Regulations of Shenzhen Special Economic

Zone on Transfer of Real Estate

 (Originally adopted at the Seventeenth Meeting of the Standing Committee of the First Shenzhen Municipal People's Congress on July 24, 1993. As revised in accordance with the Decision on Revising of Regulations of Shenzhen Special Economic Zone on Transfer of Real Estate of the Thirty-third Meeting of the Standing Committee of the Second Shenzhen Municipal People' s Congress on June 30, 1999.)

Chapter I General Provisions

Article 1 In order to standardize activities of transfer of real estates, safeguard the legal rights and interests of parties involving in transfer of real estate, and maintain the market order of real estate of Shenzhen Special Economic Zone (hereinafter referred to as the "Special Zone"), these regulations are hereby formulated.

Article 2 These regulations shall be applicable to the transfer of real estate in the Special Zone.

Article 3 Real estates in these regulations refer to lands, buildings and other things adhering to the lands.

Transfer of real estates in these regulations refers to the legal acts where natural persons, legal persons and other organizations, that legally have the lands-use rights and ownership of buildings and other things adhering to the lands, transfer their real estates to others through trading, exchanging and donating of the real estates.

Article 4 The transfer of real estate shall abide by the principles of legality, justice, voluntariness and being honest and trustworthy.

Article 5 In the case of transfer of real estates, the ownership and the land-use right of buildings and other things adhering to the lands shall be transferred together other than distributed.

Article 6 The administrative department of real estate of Shenzhen Municipal People' s Government (hereinafter referred to as the "Municipal Government" ) is the administrative department in charge of real estate market (hereinafter referred to as the "Competent Authority" ) of the Special Zone, which shall abide by law to administrate real estate.

Article 7 The following real estates shall not be transferred unless having been approved by the Competent Authority as well as having made up the payable price of the lands:

(1) The ones with which land-use right obtained through administrative allocation;

(2) The ones which being abated of or exempted lands payable price when obtaining the land-use right; and

(3) Other circumstances as stipulated by laws and regulations.

Article 8 The following real estates shall not be transferred:

(1) The ones that the Municipal Government decides to take back the land-use right according to a city planning;

(2) The ones, which have been judged or decided to seal up or restrict of rights of real estate by other ways by the justice organizations and the administrative departments;

(3) The co-owned ones without the consent of the other co-owners in writings;

(4) The ones upon which a mortgage has been fixed without the mortgagee's approval;

(5) The ones which ownerships are under dispute; and

(6) The ones fall into other circumstances that are prohibited to be transferred by laws and regulations or provisions of the Municipal Government.

Article 9 To sell real estate in advance shall get the approval from the Competent Authority.

Where the real estate bought in advance is transferred again before the registration of transfer of the real estate being carried out and the certificate of the ownership of the real estate being obtained, it shall follow relevant provisions of the Municipal Government.

Article 10 The following acts shall be deemed as the transfers of real estates:

(1) Taking real estates as capitals that to be contributed to establish enterprises legal persons;

(2) Where one of the parties offers his land-use right while the other or others provide(s) capitals to cooperatively develop real estates and to distribute profits based on the ownership of the real estate;

(3) The real estates are transferred to a new owner when a company is purchased or merged;

(4) Taking real estates to pay a debt in kind; and

(5) The allocation of real estates between state-owned enterprises or other organizations.

Article 11 The following acts are not the transfers of real estates:

(1) The division of co-owned real estates by co-owners; and

(2) The administrative allocation of real estates between state organizations or the institutions with financial allocation and their subordinate organizations.

Article 12 In the case of transfer of real estate, the rights and obligations stipulated in a contract of transfer of land-use right shall be transferred accordingly; the transferor shall provide the contract or its duplicate to the transferee.

Article 13 In the case of transfer of real estates, the transferor shall transfer his own rights and interests of the roads, greenbelts, fields for rest, spare lands, lifts, stairs, connecting corridors, corridors, balconies or other public facilities of the same land accordingly.

Where there are no special agreements on the rights and interests of parking lots and advertisements in the first contract of transfer of land-use right, such rights and interests shall be transferred accordingly with the real estate; where there are special agreements, these said rights and interests shall be owned by the registered obligee after primarily registered by the registration organizations of real estate.

Article 14 The parties involving in the real estate transfer shall handle the registration of the transfer of the ownership of real estate according to the provisions of Regulations of Shenzhen Special Economic Zone on Registration of Real Estate.

Article 15 The date when the real estates registration organization examines and approves the registration of the transfer of real estates shall be the date of transferring the property right of the real estate.

Article 16 The risk liabilities of real estates shall be assumed by the transferor before the real estate transferred, while they shall be assumed by the transferee after the real estate transferred.

