Real estate perspective: the construction project price priority compensation rules analysis.

In the process of building the socialist rule of law with Chinese characteristics, ensuring the right to survival and maintaining the stability and unity of the rule of law society are the basic requirements for legal practitioners to adhere to the unity of political, social and legal effects. The legal affairs system in the field of construction engineering, especially in the field of real estate construction engineering, is complicated, involving the conflict and protection of the legal rights of real estate developers, construction units, construction workers, actual builders, commercial banks, home buyers and other civil subjects, covering the concept of multi-dimensional rights such as the right to survival and development.

It is of great significance to properly deal with the rights of relevant civil subjects in accordance with the law, clarify and determine the priority protection order of different civil rights, and give different civil subjects reasonable expectations of priority or inferior protection of their own rights from a legal point of view. it is of great significance to ensure the construction progress of real estate construction projects and promote the protection of the legitimate rights and interests of different civil subjects in the field of real estate construction projects and the degree of social trust.

The construction contractor materializes his labor, materials, etc. into the construction of the project in the most direct way in exchange for the remuneration capital needed to protect his right to survival, and his rights based on the construction of the project should be protected in accordance with the law, and the protection should be limited.

Based on the perspective of the priority compensation right of construction project price, this paper focuses on the analysis and summary of the main points of litigation practice on the priority compensation right of construction project price, in order to clarify the concept of rights and litigation practice tendency in the field of construction project and the priority compensation right of construction project price, and to promote the full understanding and effective exercise of the priority compensation right of construction project price by the right holders and relevant legal practitioners.

Civil rights can be divided into legal rights and contractual rights based on the manner in which they are created and established. Based on the perspective of the current effective law, Article 807 of the the People's Republic of China Civil Code (the "Civil Code") is a legal provision on the right to priority compensation for the price of construction works. The right of priority compensation for the price of construction works is established by the Civil Code in the form expressly provided for by law, does not require a special agreement between the parties to the construction contract, does not require registration and publicity, and is a legal right.

Civil rights can be divided into priority rights and ordinary rights on the basis of whether protection is given priority or not. The Civil Code stipulates that the right holder of the construction project price shall give priority to the payment of the project discount or auction price, and gives the effect that the construction project price can be realized in priority over the ordinary right.

Civil contracts can be divided into typical contracts and atypical contracts based on whether the name is uniformly determined. The construction contract is a typical contract under the "Construction Contract" section of the Civil Code. The right to priority compensation for the construction project price occurs in the construction project contract and is a typical contract right.

Civil rights can be divided into sovereign rights and subordinate rights based on the standard of master-subordinate relationship. The existence, determination and expiration of the claim for the construction project price is a prerequisite for the enjoyment and exercise of the right of priority compensation for the construction project price. If the claim for the price of the construction project is extinguished as a result of the completion of the performance, the priority right to be paid for the price of the construction project shall be extinguished. The priority right to be paid for the construction project price belongs to the subordinate right of the main right to claim the claim of the construction project price.

Based on the type of object of rights, civil rights can be divided into claims and property rights. The priority compensation right of the construction project price points to the price of the construction project and the project discount or auction price, which belongs to the property right, but does not belong to the legal mortgage, quality right or lien type of security right.

In summary, the right to priority compensation for the construction price is a non-security interest that does not need to be registered as a statutory right of priority protection in a typical contract.

In the theory of civil law, due to the difference of the nature of the right, the legal protection effect of real right and creditor's right is different, and the real right takes precedence over the creditor's right. However, based on the consideration of public interest and other factors, there is a situation where claims take precedence over property rights.

The first paragraph of Article 7 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Commercial Housing Sales Contracts" (referred to as the "Judicial Interpretation of Commercial Housing Sales Disputes") (Fa Shi [2003] No. 7) implemented on June 1, 2003 It is the priority of demolition and resettlement of the demolished person, also known as the source of legal basis for the priority of special claims of the demolished person.

The Judicial Interpretation of Commercial Housing Sale Disputes (Fa Shi [2020] No. 17) implemented on January 1, 2021 deleted the above provisions. Based on the principle that the law is not retroactive, the priority of the demolition and resettlement of the demolished person that has effectively existed before the implementation of the new judicial interpretation should not be denied, and its effectiveness should continue to be protected by law.

The right to compensation for demolition and resettlement enjoyed by the demolished person in accordance with the law is the transformation of the property rights of the demolished. The demolition compensation and resettlement agreement is a reciprocal contract, which essentially means that the demolisher exchanges a specific house for the demolished house of the demolished person, and the house is exchanged for the house to guarantee the basic living and living needs of the demolished person. A clear agreement on the specific location and use of the compensation and resettlement house is a prerequisite for the establishment of the priority of demolition and resettlement. The priority of demolition and resettlement takes precedence over the rights of consumers of commercial housing and the priority of compensation for the price of construction projects.

