Discussions on the System of Mortgage Rights in China
| Autor | Li Kangning |
| Cargo | Northwest University of Politics and Law Xi'an, China |
| Páginas | 85-91 |
Page 85
Before promulgating of the present real right law, a specific law named security law was adopted and went into effect in 1995 in China. In this law, not only property used for security but personal security was also prescribed. Because at that time China was still in the initial stage of the transition from a planned economic system to a market economic system transformation, both the legislative experience and the preparation of legislative technique were not sufficient, some shortcomings, even mistakes, occurred in this rough law. So when it was circled in the legislative plan to enact real right law, one of the aims was to improve the prior provisions in security law and correct the existing mistakes thereof, then provide a better law for the related right holders and for the construction of market economy.
In Part IV of Real Right Law, general rules and three basic types of real rights for security are provided for altogether. The three types are mortgage right, pledge right and lien respectively. Here I suggest taking the system of mortgage right, especially mortgage right established on chattels, as a focused subject besides a brief introduction to general rules of real rights for security.
General rules such as the concept of real rights for security, the condition of establishment and termination of real rights for security, the base of effectiveness of a security contract, the range of security and the assuming of the security liability etc. are prescribed. Furthermore, it is explicitly prescribed that if any provision in the Security Law conflicts with that of the present law, the latter shall prevail.
Related Provisions:
[Article 170] Where the obligor fails to pay its due debts or any circumstance for realizing real rights for security as stipulated by the parties concerned happens, the holder of real rights for security shall enjoy preferred payments from the property for security, except that it is otherwise provided for by any law.
This article is the prescription for the nature of real rights for security. It means that these rights are the ones of preferred payments.
[Article 171] According to the present law or any other law, an obligee may, in such civil activities as loans or sales, establish the real rights for security in case the security is required for ensuring the realization of its/his credits.
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Where a third party provides security to the obligee for an obligor, countersecurity from the obligor may be required. The countersecurity shall be pursuant to the present Law and other related laws.
This article tells us the premise of establishing the real rights for security is that it must be practiced in market transaction activities.
[Article 172] For establishing real rights for security, a security contract shall be entered into in accordance with the present Law and the other related laws. A security contract shall be a subordinate one to the principal contract. Unless it is otherwise prescribed by any law, the security contract shall be invalid when the principal contract is nullified.
After a security contract is confirmed to be nullified, the obligor, the security provider and the obligee that has faults shall, in light of their respective faults, undertake corresponding civil liabilities.
The relation between a security contract and a principal contract is prescribed in this article and the effectiveness of them is also confirmed.
[Article 173] The security range shall cover principal obligee's rights and their interests, default fines, damages as well as expenses for keeping the property for security and for realizing the real rights for security. In case there are otherwise stipulations between the related parties, such stipulations shall prevail.
This article means not only the principal rights of obligee's but also their interests, default fines, damages as well as expenses for keeping the property for security and for realizing the real rights for security are secured.
Furthermore, during the security term, In case the property for security is damaged, lost or expropriated, the security holder may seek preferred payments from the insurance...
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