Article 17 Where one or both of the parties in the transfer of real estate is (are) individual(s) or organization(s) from overseas, the contract of transfer shall be notarized by a notary public office of Shenzhen Municipality.

Chapter II Sales of Real Estates

Section I Contract of Sales of Real Estates

Article 18 The parties of sales of real estate shall conclude contract of sales of real estate according to law.

Article 19 The parties shall adopt the text of contract of sales of real estate, which uniformly made by the Competent Authority to conclude such contract.

The contracts of sales of real estates shall include all of the following items:

(1) Names or titles and addresses of the parties;

(2) Numbers of certificates of property right of the real estate;

(3) Locations, areas, and four boundaries of the real estate;

(4) Lot umber of the land, the character and year limits of the land-use right;

(5) Uses of the real estate;

(6) Price of sales of the real estate and ways and date of payment;

(7) The date of delivery of real estates;

(8) Sharing rights and interests of the public parts and the rights and duties of co-owners;

(9) Liabilities for breach of contract;

(10) Solutions of contract disputes;

(11) Conditions and time when the contract takes effect; and

(12) Other items that both parties think necessary.

Article 20 In the case of selling real estate in advance, the time of delivery of the real estate agreed on by the parties shall be after the real estate completed as well as checked and accepted as a qualified project.

Article 21 A businessman engaged in the development (hereinafter referred to as the "developer" )of real estates shall provide a written warranty of house quality and a specification of using the house.

The quality grade, scope of repair guarantee, period of repair guarantee and the unit to implement the guarantees, which examined by the project quality supervision unit, shall be clearly recorded in the warranty of house quality. The real estate developer shall bear the liability of keeping the house in good repair not less than one year according to the agreements prescribed in the warranty of house quality.

Within the period of warranty of the house in good repair, a real estate developer who has the real estates repaired, resulting in an effect to the function of the house and a loss to the transferee shall be liable according to law.

Article 22 The contract of sales of real estate shall be invalid in case it violates laws and regulations.

The contract of sales of real estate, which is invalid, shall not be legally binding from the date it being concluded.

Article 23 Where a contract of sales of real estate is confirmed to be invalid, the party at fault shall be liable for the loss, which resulted from his fault, of the other party. In case both parties are at fault, they shall be liable respectively.

Article 24 A contract of sales of real estate may be modified or cancelled in any one of the following circumstances:

(1) being agreed upon by both parties and causing no harm to the state' s interests and others' lawful rights and interests;

(2) the whole or part of the contract of sales of real estate cannot be performed due to force majeure;

(3) the performance of the contract of sales of real estate becomes unnecessary resulting from the breach of contract by one of the parties; and

(4) the conditions for modification or cancellation the contract of sales of real estate come out.

Where both parities agree upon the modifying or canceling of a contract of sales of real estate, they shall conclude an agreement in written form.

Where one of the parties claim for modifying or canceling a contract of sales of real estate according to Item 2, 3, 4 of the first paragraph of this article, he shall notice another party in time.

Article 25 Where the modification or cancellation of a contract of sales of real estate causes damages to one of the parties, the party at fault shall bear the compensation liability.

Article 26 Where the transferor fails to deliver the real estate to the transferee in time due to his fault, he shall pay the breach of contract damages to the transferee. The amount of the damages shall follow the contract of sales of real estate in case there is a provision in the contract or be calculated according to a guide rent for the period of delaying to deliver the real estate in case there is no such provision in the contract. If the fault results in lose to the transferee, the transferor shall bear the responsibility of compensation besides the damages.

Where the transferor fails to deliver the real estate to the transferee even exceeding 90 days of the expiration time agreed upon in the contract of sales of real estate, the transferee shall be entitled to cancel the contract, unless as otherwise agreed upon in the agreements between them.

Article 27 Where the transferee of the actual selling of real estate does not pay the payable price within specified time limit, he shall pay the breach of contract damages for deferred payment according to relevant rules of deferred payment of the People's Bank of China.

Where the transferee fails to pay the payable price to the transferor even exceeding 90 days of the expiration time agreed upon in the contract of sales of real estate, the transferor shall be entitled to cancel the contract, unless as otherwise agreed upon in the agreements between them.

Article 28 Where the transferee of the real estate sold in advance does not pay the money of the real estate in time according to the contract of sales of real estate, he shall be liable for the breach of contract according to the following prescriptions:

(1) Where the transferee' s payment is more than 50% of the payable price, he shall pay the breach of contract damages for deferred payment according to relevant rules on deferred payment of the People's Bank of China to the transferor; and

(2) Where the transferee' s payment is less than 50% of the payable price, the transferor may ask him for paying the breach of contract damages. If a transferor fails to pay the payable price even exceeding 90 days of the expiration time agreed upon in the sales contract of real estates, the transferor shall be entitled to cancel the sales contract of real estates.

