China Real Property Law Guide — Buying, Leasing & Development
Real estate in China is built on land-use rights rather than private freehold land ownership in the common-law sense. Foreign buyers, tenants, and developers must navigate title, use restrictions, foreign-exchange, and local purchase eligibility rules.
1. Land use rights and title
State-owned land is granted or allocated for terms that vary by use (e.g., residential, industrial, commercial). Buildings and land-use rights are registered; always verify registration records, encumbrances, and whether the seller can lawfully transfer to a foreign individual or entity.
2. Foreign individual purchases
Many cities restrict foreign individual home purchases (work/study duration, one-home policies, local variations). Using nominees is legally and practically risky. Corporate purchase through a WFOE may fit commercial needs but brings tax and substance requirements.
3. Commercial leasing
Leases should address term, rent adjustments, deposit, fit-out, reinstatement, subletting, early termination, and registration where required. Shopping mall and office leases often include sales-based rent and exclusive-use clauses. Ensure the lessor has authority and the premises use matches business scope/licensing.
4. Development and construction
Development projects involve land grant contracts, planning permits, construction permits, completion acceptance, and pre-sale rules for residential. Contractor disputes (delay, quality, payment) are common—link dispute clauses to asset location.
5. Mortgages and finance
Bank mortgages require clean title and valuation. Enforceability and priority depend on registration. Cross-border financing may add SAFE and security registration layers.
6. Disputes
Typical fights: deposit forfeiture, hidden defects, delayed delivery, co-ownership breakup, and landlord lockouts. Preserve sale contracts, WeChat negotiations, payment proofs, and inspection reports.
7. Checklist
- Pull official registration and seller identity verification.
- Confirm foreign eligibility before paying large deposits.
- Use escrow/custody arrangements where available.
- Align lease use with licenses (F&B, medical, education, etc.).
- Model tax (deed, VAT, IIT/CIT) before signing.