Article 29 of the Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Execution Objection and Reconsideration Cases by the People's Court, Reply of the Supreme People's Court on the Priority of Compensation for Construction Project Prices (hereinafter referred to as "Reply on the Priority of Compensation for Construction Project Prices", abolished on January 1, 2021) (Fa Shi [2002] No. 16), and the Executive Office of the Supreme People's Court on <最高人民法院关于建设工程价款优先受偿权问题的批复> The reply on how to understand the provisions on giving priority to the protection of consumers' rights ([2005] Zhihe Zi No. 16) and the reply of the Supreme People's Court to the request for instructions from the Shandong Provincial Higher People's Court on the dispute over the housing sales contract of Jinan Caishi Villa ((2014) Zhihe Zi No. 23 and 24) are the sources of legal basis for the rights of commercial housing consumers.

The term "rights of commercial housing consumers" comes from the "Minutes of the National Court Civil and Commercial Trial Work Conference" (referred to as the "Minutes of the Nine People's Conference") "126. [The relationship between the rights of commercial housing consumers and mortgage rights]", also known as consumer-type The priority of home buyers.

According to the above provisions, buyers who have signed a purchase contract, used for the sole residential use, and have paid more than half of the contract price, their right to claim the delivery of the house, the right to return the purchase price in the case of the house has not been completed, etc., is protected by law, and takes precedence over the contractor's right to receive priority compensation for the construction project price.

In accordance with the provisions of the fourth subdivision of the Civil Code, "Security interests" and the principle of property law, security interests include only mortgages, pledges and liens. The right of priority compensation of the construction project price has the value of security for the realization of the claim of the construction project price, but it does not belong to the category of security right, which can be referred to, but the provisions of the civil code security right can not be generalized. For example, the establishment of the right of priority compensation for the construction project price is not conditional on the delivery, lien or registration of the right of priority compensation for the construction project price.

According to the provisions of Article 36 of the Interpretation (I) of the Supreme People's Court on the Application of Law in the Trial of Disputes over Construction Contracts (hereinafter referred to as "Judicial Interpretation I of Construction Disputes") (Fa Shi [2020] No. 25), the priority of compensation for the construction project price takes precedence over the mortgage. If there is not only the contractor's right of priority compensation for the construction price of the same construction project, but also the mortgage right of the construction project of the commercial bank, the priority compensation right of the construction project price takes precedence over the mortgage right.

The first paragraph of Article 113 of the the People's Republic of China Enterprise Bankruptcy Law (the "Bankruptcy Law") is the main source of legal basis for employee claims.

In the field of bankruptcy reorganization of market entities, employee claims include the wages and medical, disability subsidies, and pension expenses owed by the bankrupt, and the basic pension insurance and basic medical insurance expenses that should be transferred to the employee's personal account, as well as laws, The compensation that administrative regulations stipulate that it should be paid to employees also includes the pre-acceptance of employee fund-raising and the third-party advance of non-wage protection funds after acceptance. After acceptance, the third party of the wage protection fund advances the employee's claim, which is the subordinate employee's claim, and after the employee's claim is settled according to the property distribution plan, it takes precedence over the ordinary claim.

Correspondingly, non-employee fund-raising before acceptance and third-party advances to employees before acceptance are ordinary claims. Post-acceptance of employee fund-raising and post-acceptance of non-employee fund-raising are common debts.

According to the Supreme People's Court's Application. <中华人民共和国企业破产法> Article 3, paragraph 2, of the (II) on Certain Issues provides that security interests take precedence over employee claims and employee claims take precedence over ordinary claims.

Articles 45 and 46 of the the People's Republic of China Law on the Administration of Tax Collection and Article 113, paragraph 1, paragraph 2, of the Bankruptcy Law are the source of the legal basis for tax priority.

Because taxes take precedence over unsecured claims, I .e. ordinary claims, tax claims have the legal effect of taking precedence over ordinary claims to be paid off, so they are called tax priority.

In general, mortgages, pledges, and liens take precedence over tax priority, I .e., security interests take precedence over tax priority. Based on the information disclosure measures such as the taxpayer's tax arrears announcement system, the taxpayer's obligation to explain the tax arrears, and the security interest holder's right to investigate the tax arrears, the security interest holder should be aware of the defects in the rights of the security when accepting the security provided by the debtor, and can properly exclude the good faith of the security interest holder without knowledge. Therefore, if the tax priority occurs before the security right, the tax priority takes precedence over the security right.

In accordance with Article 8 of the the People's Republic of China Enterprise income tax Law and Articles 34 and 35 of the regulations on the implementation of the the People's Republic of China Enterprise income tax Law, enterprises are allowed to deduct wages and salaries, basic social insurance premiums and housing accumulation funds when calculating taxable income. The deduction covers the claims of employees in insolvency proceedings. After deducting the employee's claim, the enterprise calculates the tax payable, forming a tax claim that takes precedence over ordinary claims. Therefore, the employee's claim takes precedence over the tax priority.

According to the provisions of Article 118 of the Civil Code and the principle of equality of creditor's rights, the legal effect of creditor's rights formed by contract, infringement, etc. shall not be divided into advantages and disadvantages due to the order of establishment, and shall be equally protected by law. There is no distinction between the common claims that coexist, and there is no distinction between priority or inferiority, and the various priorities are unified.

