城市房地产抵押管理办法（修正） Administration of Urban Real Property Mortgage Procedures (Revised)

　4. The mortgagor is in breach of the relevant provisions of these Procedures and disposes of its mortgaged real property without authorization; or

　　5. Other circumstances as stipulated in the mortgage contract.

　　Article 41　Where one of the circumstances as specified in Article 40 of these Procedures is exhibited, th

e parties to the mortgage may, through consultation, dispose of the mortgaged real property by such lawful means as auction. Where the parties to the mortgage have failed to reach an agreement, the mortgagee may institute proceedings in a people's court.

　　Article 42　Where a mortgagee wishes to dispose of a piece of mortgaged real property, he shall notify the mortgagor in advance in writing. Where the mortgaged real property is jointly owned or is rented, he shall notify the other joint owners or the lessee in writing at the same time. Joint owners or the lessee shall enjoy the same privilege of having priority in buying the real property in accordance with the law.

　　Article 43　Where a piece of real property is mortgaged more than twice, debt repayment shall be made in light of the order of mortgage registration.

　　Article 44　Where mortgaged real property is to be disposed of, new buildings constructed on the land and the mortgaged assets may be disposed of jointly in accordance with the law. The mortgagee shall have no priority of receiving payment from the income obtained from disposal of new constructions.

　　Article 45　When disposing of the leaseholds for mortgaged real property that were obtained by State allocation, inclusive of the buildings constructed thereon, the income obtained shall first be used in payment of the leaseholds assignment fee. Only after the fee is paid up can the mortgagee enjoy the priority of receiving payment.

　　Where laws and regulations have other stipulations, such laws and regulations shall prevail.

　　Article 46　Disposal by the mortgagee of a piece of mortgaged real property shall be terminated under any one of the following circumstances:

　　1. the mortgagee requests termination;

　　2. the mortgagor has demonstrated its willingness to perform its obligation on debt repayment and has shown that it is able to complete payment on time, and the mortgagee has given its consent;

　　3. it is found that ownership title to an auctioned mortgaged structure is in dispute;

　　4. the mortgaged real property is involved in a lawsuit pending adjudication; or

　　5. other circumstances which necessitate termination.

　　Article 47　Income obtained from the disposal of mortgaged real property shall be distributed according to the following order of priority:

　　1. payment for any expenses incurred from the disposal of mortgaged real property;

　　2. deduction of tax arising from the mortgaged real property;

　　3. repayment of debt principal plus interest and any penalty for breach of contract to the mortgagee;

　　4. compensation made by the debtor to the mortgagee for any damages suffered by the mortgagee owing to the breach of contract; and

　　5. the remaining amount shall be returned to the mortgagor.

　　Where income obtained from the disposal of mortgaged real property is insufficient for the payment of debt, or penalty for breach of contract and compensation, the mortgagee has the right to pursue the debtor for the outstanding amount.

　　PART SEVEN　LEGAL LIABILITY

　　Article 48　Where a mortgagor is found to have concealed such circumstances regarding the mortgaged real property, for example, that it is jointly owned, is involved in a property rights dispute, is sealed up, held or under government examination, the mortgagor shall bear any liability thus arising.

　　Article 49　Where a mortgagor sells, leases, exchanges, gives away or uses other methods to dispose of its mortgaged real property without authorization, such acts shall be considered invalid. Where a third party suffers any losses as a result, the mortgagor shall be liable for compensation.

　　Article 50　In the event a dispute arises in respect of the performance of the mortgage contract or the disposal of mortgaged real property by the parties to a mortgage, the parties may settle the dispu

te by consultation. Where consultation fails to resolve the dispute, the parties to the mortgage shall apply for arbitration by an arbitration authority in accordance with a mutually agreed arbitration agreement. Where there is no arbitration agreement, the parties concerned may institute proceedings directly in a people's court.

　　Article 51　Where, owing to the needs of State construction, a piece of mortgaged real property is to be demolished and removed and the mortgagor is found to be in breach of the afore-mentioned Article 38, that is, he has not settled the debts and credits in accordance with the law, nor has he secured a new mortgage in respect of the mortgaged real property, the mortgagee may institute proceedings in a people's court.

　　Article 52　Where it is found that personnel of the registration authorities have perpetrated dereliction of duties, abused their power, taken advantage of their position, have solicited financial gains from others, or have illegally accepted bribes from others in order to advance these people's interests, administrative penalty shall be imposed on such personnel in accordance with the law. Where the act constitutes a criminal offence, criminal responsibility shall be assessed in accordance with the law.

　　PART EIGHT　SUPPLEMENTARY PROVISIONS

　　Article 53　Real property mortgages undertaken within State-owned land outside urban planning zones shall refer to these Procedures for implementation.

　　Article 54　The administrative department of the State Council in charge of construction shall be responsible for the interpretation of these Procedures.

　　Article 55　These Procedures shall be effective as of 1 June 1997

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