Point of View... After the developer compensates for the presale commercial housing mortgage loan, can it claim its priority right to the subject housing auction?

Under the commercial housing presale model, most buyers purchase presale commercial housing through mortgage loans. In recent years, under the malaise and depression of the macro-economy, it is not uncommon for buyers to cut off their supply. In the case of a buyer's supply cut off, the developer usually needs to repay the mortgage loan to the bank on behalf of the buyer because of its phased guarantee responsibility.

The so-called phased guarantee responsibility of the developer is that during the period from the effective date of the guarantee contract to the time of formal mortgage registration, the bank will bear the guarantee responsibility for the mortgage loan of the buyer in order to reduce the loan risk. This stage usually has the following characteristics:

(1) The commercial house purchased by the buyer does not yet have the conditions for the registration of property rights, that is, the ownership of the house is still registered in the name of the developer;

(2) Buyers can only use the presale of commercial housing, for the bank mortgage loan to provide mortgage notice registration, and not formal mortgage registration.

The emergence of a supply break usually indicates that the buyer's capital chain is broken and insolvent, and a considerable number of buyers will have other creditors to claim rights against the property. If other creditors take the lead in pre-mortgaging and auctioning the house involved, can the mortgage loan compensated by the developer be paid first in the house auction? If so, what are the substantive legal bases? How to realize the priority of payment in procedure?

According to articles 208 and 209 of the Civil Code, the establishment, alteration, transfer and elimination of real property rights shall be effective upon registration in accordance with the law.

During the period when the developer assumes the phased guarantee responsibility, the house involved in the case usually does not have the conditions for property rights registration, that is, the house involved in the case is still registered in the name of the developer, in other words, the developer has ownership of the house involved in the case. According to the theory of the priority effect of property rights, after the house in question is auctioned, the developer enjoys the right of claim on the property based on ownership, such as the return of the original property, the right to claim damages, etc., which has the priority effect compared to other claims, and can be paid in the auction of the house.

For example, (2020) the Supreme Law Minzong No. 690 judgment held that "the house involved in the case is still registered in the name of Honglicheng Company, and the house is still the property owned by Honglicheng Company in terms of property ownership. Honglicheng Company has the right to request exclusion of execution or priority compensation for the auction price based on the ownership of the house involved in the case", "Honglicheng Company's right to claim priority compensation for the house auction price based on the property claim has not been eliminated, and it requests the people's court to give priority to the price of the house involved in the auction case. Although it has the purpose of retreating and seeking the second best, the right of Honglicheng Company to the house involved in the house involved in the house is based on the property, the effect takes precedence over the claim of the Huaxi Branch of Guizhou Bank based on the claim to Suliga".

1, the developer can be subrogation to exercise the rights of the bank to the buyer.

According to article 700 of the Civil Code, after the guarantor has assumed the responsibility for the guarantee, unless otherwise agreed by the parties, the guarantor shall have the right to recover from the debtor within the scope of its responsibility for the guarantee and enjoy the rights of the creditor against the debtor, but not to the detriment of the interests of the creditor. After assuming the guarantee responsibility, the developer can enjoy the rights enjoyed by the bank to the buyer without harming the interests of other creditors.

In addition, according to Article 18 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the the People's Republic of China Civil Code (hereinafter referred to as the Interpretation of the Guarantee System), the same creditor's right has both the guarantee provided by the debtor itself and the guarantee provided by a third party. If a third party who has assumed the liability for security or compensation claims to exercise the creditor's security right over the debtor, the people's court shall support it. Based on this, if the bank has a valid security interest in the house involved in the case, it can give priority to the auction money of the property involved in the case, then the developer can also claim priority in the auction money of the property involved in the case after repaying the mortgage loan.

As mentioned above, during the period when the developer assumed the stage guarantee responsibility, the house involved in the case has not yet established a formal mortgage right, only the mortgage notice registration has been established.

In this model, the key to the developer's priority compensation in the auction money lies in whether the bank's mortgage advance registration of the house involved in the case can produce the effect of priority compensation.

2, the effectiveness of mortgage notice registration analysis.

Mortgage advance registration refers to the parties after signing the loan contract and mortgage contract, in order to protect the realization of future mortgage rights, and in accordance with the agreement to apply to the registration authority for mortgage advance registration. Whether the mortgage notice registration has the effect of property rights, in other words, whether the bank can obtain the relief of priority payment through the mortgage notice registration, there has been a long-standing dispute in the theoretical circle and judicial practice.

In this regard, the Supreme People's Court adopted Article 52 of the Interpretation of the Guarantee System and 《 <担保制度解释> The analysis of article 52 is clear and uniform in the Guide to the Understanding and Application of the Provisions, which holds that the registration of a mortgage notice is only effective against third parties and that whether it has the effect of priority payment is based primarily on the following facts:

(1) Whether the property has been registered for the first time at the time of advance notice registration.If the property has been registered for the first time at the time of advance notice registration, if the developer has obtained the title certificate, the effect of mortgage advance notice registration at this time is equivalent to that of formal mortgage registration, and the obligee shall have the priority right of compensation from the date when the subject property is registered for the first time; if the property has not been registered for the first time at the time of advance notice registration, the nature of the mortgage advance notice registration right is still the right of claim, and the obligee does not.

(2) Whether the property registered in advance is consistent with the property at the time of the first registration of ownership of the building.If it is consistent, the formal mortgage effect will be achieved from the date of registration of the notice; if it is inconsistent, the mortgage effect will not be recognized.

