Qin Xianfeng

Land mortgages formed by corporate loans should not be registered

Case:

Due to business needs, Company A plans to Borrowed money from Company B and agreed to use a real estate development land obtained by Company A through transfer as collateral. The two parties went to the land and resources department to apply for mortgage registration of land use rights. During the review, the land registration personnel came up with two different opinions. One opinion is that it cannot be handled. According to Article 61 of the "General Rules for Loans" issued by the People's Bank of China in 1996, administrative departments at all levels and enterprises and institutions, supply and marketing cooperatives and other cooperative economic organizations, rural cooperative foundations and other foundations , shall not operate financial businesses such as deposits and loans. Enterprises may not violate state regulations by engaging in lending or disguised lending and financing business. Enterprise B is a non-bank financial institution and cannot engage in loan business, so it cannot handle land use right mortgage registration. The second opinion is that it can be handled. According to Article 32 of the "Interim Regulations of the People's Republic of China on the Assignment and Transfer of State-owned Land Use Rights in Guocheng Town", land use rights can be mortgaged. Article 180 of the Property Law also stipulates that the right to use construction land that the debtor or a third party has the right to dispose of can be mortgaged. Company A's borrowing from Company B is a general private lending activity, rather than engaging in business loan business. It can register the land use rights mortgage for it based on the application of both parties. Can private lenders handle land mortgage registration for them?

The question of "whether private lending can handle land mortgage registration" involves two legal relationships: one is the lending relationship between enterprises; the other is the mortgage registration of state-owned land use rights. The two are related to each other. The loan contract involved in the former is a principal contract, and the mortgage contract involved in the latter is a subordinate contract. According to the first paragraph of Article 5 of the "Guarantee Law of the People's Republic of China", the main contract is invalid and the guarantee contract is also invalid; Article 44 stipulates that when registering collateral, the main contract should be provided to the registration department. Therefore, the key to whether the land department can handle the land mortgage registration is to first determine the validity of the loan contract between enterprise A and enterprise B.

The current judicial practice in our country has a negative attitude towards the validity of inter-enterprise loan contracts. The Supreme People's Court's "Reply on How to Handle Problems When Borrowers in Enterprise Loan Contracts Do Not Return the Loans Overdue" (Fafu [1996] No. 15) stipulates: "Enterprise loan contracts violate relevant financial regulations and are invalid contracts." Among them. The relevant financial regulations refer to the "General Rules on Loans" issued by the People's Bank of China in 1996.

However, the author believes that my country does not deny the validity of corporate loan contracts at the legal level. The reasons are as follows:

The "General Principles of Loans" cannot be used as the basis for determining the validity of the contract. Article 4 of the Supreme People's Court's "Interpretation on Several Issues Concerning the Application of the Contract Law of the People's Republic of China (1)" (Fa Interpretation [1999] No. 19) stipulates that after the Contract Law is implemented, the people's court confirms that the contract is invalid. It shall be based on the laws enacted by the National People's Congress and its Standing Committee and the administrative regulations formulated by the State Council, and shall not be based on local regulations and administrative rules. According to this judicial interpretation, the "General Rules for Loans" are departmental regulations of the People's Bank of China and shall not be used to determine the validity of loan contracts between enterprises.

The "Company Law of the People's Republic of China" does not prohibit inter-enterprise lending. Paragraph 3 of Article 149 of the Company Law stipulates that directors and senior managers shall not violate the provisions of the company's articles of association and lend company funds to others without the consent of the shareholders' meeting, general meeting of shareholders or the board of directors. The legal "person" shall include natural persons and legal persons. Of course, Company A is among the “others”, so if Company B borrows money from Company A in accordance with the company’s articles of association and with the consent of the competent authority (shareholders meeting, general meeting of shareholders or board of directors), it is not prohibited by law.

As for this case specifically, although the author has certain doubts about the validity of the inter-enterprise loan master contract, in the practice of land use rights mortgage registration, the land department should fully respect my country's current judicial practice and determine that A , The main loan contract between Company B is invalid, and the land mortgage registration will not be processed. If the applicant is dissatisfied, it is recommended that he first file a lawsuit to confirm the right to the court.

(This article was originally published in "China Land and Resources News" on July 27, 2010)

Is it necessary to pay the land transfer fee in this case?