(1) Lease

According to the provisions of Article 725 and Paragraph 1 of Article 726 of the Civil Code, Article 14 and Article 15 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Laws in Hearing Cases of Disputes over Urban Housing Lease Contracts (Fa Shi [2020] No. 17), and Article 28 of the Provisions of the Supreme People's Court on Auction and Sale of Property in Civil Execution by People's Courts (hereinafter referred to as "Provisions on Auction and Sale and Sale"), the lease cannot prevent the realization of the mortgage that has been established before the lease, and the people's court shall remove the lease that has an impact on the realization of the mortgage, and the lessee shall have the right of priority purchase under the same conditions. Because the right of priority compensation for the construction project price takes precedence over the security right, the lease on the construction project cannot prevent the realization of the right of priority compensation for the construction project price.

(2) Preservation

According to the Supreme People's Court's Application. <中华人民共和国民事诉讼法> According to Article 157 of the Interpretation and Article 28 of the Provisions on Auction and Sale of Property, the preservation of property shall not affect the realization of the real right for security, and the proceeds from the auction of property shall give priority to the settlement of the claims of the security interest holder and other priority recipients. Because the priority compensation right of the construction project price takes precedence over the security right, the property preservation measures of the construction project shall not affect the realization of the priority compensation right of the construction project price.

(3) Transfer

With reference to Article 206 of the Civil Code, the Supreme People's Court on the Application <中华人民共和国民法典> Article 43, paragraph 2, of the Interpretation of the Security System (the "Judicial Interpretation of the Security System") stipulates that the mortgaged property may be transferred during the mortgage period, and the mortgage right shall not be affected after the transfer, unless the registration publicity prohibits or restricts the transfer of the mortgaged property.

The priority compensation right of the construction project price has the function of guarantee, and the effect of the transfer of the construction project on the priority compensation right of the construction project price may be determined by reference to the above-mentioned provisions. From the time when the contractor begins to fulfill its construction obligations, materialize the labor of construction workers and the value of engineering equipment and materials into the construction project, and the contractor shall fulfill its obligation to pay the price of the construction project, the construction project shall provide the legal guarantee function for the contractor's claim for the construction project price. The right of priority compensation for the construction project price is a legal right that does not require registration and publicity, and the contractor has the right to transfer the construction project in accordance with the law, and if the construction project is transferred, the right of priority compensation for the construction project price is not affected, and the contractor may claim the right of priority compensation for the construction project price from the transferee in accordance with the law.

According to the provisions of Article 42 of the judicial interpretation of the construction project dispute, the right of priority compensation for the construction project price is the right enjoyed by the construction project contractor in accordance with the law. According to the principle of autonomy, the contractor shall have the right to dispose of his rights according to his own will and decide to waive or restrict the exercise of the right of priority compensation for the price of the construction project.

According to the principle of good faith and credit, the legislative purpose of the priority compensation right of construction project price is to protect the right of survival of construction workers, and the contractor shall be bound by the legislative purpose of the priority compensation right of the construction project price. The contractor shall not waive or restrict the exercise of the right of priority compensation for the construction project price in violation of the purpose of the legislation, for example, by promising to the contractor to waive the right of priority compensation for the construction project price after the completion of the payment of the construction worker's remuneration, which is valid in accordance with the law because it does not harm the interests of the construction worker. The contractor abandons or restricts the exercise of the right of priority compensation for the construction project price against the legislative purpose, such as unilaterally promising to the contractor or maliciously colluding with the contractor to waive the right of priority compensation for the construction project price when the contractor is under pressure from the loan bank when applying for the mortgage loan for the construction project, requiring the contractor to issue a commitment to waive the right of priority compensation for the construction project price, it is invalid according to law because it seriously damages the interests of construction workers.

According to the relevant provisions of the the People's Republic of China Construction Law (referred to as the "Construction Law"), the Civil Code, the "Regulations on the Quality Management of Construction Projects" (referred to as the "Regulations on the Quality of Construction") and the Ministry of Housing and Urban-Rural Development "Measures for the Administration of the Determination, Investigation and Punishment of Illegal Acts in Construction and Contracting" (Construction City Regulation No. [2019] 1), the main body of construction projects has different legal and factual relations, it can be divided into subcontractors, general contractors, subcontractors ("subcontractors"), subcontractors, subcontractors, subcontractors, contractors, and actual constructors.

According to the provisions of Article 807 of the Civil Code and Article 35 of the Judicial Interpretation of Construction Disputes, the contractor who enters into a construction contract with the contractor, that is, the general contractor and the contractor who has a direct contractual relationship with the contractor, is the subject of the right of priority compensation for the construction project.

In accordance with the provisions of Article 793, paragraph 1, of the Civil Code and Articles 38 and 39 of the Judicial Interpretation of Construction Project Disputes, the contractor shall exercise the right of priority compensation for the construction project price on the condition that the quality of the construction project is qualified, not on the condition that the construction contract is valid and the construction project is completed. If the contractor's contracting out the construction of a unit project results in the invalidity of the construction project contract, but the quality of the construction project is qualified, the contractor may exercise the right of priority compensation for the construction project price.