Article 29 Where the contents of the contract of sales of real estate are not performed wholly after the registration of transfer of the ownership of the real estate, the parties shall continue to perform the contract.

Section II Actual Sales of Real Estates

Article 30 In the case of actual sales of real estate, the land-use right and ownership of buildings and other things adhering to the land of the transferor shall have been registered and the transferor has got the certificate of property right of the real estate.

Article 31 Where the real estate is transferred through sales, the following parties shall have preemptive right under equal conditions:

(1) co-owners of the real estate; and

(2) tenant of the real estate.

Where there are the above-mentioned parties on one real estate sales simultaneously, the enjoyment of the preemptive right shall follow the above-mentioned order.

Article 32 The transferee shall have the right to know the situation of real estate including ownership, structure, fitment, relationship of mortgage, relationship of lease, neighborhood relationship and the contract of transfer of the land, while the transferor shall have the duty to disclose such relevant information. Where the transferor intentionally conceals the true circumstances, which results in the invalidity of the contract of sales of real estate, he shall be liable for the loss to the assignee.

Article 33 Where the real estate has been rented before the transaction, the transferee shall continue to perform the original contract of house leasing.

Section III Real Estate Sales in Advance

Article 34 To sell real estate in advance, the real estate developer shall meet the following requirements:

(1) Having had the land-use right registered and got the certificate of property right of the real estate;

(2) Having got the certificates of "permission to building" and "permission to commencement of construction";

(3) Besides having paid off the payable price for the land, the capital invested in the construction shall have reached 25% of total investment of construction budget and been examined by a certified public accountant;

(4) Having concluded an agreement on supervision of the selling price in advance with a financial institution; and

(5) The land-use right is not mortgaged or the relationship of mortgage has been terminated.

Anyone who meets the above-mentioned requirements may be issued the certificate of permission to sales of real estates in advance with the approval of the Competent Authority.

Article 35 The developer of real estates shall be liable for the authenticity of documents being shown in public such as the description, design blueprint and advertisement of sales of the real estate selling in advance.

Article 36 The funds resulting from selling real estates in advance shall be collected by a financial institution, which is entrusted by the developer.

The financial institution to collect the funds resulting from selling real estates in advance shall be the supervisory organization of the funds.

Article 37 The funds resulting from selling the real estate in advance shall be earmarked for its specified purpose only, the supervisory institution of construction shall inform the supervisory institution of selling in advance in writing to allocate the funds to a transferor according to a schedule stipulated by a construction contract and actual progress of the construction. Where the supervisory institution of construction does not issue the notice in written form, the supervisory institution of selling in advance shall not allocate the money directly to the transferor.

Where the supervisory institution of construction and the supervisory institution of selling in advance supervise and manage inappropriately, which results in a loss to the transferee, they shall bear joint and several liability of compensation with the developer.

Article 38 A developer of real estate shall submit the sales contract of real estate to the organization of the registration of real estates to put on records according to the rules formulated by the registration organization of real estates.

Article 39 The design of public facilities of the real estate to be sold in advance may not be changed in the course of construction. In case it does need modifying the design, it shall be required to get the permission to at least four fifths of all transferees.

Article 40 The developer shall not mortgage the real estate that has been sold in advance.

Chapter III Exchange and Donation of Real Estates

Article 41 The exchange of real estates refers to any legal act where the parties transfer their own real estates to each other.

Article 42 In the case of exchange real estates, the parties shall conclude contracts of exchanging real estates according to law.

The conclusion, performance, modification and cancellation of a contract of exchange of real estates shall be carried out with reference to relevant prescriptions in the contract of sales of real estate.

Article 43 Donation of real estates refers to any legal acts where one of the parties donates his own real estates to others without consideration.

Article 44 A natural person, being a donor, shall have full civil capacity.

Article 45 A donee of real estates may be a country, a natural person, a legal person, or other organizations unless as otherwise stipulated by laws and regulations.

Article 46 In the case of donating real estates, the donor and the donee shall conclude a contract of donating real estates.

Article 47 The time when a contract of donating real estates takes effect shall be the time of registration of the transfer of property right of the real estates.

Article 48 In the case of a conditional donation, if the donee does not fulfill obligations according to the agreement, the donor may demand him to do so or revoke the registered donation. If it is unable or unnecessary to carry out the conditions, the donor may not revoke the donation that has been taken effect.

