Interpretation of Several Issues Concerning the Specific Application of the Law in Disputes over the Division of Ownership of Buildings

(Promulgated by the Supreme People's Court on May 14 2009 and effective as of October 1 2009.)

SPC Interpretation [2009] No.7

The Interpretation has been formulated pursuant to laws such as the PRC Property Law while taking into account civil trial practice in order to correctly try disputes over the partitioning of ownership of buildings and protect the lawful rights and interests of parties in accordance with the law.

Article 1 If a party has obtained ownership of a part of a building exclusively owned by it through registration in accordance with the law or has obtained the same in accordance with Section Three of Part Two of the Property Law, it shall be deemed to be the owner as mentioned in Part Six of the Property Law.

If, based on the civil law act of the purchase and sale of commodity premises with the developer, a party has lawfully taken possession of the part of a building exclusively owned by it but has yet to register ownership thereof in accordance with the law, it may be deemed to be the owner as mentioned in Part Six of the Property Law.

Article 2 Within a developed site, premises that satisfy the following conditions, as well as parking spaces, booths and other such specific spaces shall be deemed exclusively-owned parts as mentioned in Part Six of the Property Law:

(1) they are structurally separate and can be clearly distinguished;

(2) they are separate for the purposes of use and can be used to the exclusion of others; and

(3) they are capable of being registered as the object of the ownership of a specific owner.

If, according to planning, a balcony etc. exclusively forms part of specific premises and, pursuant to the plan, the developer, at the time of sale, included the same in the sale and purchase contract for the specific premises, such balcony etc. shall be deemed a constituent part of the exclusively-owned part as mentioned in Part Six of the Property Law.

For the purposes of the first paragraph of this Article, the term “premises” includes entire buildings.

Article 3 In addition to parts owned in common specified in laws and administrative regulations, the following parts within a developed site shall also be deemed parts owned in common as mentioned in Part Six of the Property Law:

(1) a building's foundation, load-bearing structures, exterior walls, roof and other such basic structural parts, corridors, stairwells, lobby and other such parts used in common for access purposes, fire prevention, common lighting and other such ancillary facilities and equipment, refuge floor, equipment floor or equipment room and other such structural parts; and

(2) other parts not exclusively owned by owners, not constituting parts of public utilities and not constituting space or facilities owned by other rights holders.

With respect to land within a developed site, the owners shall jointly enjoy leaseholds of construction land in accordance with the law, other than the zoned land exclusively owned by an owner and occupied by a building and land occupied by urban public roads, green spaces, etc.

Article 4 The use without consideration by an owner as reasonably required in connection with the specific use functions of its exclusively-owned part, such as a residence, business premises, etc., of the roof, the exterior wall face corresponding to its exclusively-owned part and other such co-owned parts shall not be deemed infringement, unless the same violates laws, regulations or the management covenant, or harms the lawful rights and interests of others.

Article 5 If the developer disposes of parking spaces or parking garages to the owners proportional to the allocation ratio by way of sale, inclusion with the premises, or lease, its act shall be deemed to comply with the provision on “satisfying the requirements of the owners on a priority basis” of the first paragraph of Article 74 of the Property Law.

For the purposes of the preceding paragraph, the term “allocation ratio” means the ratio, determined in the plan, of parking spaces or parking garages zoned for the parking of motor vehicles within a developed site to the number of premises units.

Article 6 Parking spaces that occupy roads or other space co-owned by the owners additional to the parking spaces zoned for the parking of motor vehicles within a developed site shall be deemed parking spaces as mentioned in the third paragraph of Article 74 of the Property Law.

Article 7 Changing of the purpose of a co-owned part, use of a co-owned part to engage in business activities, disposal of a co-owned part as well as matters decided on in accordance with the law at owners' general meetings or that are required to be decided on jointly by the owners as determined in accordance with the law in the management covenant, shall be deemed “other material matters relating to co-ownership and the right of joint management” as specified in Item (7) of the first paragraph of Article 76 of the Property Law.

Article 8 The area of an exclusively-owned part and the total area of a building as specified in the second paragraph of Article 76 and Article 80 of the Property Law may be determined by the following methods:

(1) the area of an exclusively-owned part shall be calculated based on the area recorded in the immovable property registry; if registration of rights in rem has not yet been carried out, the area shall provisionally be calculated based on the area actually measured by the surveying institution; if the actual measurement has yet to be taken, the area shall provisionally be calculated based on the area recorded in the premises sale and purchase contract; and

(2) the total area of the building shall be calculated based on the total of the statistics of the preceding item.