Case:(2019) Supreme Law No. 314

Article 286 of the the People's Republic of China Contract Law stipulates that neither the article nor the relevant judicial interpretations clearly stipulate that the construction contract is valid in order to claim the priority of the project price.

Subcontracting generally includes professional contracting and labor subcontracting. In a subcontract, the other party to the subcontractor's contract is generally the general contractor. In a subcontract, the counterparty to the subcontractor's contract is generally also the general contractor. The other party to the contract of the subcontractor and the sub-contractor is not the contractor, and neither the subcontractor nor the sub-contractor is the "contractor who enters into a construction contract with the contractor" as stipulated in Article 35 of the judicial interpretation of the construction project dispute ". Neither the subcontractor nor the subcontractor is the subject of the right of priority compensation for the price of the construction project.

According to the provisions of the "Answers to Several Questions of the People's Court of the High People's Court of Shandong Province on the Trial of Disputes over Construction Contracts", if the contractor who enjoys the right to claim the price of the construction project in accordance with the law transfers the claim in accordance with the law, the transferee shall obtain the right to claim the price of the construction project against the contractor. The right of priority payment of the construction project price is not exclusive to the contractor itself according to law, and as a subordinate right, it is transferred together with the claim of the main right construction project price. Allowing the transferee to obtain the right of priority compensation for the construction project price together is conducive to promoting the contractor's obligation to pay remuneration to the construction workers at the transfer fee of the claim, and is also in line with the legislative purpose of the right of priority compensation for the construction project price. The transferee of the claim right of the construction project price is the subject of the right of priority compensation of the construction project price.

Case:(2021) Lu 05 Minchu No. 123

The Court considers that Li Yunxiang's right to priority compensation for the construction price should be supported in accordance with the law ...... 2. Yuhong Company and Jinshan Company have a construction contract relationship, Yuhong Company has the right of priority compensation for the construction price of the project, after the transfer of the project claims, the construction project price priority compensation right is also transferred, the transferee Li Yunxiang has the right to claim the project price priority compensation right.

In a construction contract that is invalid due to subcontracting, illegal subcontracting or borrowing of qualifications, the contractor of the enterprise or individual type that actually invests funds, materials and labor in the construction of the project is the actual builder. The other party to the contract of the actual construction person is not the contractor, the actual construction person is not the "contractor who enters into a construction contract with the contractor" as stipulated in Article 35 of the judicial interpretation of the construction project dispute, does not enjoy the right of priority compensation for the construction project price, and is not the subject of the right of priority compensation for the construction project price.

Case:(2020) Supreme Fa Min Shen No. 1872

2. the question of whether Shanxi Installation Company, as the actual builder, enjoys the priority right to compensation for the construction project price ...... Shanxi Installation Company, as the contractor of the illegal subcontract, found that it did not enjoy the priority right to compensation for the construction project price, which was not improper in the application of the law.

However, according to the provisions of Article 44 of the judicial interpretation of the construction project dispute, the actual construction person has the right to file a subrogation lawsuit against the contractor in accordance with the law under the urgent circumstances of the relief of rights, and to exercise the right of claim for the construction project price or the subordinate right related to the claim. The subordinate right shall include all subordinate rights such as the security right related to the claim of the construction project price, the right of priority compensation of the construction project price, etc.

According to the second paragraph of Article 788 of the Civil Code, the second paragraph of Article 2 and Article 3 of the Project Quality Regulations, the types of construction projects include civil engineering, construction engineering, pipeline and equipment installation engineering and decoration engineering. The types of construction project contracts include engineering survey contracts, engineering design contracts, and engineering construction contracts. Each type of construction project generally requires the signing and performance of all types of construction contracts. As a provision for the priority compensation of the construction project price, Article 807 of the Civil Code does not distinguish between the contract type attribute of the contractor, and Article 35 of the judicial interpretation of the construction project dispute distinguishes between the contract type attribute of the contractor and is interpreted as the contractor of the construction contract.

The legislative purpose based on the priority compensation right of construction project price is to protect the rights and interests of construction workers to obtain remuneration, and to protect the value of construction workers' labor and services materialized into construction projects. Surveyors and designers perform engineering survey contracts and engineering design contracts with professional and technical services, and their work is not directly materialized into construction projects, which is inconsistent with the legislative purpose of the priority compensation right of construction project price. Therefore, the surveyor and the designer do not enjoy the right of priority compensation for the construction project price, and are not the subject of the right of priority compensation for the construction project price.

The field of construction engineering involves multiple subjects, in order to balance the rights of all parties, based on the economic analysis of the law, to protect the contractor's construction project price priority compensation rights, should not invest in the cost of the interests of other subjects contrary to economic rationality. The contractor should be restricted or prohibited from claiming the right of priority compensation for the construction price for things that are not related to the performance of the construction obligations of the project.

In accordance with the terms of Article 807 of the Civil Code, which states that "the project will be discounted", "the project will be auctioned in accordance with the law", "the project will be paid at a discount or the price of the auction will be paid first" and Article 35 of the judicial interpretation of construction project disputes, "the price of the project will be paid first at a discount or the price of the auction, the object of the right of priority compensation for the construction project price is" the project "and" the construction project ", and the contractor shall enjoy the right of priority compensation for the construction project price only for the construction project materialized by his labor.

