sciences (CASS) and member of consulting panel for the property rights law drafting, said: "The ideological factor is behind the law drafting logic."

Traditionally, China’s law has stressed the sanctity of public property and overlooked individual property rights. The introduction of property rights into the Constitution in March has changed this approach.

"Only when personal property is guaranteed can individuals foster confidence in the society and the nation as well," said Sun.

Caijing is told that the draft law introduced on October 22 does not include any phrases such as "State property is sacred and shall not be violated," but the ownership of property is differentiated in the fifth chapter.

Liang Huixing, a researcher from the CASS Law Institute and a major drafter of the initial version of the legislation, says that it shows some progress that no special stipulations are made in the draft law for protecting state properties. That progress is limited, however, because the ownership differentiation will eventually lead to unequal treatment in practice, Liang says.

The draft law reflects lawmakers’ respect for market rules and encouragement of ingenuity, analysts say. Given the many social limitations, however, the draft law circumvents many thorny issues, a result of concessions by various interests.

The immovable property registration system, for example, is included to maintain market order. But in China, multiple departments have registration powers. The disunited management creates obstacles for concerned parties. Worse, some departments use their administrative power to profit from market transactions by overcharging or repeatedly charging

The draft legislation stipulates that registration of an item of property cannot be charged more than 200 yuan (US$24.2) and registration agencies cannot involve themselves in property value appraisals. Repeated charges and activities other than registration are forbidden.

"This will greatly reduce market transaction costs and is of inestimable significance," said a civil law expert, who declined to be named.

Unable to balance the various interests concerned, however, lawmakers bypassed the issue of registration management in the draft law, analysts say.

Disputes over house sales have been common in recent years. The sixth chapter of the draft law on "differentiated ownership of buildings" is expected to help solve these problems.

The draft law stipulates that while the individual apartment owners own the apartments within the buildings, they have co-ownership of public parts of the buildings, such as corridors, stairs and outer walls. They also have the collective right of managing the buildings and facilities and are entitled to replace the realty management company if they are dissatisfied with the services it provides.

"It is clear lawmakers are conscientious in protecting house owners’ rights," said a legal expert who declined to be named. But there are some loopholes, added the unidentified expert. The draft law sets out rules for affiliated facilities, such as parking lots and grasslands. If there is no agreement between real estate developers and the owners or if the developer cannot provide relevant ownership papers of ownership, then these facilities belong to the buildings’ many individual owners. If there is an agreement, then the agreement determines the ownership of those facilities. In practice, analysts say, the stipulation may go awry. It is easy for powerful real estate developers to get needed papers or even force house owners to ink favorable contracts.

Concerning state requisition of private properties, a highly controversial issue in recent years, the draft law does not go beyond existing legislation. The scope, standards, and forms of compensation, as well as the definition of "public interest" in the requisitioning of private properties, are not clearly stipulated.

"It is mainly because there are too many controversies and it is hard to co-ordinate disparate opinions," said Wang Liming, a civil law professor from the Renmin University of China (RUC). "Perhaps we will have to wait for a special law on requisition to solve the problem in the future."

On issues of state asset management and rural land ownership, the new draft also fails to make any significant progress.

"It is unrealistic to pin too much hope on a law (to solve all problems)," said Yang Lixin, a RUC law professor. Controversies in drafting the property rights law are in essence a reflection of the many inevitable problems in a transitional society, he said.

What is needed is to get the law passed and improve it gradually in practice. "Incomplete as it is, a law is better than nothing," Yang said.

http://english.caijing.com.cn/2004-11-01/110032017.html