Laws of the People's Republic of China

The Supreme People's Court

The Proclamation of the Supreme People's Court

Fa Shi [2005] No. 5

The Interpretation of the Supreme People's Court of Matters Concerning the Law Application in the Trial of the Disputes Arising from Contract for Right to Use the State-owned Land was adopted at the 1334 session of the Judicial Committee of the Supreme People's Court and it is hereby promulgated and shall be implemented as of August 1, 2005.

The Supreme People's Court

June 18, 2005

The Interpretation of the Supreme People's Court of Matters Concerning the Law Application in the Trial of the Disputes Arising from Contract for Right to Use the State-owned Land

In accordance with the provisions of such laws as the General Principles of Civil Law of PRC, the Contract Law of PRC, the Land Administration Law of PRC and the Administrative Law of the Urban Real Estate of PRC and in combination with practices in civil trials, with respect to the matters concerning the law application in the trial of the disputes arising from contract for right to use the state-owned land, this Interpretation is thus promulgated.

1.

The disputes arising form the contract for consignment of land-use right

Article 1

The contract for consignment of land-use right referred to in this Interpretation is the agreement in which the municipal people's government or the people's government of a county, as the assignor, assigns the right to use the state-owned land to the assignee for a certain term while the assignee pays the fees for assignment.

Article 2

The contract for assignment of land-use right concluded by the administrative committee of development zone as a assignor and the assignee shall be determined to be invalid.

Where the contract for assignment of land-use right concluded by the administrative committee of development zone as a assignor and the assignee prior to the implementation of the this Interpretation is recognized retroactively by the land administration authorities of municipal people's government or the people's government of the county shall be determined to be valid.

Article 3

Where the land-use right is assigned by way of agreement as approved by the municipal people's government or the people's government of a county and the fees for assignment is lower than the lowest price prescribed by the state at the time of the conclusion of the contract, the price clauses as agreed in the contract for assignment of land-use right shall be determined to be invalid.

Where the party concerned requires paying the fees for assignment of the right to use land in accordance with the market evaluation price at the time of the conclusion of the contract, the party shall be supported. Where the assignee disagrees to compensate in accordance with the market evaluation price and requires rescinding the contract, the assignee shall be supported. The losses thus caused shall be born by each party in accordance with respective fault.

Article 4

Where the assignor in the contract for assignment of land-use right fails to deliver the land because the approval procedures of assignment of right to use land has not been gone through and the assignee requires rescinding the contract, the assignee shall be supported.

Article 5

Where the assignee, after the approval of the city layout authorities in municipal people's government or the people's government of a county, changes the purpose of the land as agreed in the contract for assignment of land-use right, the party concerned requiring adjustment of the fees for the assignment of land-use right in accordance with the fees for the assignment of right to use the land of same purpose at the time when the litigation is instituted shall be supported.

Article 6

Where the assignee changes without authority the purpose of the land as agreed in the contract for assignment of land-use right, the assignor requiring rescinding the contract shall be supported.

2.

The disputes arising from the contract for the transfer of land-use right

Article 7

The contract for transfer of land-use right as referred to in this Interpretation is the agreement in which the owner of the land-use right, as the transferor, transfers the land-use right to the transferee while the transferee pays the fees thereof.

Article 8

After the owner of the land-use right concludes the contract for transfer of land-use right with the transferee, either party requiring for the determination of the invalidity of the contract because that the parties have not conducted registration procedures of the change of the land-use right shall not be supported.

Article 9

Where the transferor who doesn't obtain the certificate of land-use right concludes contract with the transferee and obtains the certificate of land-use right or the people's government that has the approval authority agrees to the transference before the litigation is instituted, the contract shall be determined to be valid.

Article 10

Where the owner of land-use right, as the transferor, concludes more than one transfer contracts for one land-use right, and the transfer contracts are valid and all transferee requires the performance of the contract, it shall be dealt with in accordance with the following circumstances:

(1)

The transferee that has gone through the registration procedures for the change of land-use right and requires the transferor to perform such contractual liabilities as delivery of land shall be supported.

(2)

Where non has gone through the registration procedures for the change of land-use right and the transferee that has already legally occupied and invested for development of the land requires the transferor to perform such contractual liabilities as the registration for the change of land-use right shall be supported.

(3)

Where non has gone through the registration procedures for the change of land-use right and legally occupied and invested for development of the land, the transferee that has already paid the land transfer fees and requires the transferor to perform such contractual liabilities such as delivery of land and registration for the change of land-use right shall be supported.

(4)

Where all contracts are not performed and the transferee in the contract that is established at the earliest time requires the performance of the contract, the transferee shall be supported.

Where the transferee that has not obtained the land-use right requires rescinding contract and damages, it shall be dealt with in accordance with relevant provisions of the Contract Law of PRC.

Article 11

Where the owner of land-use right failing to be approved by the people's government that has the approval authority concludes contract with the transferee to transfer the allotted land-use right, the contract shall be determined to be invalid. Where before the litigation is instituted the people's government that has the approval authority approves the transfer of land-use right, the contract shall be determined to be valid.