(3) Whether the advance notice registration has lapsed.Article 211, paragraph 2, of the Civil Code stipulates: "After the advance registration, if the creditor's rights are extinguished or the registration is not applied for within 90 days from the date when the real estate registration can be carried out, the advance registration shall be invalid." Thus, if the claim is extinguished or if registration is not applied for or priority payment of the mortgaged property is not made within 90 days from the date on which the real estate can be registered, the advance registration will lapse and the creditor will naturally not be able to obtain priority.

According to the "Interim Regulations on Real Estate Registration" and other provisions, developers have the obligation to handle the first registration of real estate and assist in other registrations, that is, developers have greater initiative in handling the first registration of real estate and other registrations of real estate. To sum up, in order to ensure that the housing auction money involved in the case can be paid first, the developer should timely handle the first registration of real estate, and cooperate with the bank to handle the mortgage advance notice registration and formal mortgage registration within a reasonable period of time.

3. Analysis of judicial opinion

In the Weike Advance Legal Information Database, using "phased guarantee", "mortgage advance notice registration" and "priority of compensation" as key words, 46 cases of "dispute over the right of recovery" in the past 3 years were searched, of which 32 cases were supported by the court for developers (guarantors) to enjoy priority of compensation, 1 case was not handled due to unfulfilled conditions, and 13 cases were not supported.

In the supported case, the court mainly considers whether the real estate has been registered for the first time, whether the mortgage notice has been registered, and whether there is a situation where the mortgage notice registration has failed, which is basically the same as the above analysis.

In the case of non-support, the reasons for non-support are as follows:

Through the above judicial case statistics, it can be seen that in judicial practice, to judge whether the mortgage advance notice registration is effective, the main consideration is whether to apply for registration within 90 days from the date of real estate registration. In addition, if the relevant requirements set out in Article 52 of the Interpretation of the Guarantee System are met, the court will generally support the developer (guarantor) to give priority to the payment of the proceeds from the auction sale of the advance registered collateral within the scope of the compensation amount after assuming the phased guarantee liability.

In judicial practice, some courts believe that the basis for developers to give priority to compensation in the housing price involved in the case within the scope of the mortgage loan is Article 17 of the Provisions on Seizure, Seizure and Freezing of Property in Civil Enforcement of the People's Court, that is, the person subject to execution has purchased the property of a third party who needs to go through the transfer registration, has paid part or all of the price and actually occupied the property, although the property has not gone through the transfer registration procedures, however, if the applicant for enforcement has paid the remaining price to the third party or the third party agrees to pay the remaining price in priority from the price of the property, the people's court may seal up, seize or freeze it.

The court held that the developer paid part or all of the mortgage loan, and there was no substantial difference in the result between the buyer's failure to pay the full price. In other words, if the buyer purchases the commercial housing presale by the developer, although the transfer registration has not yet been completed, but has paid part of the price and actually occupies the property, and the developer agrees that the remaining price should be paid in priority from the change price of the property, the people's court may seal up, seize or freeze it. If it has been pre-sealed and auctioned by the court, it can be dealt with by reference to this rule.

For example, (2020) Yu Min Zhong No. 505 Judgment held that "the developer Lvdong Company undertakes the guarantee responsibility for repaying the bank mortgage loan on behalf of Guo Min, the buyer, in essence, has to bear the corresponding monetary payment responsibility to the bank after receiving the mortgage loan paid by the bank. There is no substantial difference in the result with the developer's failure to collect the house purchase money in full. Combined with the fact that the property ownership involved in the case is still initially registered in the developer Lvdong company, the transfer of ownership after the disposal of the real estate involved in the case also needs the assistance and cooperation of Lvdong Company. According to the provisions of Article 19 of the Provisions of the Supreme People's Court on the Seizure, Seizure and Freezing of Property in the Civil Execution of the People's Court, the bank mortgage loan compensated by Lvdong Company can be dealt with according to the rule of" priority payment of residual price from the real estate change price involved in the case, it does not prejudice the reasonable expectation of other creditors to claim rights and interests in the disposal price of the property involved in the case, and also avoids the developer from affecting the stability of the transaction by exercising the right to terminate the contract, so as to maximize the balanced protection of the interests of all parties ".

According to the Supreme People's Court on the application <中华人民共和国民事诉讼法> Article 506 of the Interpretation (hereinafter referred to as the Interpretation of Civil Litigation), creditors who have priority and security interests in the property seized, seized or frozen by the people's court may directly apply for participation in the distribution and claim the right of priority compensation. Based on this, the developer can directly apply to the enforcement court to participate in the distribution of the price of the property involved in the auction sale case, and claim priority compensation.

However, based on the above statistics, since in judicial practice, some courts have held that the developer cannot directly obtain the security right equivalent to the bank after compensation, the priority must be confirmed by the effective judgment of the court before applying to participate in the distribution. If this is the case, how should it be advocated?

If the enforcement court does not recognize the security right that can be directly equivalent to the bank after the developer's compensation, the developer can, before the end of the enforcement, on the premise that the house involved in the case has not been registered and the developer still retains the ownership of the house involved in the case, submit a written objection to the enforcement court on the subject matter of enforcement in accordance with the provisions of Article 234 of the Civil procedure Law.

If the people's court finds that the objection is established after examination, the execution will be suspended. At this point, the developer may confirm the rights in the enforcement license lawsuit filed by the creditor.

If the people's court, after examination, rules that the objection is not established, the developer may, within 15 days from the date of service of the ruling, file a lawsuit against the people's court and directly claim the right of priority compensation.

Of course, if the execution procedure has not yet entered, the developer should promptly file a right of recovery lawsuit, in the lawsuit to claim the right of recovery and priority compensation to confirm.