Zhongcheng Qingtai | Real Estate Perspective: If the owner has a legal dispute with a third party other than the developer, resulting in the pre-seizure of the commercial house, how should the developer protect his rights?

Introduction

After the developer and the owner have signed the "Commercial Housing Sales Contract" and handled the advance notice registration, if the owner has a legal dispute with a third party other than the developer, resulting in the pre-seizure of the commercial housing by the court, can the developer apply for the lifting of the pre-seizure and exclude enforcement? How should the developer safeguard its legitimate rights and interests?

1. referee case

(I) Supreme People's Court (2018) Supreme Fa Min Shen No. 5670

1. If it is confirmed that the commercial housing sales contract between the developer and the owner is terminated and the judgment of returning the house is made after the house involved is pre-sealed by the court, it cannot oppose the court's enforcement of the house involved.

2. Because the developer failed to prove when it notified the owner to carry out the initial registration of the house, it could not prove whether the registration of the ownership of the house was invalid, so it could not confirm whether the advance notice registration was invalid during the pre-seizure.

(II) Supreme People's Court (2019) Supreme Law Minyou No. 299

1. If the following conditions are met, the people's court shall not restrict the developer from exercising the right to terminate the contract. (1) The effect of the people's court seizure is to prohibit the person being executed from disposing of the property, and the termination of the contract is not the disposition of the property;(2) The contract for the sale of commercial housing and the supplementary agreement stipulate the circumstances of the termination of the contract.

2. If the developer requests to exclude the enforcement application of a third party based on the arbitration award made after the house involved is sealed up, the court shall support its request to exclude enforcement because the arbitration award does not involve the determination of the ownership of the house involved.

(III) Supreme People's Court (2020) Supreme Fa Min Shen No. 2441

If the developer does not know that the house involved in the case has been pre-sealed, according to the agreement of the commercial housing presale contract, if the developer signs the "termination of the contract agreement" with the owner, because the act of signing the "termination of the contract agreement" does not belong to the act of disposing the property, therefore, in the absence of clear provisions in the law, the effect of pre-sealing cannot be as effective as restricting the owner and the developer from exercising the right to rescission of the contract.

After the termination of the commercial housing presale contract, the object of the pre-seizure becomes the purchase price that the developer should refund to the owner.

(IV) Supreme People's Court (2020) Supreme Fa Min Shen No. 4211

Although it is determined in accordance with the law that the judgment on the termination of the commercial housing sales contract is later than the time of pre-seizure, it does not affect the legal effect of the termination of the contract. After the commercial housing sales contract is legally terminated, the basis on which the pre-seizure depends no longer exists, and the pre-seizure measures should be lifted.

Pre-seizure as a property preservation measure, in order to fully protect the interests of the executor, so that the pre-seizure system can play its own function, after the termination of the commercial housing sales contract, the object of its preservation should be transformed into the owner's request for the developer to return the purchase money creditor's rights. The pre-seizure of the house involved was lifted while the court executed the purchase price.

Analysis of 2. Lawyers

Through the above cases, it is not difficult to see that if the owner has a legal dispute with a third party other than the developer, which leads to the pre-seizure of the commercial house by the court, whether the developer can request to lift the pre-seizure and eliminate the problem of enforcement, the Supreme Court's own judgment cases have not formed a unified judgment point of view and judgment thinking. According to the above cases and current regulations, if the owner has a legal dispute with a third party other than the developer that causes the house involved to be pre-sealed, the developer can terminate the commercial housing sales contract with the owner. After the contract is terminated, the advance notice registration will be invalid, and the premise and object of the pre-seal will no longer exist. The developer can apply to the court to lift the pre-seal of the house involved and exclude enforcement. Specific analysis is as follows:

(I) legal provisions

1, can be pre-sealed commercial housing

Article 15 of the Notice of the Supreme People's Court, the Ministry of Land and Resources and the Ministry of Construction on Several Issues Concerning the Regulation of Enforcement by the People's Courts and Assistance in Enforcement by Land, Resources and Real Estate Administrative Departments:

(1) The real estate development enterprise as the person subject to execution has applied for a commercial housing presale license and has not yet sold the house;

(2) The house purchased by the executor has been initially registered by the real estate development enterprise;

(3) The house purchased by the executor has gone through the registration and filing procedures of the commercial housing presale contract or the advance notice registration of the commercial housing.

2. Purpose of pre-sealing

Restrict the disposition of all the property of the person subject to execution.

3, notice registration does not produce the effect of changes in the establishment of property rights.

According to the provisions of Article 221 of the the People's Republic of China Civil Code, advance registration is a pre-registration that is publicized in the real estate register and has a certain effect of property rights and is based on future changes in property rights. The effect of advance registration is to exclude or hinder the acquisition of real property rights in the name of the registered right holder by a third party, so as to ensure the realization of this registration in the future. However, the right holder of the advance notice registration does not, of course, acquire the ownership of the advance notice registered house because of the advance notice registration.

4, commercial housing sales contract to terminate the legal effect of pre-seizure.

The second paragraph of Article 221 of the the People's Republic of China Civil Code stipulates: "After the advance notice 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 notice registration shall be invalid."