Article 12

Where the owner of land-use right concludes contract with the transferee to transfer the allotted land-use right and before the litigation the people's government that has the approval authority approves the transfer thereof and the transferee conducts the land-use right transfer formalities, the contract between the owner of the land-use right and the transferee may be treated as the contract with compensation nature.

Article 13

Where the owner of the land-use right concludes contract with the transferee to transfer the allotted land-use right and the people's government that has the approval authority, before the litigation is instituted, decides not to conduct the transfer formality of the land-use right but to allot the land-use right directly to the transferee, the contract between the owner of the land-use right and the transferee may be treated as the contract with compensation nature.

3.

Disputes arising from the contract for cooperative development of real estate

Article 14

The contract for cooperative development of real estate as referred to in this Interpretation is the agreement concluded between parties to provide the transference of land-use right or fund as cooperative investment to develop real estate, to share profits and take risks together.

Article 15

Where one party to the contract for cooperative development of real estate has the qualification for real estate development and operation, the contract shall be determined to be valid.

Where all parties do not have the qualification for real estate development and operation, the contract shall be determined to be invalid. Where one party has obtained the qualification for real estate development and operation or a real estate development enterprise with qualification for real estate development and operation is established by cooperation before the litigation is instituted, the contract shall be determined to be valid.

Article 16

Where the owner of land-use right concludes contract with others to develop real estate together, with the allotted land-use right as investment without the approval of the government that has the approval authority, the contract shall be determined to be invalid. Where the approval procedure is gone through before the litigation is instituted, the contract shall be determined to be valid.

Article 17

Where the investment amount exceeds what has been agreed in the contract for cooperative development of real estate, and parties concerned are not able to determine the share rate of the extra amount by mutually consulting, the share rate shall be determined based on the fault of the parties. Where it is because of the reasons non-attributable to the parties or the fault of the parties can't be ascertained, the determination shall be made according to the agreed investment rate. Where there is no agreed investment rate, the determination shall be made according to the agreed profit sharing rate.

Article 18

Where the actual construction acreage of the house is less than that agreed in the contract for cooperative development of real estate, and parties concerned are not able to determine the allocation rate of the actual construction acreage of the house by mutually consulting, the rate shall be determined based on the fault of the parties. Where it is because of the reasons non-attributable to the parties or the fault of the parties can't be ascertained, the determination shall be made according to the agreed profit sharing rate.

Article 19

Under the following circumstances, the request of the parties to the contract for cooperative development of real estate for the allocation of the proceeds of the real estate project shall not be accepted and those that have been accepted shall be rejected:

(1)

The real estate construction project that needs approval in accordance with law is not been approved by relevant authority of the people's government that has the approval authority;

(2)

The real estate construction project does not obtain the layout certificate for construction project;

(3)

The layout of the construction project has been changed without authority.

Losses caused because the parties conceal the fact that the layout of the construction project has been changed shall be born by the parties based on their fault.

Article 20

Where the actual construction acreage of the house is more than the construction acreage in the layout and parties concerned are not able to determine the share rate of the extra amount of the house by mutually consulting, the share rate shall be determined based on the agreed profit sharing rate after the approval the people's government that has the approval authority. Where parties concerned are not able to determine the share rate of the extra amount of investment by mutually consulting, the share rate shall be determined based on the agreed investment rate, and where there is no agreed investment rate, the determination shall be made according to the agreed profit sharing rate.

Article 21

Where the house the development and construction of which violate the layout is determined by the authority of the people's government that has the approval authority to be illegal construction and ordered to be removed and the parties can't determine the bearing of losses by mutual consulting, the bearing of the losses shall be determined based on the fault of the parties. Where the fault of the parties can't be ascertained, the determination shall be made according to the agreed investment rate. Where there is no agreed investment rate, the determination shall be made according to the agreed profit sharing rate.

Article 22

Where the contract for cooperative development of real estate stipulates that the determination of profit sharing rate is to be made based on the investment amount and the party does not pay full investment, the profit shall be shared based on the actual investment.

Article 23

The parties to the contract for cooperative development of real estate requiring for profit sharing with the payment in advance sales of the house deducting the investment shall not be supported.

Article 24

The contract for cooperative development of real estate stipulating that the party providing land-use right will not bear operation risk and only accept fixed proceeds shall be determined to be contract for transfer of land-use right.

Article 25

The contract for cooperative development of real estate stipulating that the party providing fund will not bear operation risk and only be distributed with fixed number of houses shall be determined to be contract for sale of house.

Article 26

The contract for cooperative development of real estate stipulating that the party providing fund will not bear operation risk and only accept fixed money shall be determined to be contract for sale of house.

Article 27

The contract for cooperative development of real estate stipulating that the party providing fund will not bear operation risk and only use the house by way of lease or otherwise shall be determined to be contract for lease of house.

4.

Other Provisions

Article 28

This Interpretation shall be implemented as of August 1, 2005; the first instance case thus accepted after the implementation thereof applies this Interpretation.

Where the judicial interpretation promulgated by the Supreme People's Court before this Interpretation is in conflict with this Interpretation, the latter shall prevail.