Article by Dr. Björn Etgen

The article was first published in the November 08 edition of the magazine "Asian Counsels", www.pbpress.com

The newly promulgated Measures for Building Registration, effective as of 1 July 2008, complement the relevant provisions of the Property Rights Law and the recent Measures for Land Registration. The building registration measures categorize buildings and structures that qualify for real estate title registration, and outline the procedure for creating and protecting an ownership interest in such real estate. In order to clarify owners' property rights, certain certificates will bear proof of the holder's interest in a building. In general, registration is permitted as long as fixed boundaries, independent use and a sole serial number are provided for. Importantly, a forenotice registration of land interests under certain conditions will help protect the interest of the original purchaser.

The building registration measures also clarify the distinction between a registration certificate and the registration book, with the latter prevailing in case of conflicts, and provide for new and re-categorized types of registration.

Although the registration procedure for the interest in land and buildings was to be unified, it remains unclear if the new Ministry of Housing and Urban Rural Construction and its local offices will retain this competence as set out in the building registration measures. The land registration measures, in contrast, provide for a uniform governmental authority to be designated by local government as the competent authority.

Although amendments made to the Law on the Administration of Urban Real Estate in August 2007 cover expropriation under the Property Rights Law, no implementing rules have addressed the issue of "public interest" or "residential conditions" in terms of relocation costs.

Foreign Investment

The last 15 months have seen both an increase of restriction and supervision of foreign investment in the real estate sector and a decentralizing of approval competence to provincial level authorities.

The Circular on Improving Filing Procedures in relation to Foreign Investment in the Real Estate Industry, effective as of 1 July 2008, intends to shorten time consuming verification and filing procedures by transferring substantive review and verification powers to MOFCOM at the provincial level, who will review applications together with other local government agencies. A summary will be submitted to national-level MOFCOM, which will make random checks of five to ten enterprises each quarter.

Environmental Issues: The Circular Economy Promotion Law

Commentators have been debating the effect of the Circular Economy Promotion Law-- which comes into effect on 1 January 2009--on the real estate and construction sector. Based on a reading of the draft law the law will cover the supervision and administration of industries that consume large amounts of energy and water, including construction, and sets out the requirements of utilizing water-use reduction facilities and energy saving techniques, including environmentally friendly energy sources and recyclable materials. Since it demands the comprehensive utilization of construction waste, it will presumably raise standards in the construction sector. So far the law only employs broad terms, and further specifications by subsequent administrative regulations are expected.

Yet, a reward scheme providing preferential tax treatment and investment policies as well as a punishment system are by now aiming at the efficient implementation of the law.

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