Can property be owned in china

The term “real estate” generally includes the following:

• Land use rights (or land ownership in some cases)
• Buildings or structures constructed on land

Real estate transactions in the People’s Republic of China (PRC) are governed by statutes enacted by national and local governmental authorities. The principal statutes at the national level include the following:

• PRC Interim Regulations Concerning Assignment and Transfer of Urban Land Use Right (Revised in 2020)
• PRC Urban Real Estate Administration Law (Revised in 2019)
• PRC Land Administration Law (Revised in 2019)
• Regulations on the Implementation of the PRC Land Administration Law (Revised in 2021)
• PRC Civil Code (Enacted in 2020)
• Provisions on the Administration of Urban Real Estate Transfer (Revised in 2001)
• Administrative Measures for the Sale of Commodity Houses (Enacted in 2001)
• Commercial Properties Leasing Measures (Enacted in 2010)
• Interim Regulations on Real Estate Registration (Revised in 2019)
• Detailed Implementing Rules of the Interim Regulations on Real Estate Registration (Revised in 2019)

While the national statutes set out the general legal framework, local regulations enacted at provincial and municipal levels often provide the detailed legal rules for local real estate transactions. For example, Shanghai has many local regulations, including the following:

• Measures of the Shanghai Municipality on the Implementation of PRC Land Administration Law (Revised in 2018)
• Measures of Shanghai Municipality on the Grant of Land Use Rights (Revised in 2008)
• Measures of Shanghai Municipality on the Transfer of Real Properties (Revised in 2010)
• Several Provisions of the Shanghai Municipality Regarding Real Estate Registration (Enacted in 2020)
• Shanghai Houses Leasing Regulations (Enacted in 2022)
• Shanghai Residential Properties Leasing Administrative Measures (Revised in 2021)

While China is not a “common law/case law jurisdiction,” the PRC Supreme People’s Court and the local courts do issue judicial interpretations to provide guidance on the laws and occasionally refer to precedent court cases when making judgments on real estate transactions.

China adopts what is basically the “Torrens system” where title to real estate is registered with and certified by the government.

Real estate title registration is achieved by registering the title details at the local real estate registry administered by the government, and the registry issues a title certificate to the registered owner.

The information contained in the title certificate issued and at the local real estate registry should be consistent with each other. However, if there are discrepancies, the information registered at the local real estate registry is conclusive unless there are manifest errors. The owner may sue the government for wrongful registration.

At the national level, the Ministry of Natural Resources generally takes charge of real estate title registrations.

At the local level, real estate title registration for land and buildings has been combined and centralized at one registry in most cities by the end of 2017.

The following types of real estate interests and transactions must be registered at the local title registry for them to be fully protected and enforceable against third parties:

• Grant (creation) of land use rights by the government
• Recognition (creation) of ownership of new buildings by the government
• Transfer of land use rights and buildings
• Mortgage of land use rights and buildings

A real estate lease is also required to be filed with the designated local authority; however, the lack of filing does not invalidate the duly executed lease.

As for easements, they are not required to be registered. An easement takes effect upon signing of the easement agreement. However, registering an easement will protect the holder of the easement right from bona fide third parties.

Depending on the location and the types of real estate interests involved, owners will normally use their “land use right certificates,” “building ownership certificate,” or “real estate title certificate” issued by the local title registry as proof of title.

Meaningful online title search is not yet available in China. Many cities now have established portals to allow online title searches, but such searches are yet to become a meaningful tool for due diligence purpose as they can reveal very limited information only. According to the Detailed Implementing Rules of the Interim Regulations on Real Estate Registration effective from 1 January 2016 and revised on 24 July 2019, only owners, interested parties in real estate transactions, succession or litigations, persons authorized by the owners or interested parties, and courts, prosecutors, security bureaus, supervisory bureaus or other government authorities carrying on official affairs may conduct title search at the local registry.

Since July 2006, foreign companies and individuals are no longer permitted to directly acquire and hold PRC real estate for “investment purposes” (e.g., greenfield development projects and acquisition of buildings for investment holding and/or leasing). Real estate directly acquired by foreign companies and individuals for investment purposes prior to July 2006 are “grandfathered.” Today, foreign companies and individuals must obtain approval from the PRC foreign investment authority to set up a local company to carry out real estate investment.

On the other hand, foreign companies and individuals may still directly acquire PRC real estate for “self-use” or “self-residence” purposes in certain limited circumstances. For example, foreign individuals who work or study in China may purchase buildings for self-use or self-residence based on actual needs. However, some cities currently restrict non-local individuals who do not have local tax and social security registrations from purchasing residential properties.

Foreign companies may purchase a “reasonable quantity” of buildings for self-use for their representative offices or branches in China. Note, however, that foreign companies and individuals from countries without diplomatic relations with China could be restricted from acquiring PRC real estate even for self-use purposes.

The government is empowered by law to expropriate land and buildings for public interest purposes, but the government must pay compensation to the owners in accordance with the law.