Case:

A real estate developer acquired a piece of state-owned land through transfer for residential use. During the development and construction process, due to changes in urban planning, the government took back the state-owned land use rights of 1,000 square meters in the plot for a fee and used it as a fire escape. Other planning and design conditions of the residential area remained unchanged. Since the 1,000 square meters of state-owned land recovered is the green space of the residential community, while other planning and design conditions remain unchanged, which leads to an increase in the building density and floor area ratio of the community. After evaluation, after the recovery of the land use rights of 1,000 square meters, the remaining real estate development The unit land price per square meter of the land is much higher than the land price at the time of transfer. I would like to ask: In this case, should the developer pay the land transfer fee required for the increase in building density and floor area ratio?

In this case, the plot ratio of residential land increased simply due to government planning adjustments, and the developer did not need to pay the land transfer fee for the following reasons:

First of all, the government cannot rely on administrative orders in this case Request additional land transfer fees. Different from the openness of the civil legal rights system, administrative agencies must exercise their powers and take specific administrative actions in accordance with the clear authorization of laws and regulations. Although the administrative legal system is very large, it should generally be closed and have power boundaries, and cannot be expanded and applied at will. "No authorization, no power" is the proper meaning of administration in accordance with the law.

At present, the laws and administrative regulations related to the adjustment of land transfer fees include: First, Article 18 of the "Urban Real Estate Management Law of the People's Republic of China" stipulates: "Land users need to change land use If the land use specified in the right transfer contract must be obtained from the transferor and the urban planning administrative department of the municipal or county people's government, the transfer fee for land use rights shall be adjusted accordingly. "The second is the "People's Republic of China and Guocheng State-owned". Article 18 of the Interim Regulations on the Grant and Transfer of Land Use Rights stipulates: “If a land user needs to change the land use specified in the land use rights grant contract, he must obtain the consent of the transferor and obtain approval from the land management department and the urban planning department... Adjust the transfer fee for land use rights and apply for registration. "The above two provisions only apply to the situation where the land user (i.e. the transferee of the state-owned construction land use right contract) actively proposes to change the land use and obtains approval from the relevant administrative agencies. When the government proactively adjusts planning and changes land use, there is no regulation on whether to adjust the land transfer fee. According to the requirements of administration according to law, the author believes that the government has no right to rely on administrative orders to require developers to pay back land transfer fees.

Secondly, in this case, the government, as the contract transferor, cannot unilaterally require additional land transfer fees. The "State-owned Construction Land Use Rights Assignment Contract" (hereinafter referred to as the "Assignment Contract") is regulated by the "Contract Law of the People's Republic of China" and has equal effect on both the transferor and the transferee. Modifications to the contract should also be made on an equal basis. on the basis of consultation. In this case, the government has the right to adjust part of the fire escape land planning during the development and construction process, and the government also chose the first item of paragraph 1 of Article 18 of the "Assignment Contract" (model text) and took back this part for a fee 1000 m2 of land use rights.

The developer could not foresee the adjustment of the plan when signing the "Assignment Contract" and designed and constructed in accordance with the floor area ratio stipulated in the original "Assignment Contract". There was no fault in the entire performance process. At the same time, " Article 19 of the Assignment Contract (model text) stipulates, “During the period of use of the parcel under this contract, the government reserves the right to adjust the planning of the parcel under this contract. If the original planning is modified, the existing planning of the parcel will "Buildings will not be affected..." "Existing buildings will not be affected" is an affirmation of the transferee's trust interests. According to the design intention of this article, the building density and floor area ratio on the parcel will increase and the unit land price will increase compared to the time of transfer. The high value is not subjectively caused by the transferee (the developer did not increase the building area without authorization, and the reduction of green space in this case is likely to reduce the comfort of the residential community and affect the overall economic value of the building and land price). Of course, They should not bear adverse consequences, otherwise it will not be conducive to the safe and efficient conduct of transactions, and will also have an impact on the government's credibility. Therefore, according to the basic principles of the Contract Law of the People's Republic of China, an explanation should be made in favor of the transferee. The developer in this case can still continue construction based on the original floor area ratio design drawings.

(This article was originally published in "China Land and Resources News" on April 23, 2011)