According to the provisions of Article 39 of the judicial interpretation of construction project disputes, the contractor may enjoy the right of priority compensation for the construction project price even if the construction project is not completed.

(1) Right to use construction land

According to the provisions of Article 397 of the Civil Code, the effect of real estate mortgage is combined with the right to use the building and construction land, and the two are mortgaged, disposed of and paid together.

The priority compensation right of construction project price is different from the mortgage right of real estate, and the labor and labor of construction workers are materialized into construction projects, but not into the right to use construction land. The constituent elements of the transfer of the right to use the construction land do not include the labor and labor costs of the construction project. The contractor shall not enjoy the right of priority compensation for the construction project price for the right to use the construction land attached to the construction project.

Case:(2019) Supreme Law Enforcement No. 470

The value and cost of materials invested by the workers in the construction project have not been converted into the land use rights within the scope of the project occupation ...... After the overall auction of the real estate involved, the auction money shall be paid by the construction project priority and the land use right mortgagee respectively.

(2) Attachment of decoration works

According to the provisions of the second paragraph of Article 2 of the project quality regulations, the decoration project belongs to the construction project. According to the provisions of Article 37 of the judicial interpretation of the construction project dispute, the contractor of the decoration project shall have the right to exercise the right of priority compensation for the construction project price in respect of the "decoration project. Houses and steel structures attached to the decoration works do not belong to the category of "the decoration works. The contractor shall not enjoy the right of priority compensation for the price of the construction project in respect of the attachment of the decoration project.

With reference to the provisions of article 390 of the Civil Code, the security right holder may give priority to the payment or deposit of insurance, compensation or compensation arising from the damage, loss or expropriation of the secured property.

The priority compensation right of the construction project price has the function of guarantee, and the impact of the damage, loss or expropriation of the construction project on the priority compensation right of the construction project price may be determined by reference to the above-mentioned provisions. If the construction project is damaged, lost or expropriated, the contractor shall have the right to give priority to the payment or deposit of the insurance money, compensation or compensation obtained by the contractor.

(1) Construction projects for the purpose of national interest and public interest

According to the provisions of the third and sixth paragraphs of the first paragraph of Article 399 of the Civil Code, construction projects for national interests and public interests shall not be mortgaged, mortgages shall not be established, and shall not be auctioned or sold for priority compensation. The contractor shall not auction or sell the construction project for the purpose of national interest and public interest, and shall not enjoy the right of priority compensation for the construction project price.

(2) Illegal construction

Illegal construction refers to the violation of the the People's Republic of China Land Management Law, the the People's Republic of China Urban and Rural Planning Law, and the relevant provisions of the Construction Law, without obtaining a construction land planning permit, a construction project planning permit, and a construction project construction permit. Buildings and structures constructed without authorization.

According to the provisions of the first paragraph of Article 49 of the judicial interpretation of the guarantee system, illegal buildings shall not be mortgaged, no mortgage shall be established, and no auction or sale shall be given priority for compensation. The contractor shall not auction or sell the illegal construction that has priority compensation, and shall not enjoy the right of priority compensation for the construction price.

(3) Construction projects with unqualified quality

In accordance with the provisions of Article 793, paragraph 2, of the Civil Code and Article 38 of the Judicial Interpretation of Construction Project Disputes, the contractor shall exercise the right of priority compensation for the construction project price on the condition that the quality of the construction project is qualified, and if the quality of the construction project is unqualified after repair, the contractor shall not have the right to request a discount to compensate the project price. Based on the principal-subordinate relationship of rights, the contractor shall not enjoy the right of priority compensation for the construction project price as the right of claim for the construction project price.

According to the provisions of Article 40 of the judicial interpretation of the construction project dispute, the scope of the right of priority compensation for the construction project price is limited to the scope of the statutory construction project price, and does not include interest, liquidated damages, damages, etc. arising from the breach of contract to pay the project price.

According to the provisions of the second paragraph of Article 5 of the Interim Provisions on the Management of Construction Contract and Contract Price (Jianbiao [1999] No. 1) and the first paragraph of Article 1 of the Construction and Installation Project Cost Item Composition (Jianbiao [2013] No. 44), the labor cost, material cost, construction equipment use fee, enterprise management fee, profit, fees and taxes in the construction project price belong to the scope of the priority compensation right of the construction project price.

The scope of the right to priority compensation for the construction project price, including costs, profits and taxes, supports the contractor's expenditure costs and expected profits, can protect the legitimate rights and interests of construction workers, and should not be expanded.

The interest, liquidated damages and damages arising from the breach of contract by the contractor are claims that can be calculated on a sustainable basis and have no direct legal relationship with the rights and interests of construction workers. The inclusion of interest, liquidated damages and damages in the scope of the right to priority compensation for the construction project price is inconsistent with the legislative purpose of the right to priority compensation for the construction project price, and is not conducive to balancing the protection of the rights of other subjects related to the construction project.

If the contractor and the contractor agree to expand the scope of the right to priority compensation of the construction project price by agreement, and include interest, liquidated damages, damages, and even the various costs of the contractor's realization of the claim, the provisions of the right to priority compensation of the construction project price cannot be applied.