Chapter IV Agency and Broker of Transfer of Real Estates

Article 49 Any party may entrust an agent to transfer real estates. In the case of entrusting an agent to transfer real estates, the procedure of entrusting shall be handled by the parities concerned.

Article 50 A natural person, or a legal person, or any other organization that engages in the transfer of real estate shall obtain the corresponding qualification. The conditions for and procedure of obtaining the qualification shall be subject to the rules formulated by the Municipal Government.

Article 51 An agency or a broker shall buy and sell the real estates at the price ordered by the consignor.

Article 52 The standard of a commission of an agent who transfers real estates shall be subject to the agreement agreed upon by the consignor and the agent, while that of a broker shall be in accordance with the rules formulated by the Municipal Government.

Article 53 Where a broker act on behalf of the consigner to transfer real estates, he shall examine the validity of the ownership of the real estates and the qualification of the parties involved in the transfer of the real estates.

A broker shall affix his signature or seal in the contract of transfer of real estates.

Article 54 A broker, who fails to get the entrusted real estates registered or fails to do so within specified time limit due to his fault and results in loss to the transferee, shall be liable for the loss.

Chapter V Taxation and Charge of Transfer of Real Estates

Article 55 In the case of transfer of real estates, the parties involved in shall pay taxes according to law.

Article 56 In case the real estate rises in value when it is transferred, the transferor shall pay the charge for increment of land value. The collection measures of the charge for increment of land value are to be formulated by the Municipal Government.

Article 57 Where there are price differences in the exchange of real estates, the variable levy and fees shall be paid in accordance with relevant regulations.

Chapter VI Punishment Provisions

Article 58 Where the transferor transfers real estates in violation of Article 7 of these regulations, the transfer shall be invalid and the transferor shall be imposed a fine of 10% of the transferring price of the real estate by the Competent Authority.

Article 59 Where anyone transfers real estates in violation of Item (1), Item (2) and Item (6) of Article 8, Paragraph 1 of Article 9 and Article 30, the transfer shall be invalid; the transferor shall be confiscated of his illegal gains in case he gains and imposed a fine of 10% of the transferring price of the real estates by the Competent Authority; in case the transferor has the certificate of qualification to develop real estates, he shall be subject to a punishment of no permission to have annual examination of the certificate or be revoked of the certificate based on the seriousness of the circumstances.

Article 60 Where the developer of real estates deliver the real estate before its completion and being checked and accepted as a qualify project in violation of Article 20 of these regulations, the delivery shall be invalid and the transferee shall be entitled to refuse to accept such delivery; The Competent Authority may give the developer a warning or impose a fine of 10% of the transferring price upon the developer. If the circumstances are serious, the developer shall be subject to a punishment of no permission to have annual examination of the certificate of qualification to develop real estate or being revoked of its certificate.

Article 61 Where the developer of real estates sell the real estate in advance before handing in the sales contract of real estate to the registered office to put on record according to relevant regulations, it shall be imposed upon a fine of less than 5% of the transferring price by the Competent Authority. If the transferor has the certificate of qualification to develop real estate, it shall be subject to a punishment of no permission to have annual examination of the certificate or suspending the certificate based on seriousness of the circumstances.

Article 62 Anyone, who manages real estates in violation of Article 50 of these regulations, shall be confiscated of his illegal gains and imposed upon a fine of not less than 1 time but not more than 2 times of the illegal gains by the Competent Authority.

Article 63 Any party, who conceals the true situation of the transfer of real estates and does not pay relevant charges according to relevant regulations, shall be ordered to compensate the payment and imposed upon a fine of not less than 2 times but not more than 5 times of the payable charges.

Article 64 In case any party objects to the administrative sanction imposed by the Competent Authority, it may apply for reconsideration to the reconsidering organization of the Municipal Government within 15 days upon the date receiving the decision of punishment. The organization shall make a decision on reconsideration within 60 days from the date receiving the application. In case the party objects the decision on reconsideration, it may directly file a lawsuit before a people's court within 15 days upon the date receiving the decision.

If the party neither applies for reconsideration, nor files a lawsuit, nor complies with the decision on administrative sanction imposed by the Competent Authority, the Competent Authority may apply to a people's court for compulsory enforcement.

Chapter VII Supplementary Provisions

Article 65 The conditions, scope and procedure of the transfers of commercial housing with low benefit margin and welfare residential buildings shall be subjects to relevant regulations formulated by the Municipal Government.

Article 66 The Municipal Government may formulate the detailed implementing measures in accordance with these regulations.

Article 67 These regulations shall take effect as of October 1, 1993.

Where there are contradictions between the provisions of these regulations and other relevant rules that enacted in the Special Zone before, these regulations shall prevail.