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Zhongcheng Qingtai Jinan Institute Wang Yanself, Zhang Xuan lawyer agent of the housing sales contract winning case was selected in the "Chinese Court of the Year 2020 case"

Published:

2021-04-19

Zhongcheng Qingtai Jinan Institute Wang Yan self, Zhang Xuan lawyer represented the housing sales contract victory case. Selected in the Chinese Court of the Year 2020

The National Institute of Judges and the Judicial Case Research Institute of the Supreme People's Court have officially published a series of "2020 Cases of Chinese Courts". The successful case "Housing Sales Contract Signed without the Consent of the Mortgagee" by Wang Yanzi, Director of the Second Financial Department of our Institute, and Zhang Xuan's lawyer "The case of Pan Mouzhi and Chen Mouyan v Zhang Mouqiu Housing Sales Contract" was selected into the series of housing sales contract disputes.Selected Cases Referee Summary
On July 28, 2012, Pan Mouzhi, Chen Mouyan, and Zhang Mouqiu signed a house sales contract on the house involved in the case. Both parties knew and had no dispute that the house had been mortgaged to Qihe Rural Credit Cooperative in 2011. As of the second trial period, the housing involved in the case is still in the state of mortgage advance registration. Pan Mouzhi and Chen Mouyan believed that the house sale contract signed without the consent of the mortgagee was invalid, so they sued the court, requesting the court to confirm that the house sale contract was invalid, and ordered Zhang Mouqiu to return the house. The court of first instance supported the claims of Pan Mouzhi and Chen Mouyan. Lawyer Wang Yanzhi, as the agent of the defendant Zhang Mouqiu in the first instance, filed an appeal with the Dezhou Intermediate People's Court in April 2018. The court of second instance held that the contract for the sale of the house involved in the case was valid. The reasons are as follows: First of all, Article 15 of the the People's Republic of China Property Law clearly distinguishes the difference between the validity of the contract and the validity of the change of real rights, that is, the "House Sale Contract" voluntarily signed by the buyer and the seller for the mortgaged real estate is an expression of the true will of both parties and takes effect immediately. Whether the contract meets the transfer conditions stipulated in the Guarantee Law and the Property Law only affects the validity of the change of real rights rather than the contract. And the contract gives rise to claims and does not cause changes in property rights. Secondly, Article 191 of the the People's Republic of China Property Law stipulates the circumstances under which the mortgagor may dispose of the mortgage, and the legislative purpose of this article is to protect the rights of the mortgagee, not to regulate the validity of the contract for the transfer of the mortgage, which is an administrative provision rather than an effective mandatory provision. Therefore, a contract for the sale of a house without the consent of the mortgagee does not conform to the invalidity of the contract as stipulated in Article 52 of the the People's Republic of China Contract Law. Due to the validity of the housing sales contract involved in the case, the court will not support the request of Zhang Mouqiu to return the house based on the invalidity of the contract. As for whether the housing sales contract involved in the case can continue to be performed, whether the parties to the contract have breached the contract, etc., Pan Mouzhi and Chen Mouyan can claim separately.

Revelation
This case well embodies the principle of the people's court's decision on the validity of the mortgagee's transfer of mortgaged property without the consent of the mortgagee in the case of a dispute over a contract for the sale of real estate. First of all, the court of second instance clearly distinguishes between the effect of the contract and the effect of the change of real right. Secondly, from the perspective of legislative purpose, the court of second instance analyzed the provisions of the property law that "the mortgagor shall not transfer the mortgaged property without the consent of the mortgagee". It is clear that the legislative purpose of the property law is to protect the rights of the mortgagee, rather than to regulate the validity of the mortgage transfer contract, which can not be regarded as invalid. Finally, the court of second instance answered the nature of the above-mentioned provisions of the Property Law, making it clear that the above-mentioned provisions are administrative provisions rather than effective mandatory provisions. The final referee mortgage transfer contract is established.
After the judgment of the case, Article 106 of the newly promulgated Civil Code has made it clear that "during the mortgage period, the mortgagor may transfer the mortgaged property". The case reflects one of the reasons for this major revision of the Civil Code. Studying the case can better understand the development direction of China's civil law system and better grasp the judgment principles of the people's court.