Article 9 The number of owners and the total number of owners as specified in the second paragraph of Article 76 of the Property Law may be determined by the following methods:

(1) the number of owners shall be calculated based on the number of exclusively-owned parts, at a ratio of one person per exclusively-owned part; however, the parts not yet sold by the developer, parts sold but not yet delivered as well as exclusively-owned parts numbering one or more owned by one buyer shall be calculated based on one person; and

(2) the total number of persons shall be calculated based on the total of the statistics of the preceding item.

Article 10 If an owner converts a residence into business premises without obtaining the consent of materially interested owners in accordance with Article 77 of the Property Law and the materially interested owners petition for the removal of obstructions, the elimination of hazards, restoration to the original state or compensation for losses, the people's court shall uphold such petition.

If the owner that converted the residence into business premises mounts its defence on the grounds that a majority of materially interested owners consented to its act, the people's court shall reject such defence.

Article 11 In the event that an owner converts a residence into business premises, the other owners in the building shall be deemed “materially interested owners” as mentioned in Article 77 of the Property Law. If an owner in another block within the developed site asserts a material interest, it shall be required to demonstrate that the value of its premises or its quality of life has been or could be adversely affected.

Article 12 If an owner petitions a people's court pursuant to the second paragraph of Article 78 of the Property Law to revoke a decision taken by the owners' general meeting or the owners' committee on the grounds that such decision infringes its lawful rights and interests or the procedure by which such decision was taken ran counter to the law, it shall exercise its right to so petition within one year from the date on which it learnt or ought to have learnt of the decision taken by the owners' general meeting or owners' committee.

Article 13 If an owner petitions for the publication of or review of the following information or data that ought to be disclosed to owners, the people's court shall uphold such petition:

(1) information on the collection and use of the funds for the repair and maintenance of the building and its ancillary facilities;

(2) the management covenant, rules of procedure of the owners' general meeting and decisions and minutes of owners' general meetings or meetings of the owners' committee;

(3) the property service contract and information on the use of and returns on the co-owned parts;

(4) information on the disposal of the parking spaces or parking garages zoned for the parking of motor vehicles within the developed site; and

(5) other information and data that ought to be disclosed to owners.

Article 14 If the developer or another actor occupies or disposes of a part co-owned by the owners, changes its use functions or carries out business activities therein without authorisation and a rights owner petitions for the removal of obstructions, restoration to the original state, confirmation that the disposal was invalid or compensation for losses, the people's court shall uphold such petition.

Where business activities are carried out without authorisation as mentioned in the preceding paragraph and a rights holder petitions for the returns derived therefrom, after the deduction of reasonable costs, to be used to supplement the dedicated repair and maintenance fund or for another purpose jointly decided by the owners, the people's court shall uphold such petition. The actor shall bear the burden of proof in respect of the expenditure and reasonableness of the costs.

Article 15 If an owner or another actor carries out any of the following acts in violation of laws, regulations, relevant mandatory state standards, the management covenant or a decision taken in accordance with the law by the owners' general meeting or owners' committee, the same may be deemed another “act that harms the lawful rights and interests of others” as mentioned in the second paragraph of Article 83 of the Property Law:

(1) damaging the load-bearing structure of the premises, damaging electric, gas or fire prevention facilities or using the same in violation of rules, or placing hazardous or radioactive articles, etc. in the building thereby jeopardising its safety or impeding its normal use;

(2) damaging or changing the form, colour, etc. of the exterior walls of the building in violation of provisions, thereby undermining the appearance of the building;

(3) decorating or renovating premises in violation of provisions; or

(4) expanding, altering, occupying or excavating public passages, roads, space or other co-owned parts in violation of rules.

Article 16 If a dispute over the divison of ownership of a building has a bearing on a property user, such as a lessee, borrower, etc. of an exclusively-owned part, it shall be handled with reference to this Interpretation.

A property user, such as a lessee, borrower, etc. of an exclusively-owned part, enjoys relevant rights and bears relevant obligations in accordance with laws, regulations, the management covenant, the decisions taken in accordance with the law by the owners' general meeting or owners' committee and the provisions agreed with the owner.

Article 17 For the purposes of this Interpretation, the term “developer” includes exclusive sales agents that, after the expiration of the exclusive sale period, sell in their own name to third parties unsold property that they purchased at the sales price specified in the exclusive sales contract.

Article 18 When a people's court tries a dispute involving the holder of rights in rem in a case over the division of ownership of a building, it shall do so on the basis of laws and administrative regulations.

Article 19 The Interpretation shall be effective as of October 1 2009.

The Interpretation shall govern disputes over the division of ownership of buildings arising in connection with acts carried out after the implementation of the Property Law.

The Interpretation shall not apply in cases that were final before the implementation of the Interpretation and in which parties apply for retrial or in which a decision for a retrial is made in accordance with the trial monitoring procedure after the implementation of the Interpretation.