If the actual discount and auction price of the contractor's construction project is lower than the scope of the construction project price of the above-mentioned applicable construction project price priority compensation clause, the scope of the above-mentioned construction project price has not yet received full priority settlement, and there is no remaining space for priority compensation if the scope of the agreement is expanded.

If the actual discount and auction price of the employer's construction project is higher than the scope of the construction project price applicable to the above-mentioned priority compensation clause of the construction project price, the remaining price after the above-mentioned construction project price scope has been paid off in full priority, other priority and ordinary creditor's rights inferior to the claim right of the construction project price shall be paid off in accordance with the law, and the remaining price after full settlement belongs to the owner of the construction project. The contractor has no right to dispose of the remaining price that does not belong to him, and has no right to agree to pay off the contractor's non-legal priority claims with the price that does not belong to him. The contractor's claim for the construction project price, except for the scope of the priority compensation right of the construction project price, belongs to the ordinary claim and does not apply the priority compensation clause.

According to the provisions of Article 807 of the Civil Code, as the contractor of the construction unit of the construction project, it is the subject of the obligation of priority compensation of the construction project price.

According to the provisions of Article 209, paragraph 1, and Article 215 of the Civil Code, the transfer of real estate, the effective transfer contract has the effect of creditor's rights on the transfer act, and the transfer registration has the effect of real rights on the transfer act, distinguishing the legal effect of the claim and the real right.

In accordance with the provisions of the the People's Republic of China Urban Real Estate Management Law, if the contractor transfers the construction project to the transferee by signing a transfer agreement and assisting in the registration of the transfer, the transferee of the construction project acquires the ownership of the construction project, as well as the existing mortgage on the construction project, the priority compensation right of the construction project price and other rights defects. The contractor may claim the right of priority compensation for the price of the construction project from the transferee of the construction project.

According to Article 37 of the Judicial Interpretation of Construction Project Disputes and Article 18 of the Interpretation (II) of the Supreme People's Court on the Application of Law in the Trial of Construction Contract Disputes (hereinafter referred to as "Judicial Interpretation II of Construction Project Disputes", abolished on January 1, 2021) (Fa Shi [2018] No. 20), the contractor of the decoration project claims the priority right to be paid for the construction project price, if the contractor of the decoration project is not the owner of the building, it is not appropriate to determine that there is a discount or auction condition.

According to the provisions of Article 22 of the judicial interpretation of the construction project dispute and Article 41 of the judicial interpretation of the construction project dispute, the period during which the construction project price priority compensation right is exercised is changed from six months to a reasonable period but not more than 18 months. The starting date of the period during which the priority compensation right of the construction project price is exercised is changed from the date of completion to the date on which the project price is payable.

According to Articles 25 and 26 of the the People's Republic of China Guarantee Law (hereinafter referred to as the "Guarantee Law", repealed on January 1, 2021), and the Supreme People's Court on Application <中华人民共和国担保法> Interpretation of Certain Issues (abolished on January 1, 2021) (Fa Shi [2000] No. 44) Article 32 stipulates that if there is no agreement on the guarantee contract established before the implementation of the Civil Code, the guarantee period shall be six months from the date of expiration of the main debt performance period, and if the agreement is not clear, the guarantee period shall be two years from the date of expiration of the main debt performance period.

According to the provisions of Article 692 of the Civil Code and Article 32 of the judicial interpretation of the guarantee system, if there is no agreement or the agreement is not clear, the guarantee period shall be six months from the date of expiration of the main debt performance period.

The Civil Code will stipulate an unclear guarantee period, which will be amended by two years from the date of expiration of the principal debt and six months from the date of expiration of the principal debt. To amend the provisions of the change, it is necessary to choose to apply the provisions of the new law or the provisions of the old law to determine the validity of the rights that were established before the implementation of the new law and have not been lost under the old law after the implementation of the new law.

According to the Supreme People's Court's Application. <中华人民共和国民法典> According to the provisions of Article 27 of the Certain Provisions on the Effectiveness of Time, if an unclear period of guarantee has been established before the implementation of the Civil Code and the period of guarantee is less than two years after the implementation of the Civil Code, the provisions of the Guarantee Law on the unclear period of guarantee shall apply for two years from the date of expiration of the period of performance of the main debt. That is, according to the principle of non-retroactivity of the law, the period of guarantee of the property of the civil code for the period of exclusion does not produce retroactivity, and the effect does not go back to the legal effect that occurred under the guarantee law before the implementation of the civil code.

Based on the guarantee attribute of the right of priority compensation of the construction project price, the period of exercise of the right of priority compensation of the construction project price shall be applied with reference to the guarantee period, and there shall be no suspension, interruption or recalculation in accordance with the law, and the rule of three years under the new law shall not be applied to the uniform application of the statute of limitations.

The period of exercise of the priority right to compensation for the price of construction works that has been calculated before the implementation of the Civil Code shall not be recalculated as a result of the implementation of the Civil Code. If the period has been more than six months before the implementation of the Civil Code, the right to priority compensation for the construction price is not protected and the provisions of the Civil Code on eighteen months do not apply. If the period does not exceed six months after the implementation of the Civil Code, the right to priority compensation for the construction price is protected, but the provisions of the Civil Code on eighteen months do not apply.