Article 5 of the Interpretation (I) of the Supreme People's Court on the Application of the Real Rights Section of the Civil Code of the People's the People's Republic of China of China stipulates: "If the agreement registered in advance for the sale of real property rights is deemed invalid or revoked, or the obligee registered in advance abandons the creditor's rights, it shall be deemed as'creditor's rights' as referred to in the second paragraph of Article 221 of the Civil Code '."

According to the above provisions, after the termination of the commercial housing sales contract, the advance notice registration is invalid. After the advance notice registration is invalid, the basis on which the people's court made the pre-seizure no longer exists, and the purpose of the pre-seizure will not be achieved.

5. Will the time of termination of the contract and the time of pre-seizure affect the legal effect of pre-seizure?

According to the above cases, if the legal document for the termination of the contract does not involve the confirmation of the ownership of the house involved in the case, or although it involves the confirmation of the ownership of the house involved in the case, the right holder of the house involved in the case identified by the judgment is consistent with Article 25 of the Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objection and Reconsideration Cases by the People's Court (hereinafter referred to the Provisions), whether the time of termination of the contract is earlier than the time of pre-seizure does not affect its legal effect on pre-seizure. On the contrary, if the legal document involves the ownership of the house involved in the case, and the identified right holder is inconsistent with the provisions of Article 25, enforcement can be excluded only when the time of termination of the contract is earlier than the time of pre-seizure. (For specific argumentation, please refer to the main part of the Supreme People's Court (2019) Supreme Law Minyou No. 299 Civil Judgment)

(II) how to terminate the commercial housing sales contract can be excluded from enforcement.

1, subjectively, not malicious lifting. (1) The developer rescinds the commercial housing sales contract in accordance with the statutory right of rescission;(2) The developer rescinds the commercial housing sales contract in accordance with the agreed right of rescission;(3) In the case that the right of rescission cannot be determined or agreed, the developer adopts If the owner negotiates to terminate the commercial housing sales contract, the developer is generally required to be unaware of the fact that the house involved is pre-sealed.

2. The time of release. According to the above cases and related provisions, the time of termination of the contract and the time of pre-seizure will not directly affect the legal effect of the termination of the contract on the pre-seizure.

3, the way to lift. According to the above cases, it can be terminated by litigation or by mutual agreement. It should be noted that if the commercial housing sales contract is terminated by litigation, it is suggested not to add "confirm the ownership of the house involved" and other similar expressions in the litigation request, so as to avoid the inconsistency between the housing right holder identified by the effective judgment and the 25th stipulation of the Provisions on Execution Objection and Reconsideration Cases, and thus the effective document requiring the judgment to terminate the contract is made before the pre-sealing, otherwise, the people's court will not support the request to lift the pre-seizure and exclude the enforcement objection.

After the termination of the (III) contract, whether the object of pre-seizure is converted into the owner's claim for the return of the purchase price.

According to the second paragraph of Article 18 of the Provisions of the Supreme People's Court on Seizure, Seizure and Freezing of Property in Civil Execution by People's Courts (hereinafter referred to as "Provisions on Inspection, Seizure and Freezing") amended in 2008, "If a third party terminates the contract according to law, the people's court shall allow the seizure, seizure and freezing measures already taken shall be lifted, but the people's court may, on the application of, the execution of the executed person's claim against the third party as a result of the payment of the price".

Although the "Regulations on Inspection, Deduction and Freezing" amended in 2020 delete the above provisions, it does not mean that the law prohibits the object of pre-seizure from being converted into the owner's claim to require the developer to return the purchase price. The reason for the deletion of the provision is that there are logical problems before and after the provision itself, and the provision has been deleted in order to reduce the opportunity for third parties to be arbitrary and to maintain the seriousness and authority of the judiciary.

According to the Supreme People's Court (2020) Supreme Law Minshen No. 4211 ruling, after the termination of the commercial housing sales contract, on the one hand, the person subject to execution (owner) lost the right to expect the property rights of the pre-sealed house, but on the other hand, it was based on The termination of the contract obtained the creditor's rights to the developer to return the purchase price. As a property preservation measure, in order to fully protect the interests of the executor (a third party other than the owner), the object of preservation should be transformed into the creditor's rights enjoyed by the owner to the developer. Therefore, regardless of whether the executor applies for transformation or not, the object of pre-seizure can be transformed into the creditor's rights of the owner asking the developer to return the purchase money.

(IV) Remind Developers of Precautions

1. It is suggested that the developer should keep the written materials and mail information to notify the owner to check and accept the house, cooperate with the house registration procedures, terminate the contract, etc., so as to avoid the legal consequences of losing the lawsuit due to the inability to provide relevant evidence in the litigation case;

2. In the case of pre-sealing, if the developer terminates the commercial housing sales contract with the owner through litigation, it is only necessary to request the termination of the contract, and there is no need to request the court to confirm the ownership of the commercial housing. Otherwise, the people's court may not support the request to exclude the execution objection because the judgment document confirming the termination of the contract was made after the house involved was pre-sealed.

3. If the owner fails to pay the house purchase price after being urged to terminate the commercial housing sales contract with the owner through litigation, it is recommended that the developer take timely preservation measures to avoid being taken by a third party to take preservation measures first, causing unnecessary trouble.