Case:(2021) Supreme Fa Min Shen No. 4069

According to the (I) of Interpretation of the Supreme People's Court on the Application of Law in the Trial of Construction Contract Disputes, disputes arising from construction contracts shall be based on the time of occurrence of legal facts as the reference point for the application of the new interpretation. In this case, the project dispute in question occurred before January 1, 2021, so the provisions of the law and judicial interpretation at that time shall be applied, that is, the exercise period of the right of priority compensation for the construction project price shall be six months. The same company's claim that the exercise period of priority compensation should be extended to 18 months in this case cannot be established.

(1) General recognition

If there is a contractual agreement between the contractor and the contractor on the date on which the project price is payable, the date on which the project price is payable shall prevail.

If there is no agreement, according to the provisions of Article 27 of the judicial interpretation of construction project disputes and the date of termination of the contract, the date on which the project price shall be determined.

Case:(2021) Lu 02 Minchu No. 187

In this case, the two parties signed the Settlement Agreement on January 11, 2021, settled the completed project funds, confirmed the amount of the outstanding project funds, but did not determine the payment date. Therefore, the priority compensation claim period should be calculated from the date of prosecution by China Construction Eighth Bureau (February 2, 2021). In this case, China Construction Eighth Bureau Company claims that the priority compensation right does not exceed the 18-month period.

(2) Insolvency proceedings

In accordance with the provisions of Article 46, paragraph 1, of the Bankruptcy Law, when the People's Court decides to accept an application for bankruptcy, the unmatured claim shall be deemed to be due and the period for the settlement of the debt shall expire. In the bankruptcy proceedings, the date on which the people's court decides to accept the bankruptcy application shall be recognized as the date on which the project price is payable.

On the date when the people's court decides to accept the bankruptcy application, the outstanding claims shall be fixed by the bankruptcy law in accordance with the law by means of special law. Claims that have been determined and are due shall be paid off immediately upon the expiration of the period of performance. The procedures such as creditor declaration, administrator review and tabulation, creditors' meeting verification and voting, and people's court decision confirmation after acceptance are the need for the bankruptcy procedure to balance the protection of the rights of creditors, debtors and other multi-party subjects, prohibit individual settlement acts, and do not affect the effectiveness of the debtor's debt performance period, which should be paid off immediately. The right to priority compensation for the construction price, as an entity right, shall be determined on the date of the entity right, I .e. the date on which the people's court decides to accept the bankruptcy application, rather than the date of procedural confirmation.

The administrator shall, according to the overall situation of the creditor's declaration, the amount of the claim confirmed by the people's court ruling, the priority attribute, etc., formulate the debt settlement plan, determine the distribution of property and the time of payment, and fairly protect the creditor and the debtor. If the payment time stipulated in the settlement scheme is the starting date of the priority of the construction project price, then the period of the creditor's supplementary declaration of the priority compensation right of the construction project price is extended, and the legal risk of blocking the progress of the bankruptcy proceedings increases. Creditors' behavior of changing or supplementing the confirmed ordinary creditor's rights as the priority compensation right of the construction project price will seriously damage the established settlement plan, and even there is a risk that the people's court's decision to confirm the creditor's rights will be revoked, which will affect the progress of the entire bankruptcy procedure and even lead to the risk that the new settlement plan cannot be approved by a vote. In order to reduce the impact of the supplementary declaration of priority claims on the bankruptcy proceedings and to ensure the fair payment of the rights of all creditors, the reasonable period of priority compensation of the construction project price should be applied according to the actual trial of the specific bankruptcy case, and should not be applied for 18 months.

Case:(2020) Supreme Fa Min Shen No. 2593

The (II) for Judicial Interpretation of Construction Projects on the priority right to receive compensation for construction project prices is a general provision on the exercise of the priority right to receive compensation for construction project prices, while the the People's Republic of China Enterprise Bankruptcy Law on "unexpired claims shall be deemed to be due when the bankruptcy application is accepted" is a specific provision on the maturity of claims, and there is no conflict between the two. According to the above-mentioned provisions, when the bankruptcy application is accepted, Shunda's engineering claims to Chinachem are deemed to be due, and it has the right to claim the priority of payment of the project price in accordance with the law.

Case:(2021) Supreme Fa Min Shen No. 330

The core issue of this case is how to determine the "date on which the price of the construction project should be paid" ...... The administrator of Lunan Fertilizer Plant, as the insolvency administrator, investigates the debtor's property, makes a report on the status of the debtor's property, and manages and disposes of the debtor's property as its statutory duties. The manager of Lunan Chemical Fertilizer Plant audited and confirmed the amount of creditor's rights of the creditor Liujian Company, which is an act of performing management duties in accordance with the law. The time for confirming the amount of the creditor's rights of the project price cannot be used as the ''Supreme People's Court on the Application of Laws in the Trial of Construction Contract Disputes The starting date for the payment of the construction project price as stipulated in Article 22 of the Interpretation (II).

According to the provisions of Article 18 of the Bankruptcy Law, if the contractor and the contractor have not completed the construction project contract in the bankruptcy proceedings of the construction unit, the date on which the administrator terminates the contract or is deemed to terminate the contract shall be the date on which the project price is payable.

Case:(2020) Lu Min No. 356

Because there is no evidence in this case to prove that the bankruptcy administrator notified Nanhai Company to continue to perform the contract after the court accepted the bankruptcy application, according to the provisions of Article 18 of the the People's Republic of China Enterprise Bankruptcy Law, it should be deemed that the contract involved in the case was accepted by the court on July 20, 2018. The bankruptcy application was actually terminated two months later. If the construction project contract is terminated, the contractor shall have the right of priority compensation for the price of the construction project, and the period of time for the contractor to exercise the priority shall be calculated from the date of the termination of the construction project contract.

(3) Commercial bills

According to the spirit of the minutes of the nine people's meeting, if the employer pays the construction project price to the contractor with commercial bills, and clearly stipulates that the act of delivering the commercial bills has the effect of fulfilling the obligation to pay the construction project price, it is generally recognized as the renewal of the debt, the contractor's claim for the construction project price is eliminated, and the right to receive compensation from the right to the construction project price is eliminated. The legal relationship between the contractor and the contractor has changed from a general civil debt relationship to a commercial bill relationship.

If there is no express agreement that the act of delivering a commercial instrument has fulfilled the effect of the obligation to pay the price of the construction project, it is generally recognized as the settlement of the new debt, and the new debt and the old debt coexist. When the contractor cannot obtain the right of commercial bill in the new debt, he has the right to continue to claim the right of claim for the construction project price in the old debt, and the right of priority payment of the construction project price from the right. If the new debt cannot be paid off, and the contractor claims to pay off the old debt, the determination of the date of payment of the construction price in the general civil debt relationship shall apply, and the determination of the due date of the bill of exchange as the date of payment as stipulated in Article 25, paragraph 2, of the the People's Republic of China Bill Law in the commercial bill relationship shall not apply.

(4) Warranty fund

The essence of the warranty is the property credit guarantee issued by the contractor to the contractor on the quality of the project he undertakes, which is represented by the security deposit paid by the contractor to the contractor or the fund supervisor, and the part of the project price withheld by the contractor from the project price payable. The warranty belongs to the property paid by the contractor to the contractor, does not belong to the property paid by the contractor to the contractor, and does not belong to the price of the construction project. The date on which the construction price is payable is not affected by the date of return of the warranty.

(5) Installment payment

If the contractor and the contractor agree to pay the same construction project price in installments, based on the integrity of the construction project price debt, the period of exercise of the right of priority compensation for the construction project price shall be calculated from the date of the last installment of the price payable.

Case:(2021) Lu 0112 Minchu No. 3554

The Court believes that the project price as the "same debt", the advance payment and progress payment belong to the contractor and the contractor agreed to perform in installments, so the project price should be taken as a whole, the date of its payable project should also be in accordance with the last period of performance to confirm.

According to the provisions of Article 807 of the Civil Code, the right of priority compensation for the construction price belongs to the right of formation, and the contractor's exercise of the right of priority compensation for the construction price does not require the consent of the contractor, and shall have legal effect once the meaning of the exercise is made to the contractor. In addition to the legal provisions of the agreement discount, judicial auction of the exercise of the way, the contractor can also send a letter, arbitration, to the administrator to declare priority claims and other ways to exercise.

Case:(2020) Supreme Famin No. 352

The contractor's right of priority compensation for the construction project price is a legal right. The forms of the contractor's exercise of the right of priority compensation include but are not limited to notification, negotiation, litigation, arbitration, etc. If the contractor claims the right of priority compensation for the construction project price in the above-mentioned form during the exclusion period, it shall be determined that its claim does not exceed the legal time limit for the exercise of the right of priority compensation.

If the construction project of the contractor has entered the execution procedure of auction and sale, the contractor shall have the right to claim the priority of the auction and sale price directly in the execution procedure on the basis of the priority of the right of priority compensation of the construction project price, without the need to raise an execution objection.

Case:(2019) Supreme Fa Min Shen No. 5070

According to the second paragraph of Article 508 of the Interpretation of the Supreme People's Court on Application, "Creditors who have priority and security rights over the property sealed up, seized or frozen by the people's court may directly apply to participate in the distribution and claim the priority right of compensation", the priority right of compensation for the construction project price does not have to be confirmed through litigation procedures to be established, and the priority right of compensation can directly claim to the court enforcement department.

From the perspective of legal theory and practical cases, a comprehensive analysis of the rules of the priority compensation right of the construction project price is conducive to the analysis of specific cases, fully understand the legislative purpose of the priority compensation right of the construction project price, carefully judge the degree of realization of the priority compensation right of the construction project price, and also help to better improve the rules of the priority compensation right of the construction project price in the revision of the law to keep pace with the times. We should strictly determine the subject of the right of priority compensation of the construction project price in accordance with the law, define the scope of rights, compare the priority of compensation, and fairly protect the rights of all parties related to the construction project.