PROVISIONS ON THE ADMINISTRATION OF THE DEVELOPMENT AND OPERATION OF URBAN REAL ESTATE

(Valid From:1998.07.20)

CHAPTER ONE GENERAL PROVISIONS
CHAPTER TWO REAL ESTATE DEVELOPERS
CHAPTER THREE REAL ESTATE DEVELOPMENT AND CONSTRUCTION
CHAPTER FOUR REAL ESTATE OPERATION
CHAPTER FIVE LEGAL RESPONSIBILITIES
CHAPTER SIX SUPPLEMENTARY PROVISIONS

Article One In order to standardize the real estate development and operation behaviors, strengthen the supervision and administration of urban real estate development and operation activities and promote and safeguard the healthy development of the real estate sector, these articles are hereby formulated in accordance with the Urban Real Estate Administrative Law of the People's Republic of China.

Article Two Real estate development and operation referred to in these articles shall mean the behaviors of real estate developers who carry out infrastructural facilities construction, housing construction and transfer real estate development projects or sell or lease commercial housing on the state-owned land within an urban planning zone.

Article Three Real estate developers and operators shall, in line with the principle of combining economic, social and environmental returns, develop an overall plan, have a rational layout, conduct comprehensive development and construct supporting facilities.

Article Four The competent construction administrative authorities under the State Council shall be responsible for the work of supervising and administering the real estate development and operation activities throughout the country.

The competent real estate development authorities of local people's governments above the county level shall be responsible for the work of supervising and administering the real estate development and operation activities within their respective administrative jurisdiction.

The competent land administration authorities of the people's government above the county level shall be responsible for the work of land administration related to real estate development and operation in conformity with relevant laws and administrative regulations.

CHAPTER TWO REAL ESTATE DEVELOPERS

Article Five To set up a real estate developer, in addition to the need to comply with the conditions for the establishment of an enterprise as stipulated in relevant laws and administrative regulations, the following conditions shall be met:

(1) The registered capital shall exceed RMB 1 million yuan;

(2) There shall be more than four full-time technical personnel with qualification certificates in the real estate major or the construction engineering major and more than two full-time accountants with qualification certificates;

The people's government at the provincial, autonomous and directly administered municipality level may, in line with local realities, formulate provisions that exceed the conditions contained in the above paragraph regarding the registered capital and technical professionals for the establishment of a real estate developer.

Article Six To set up a real estate developer involving foreign investment, in addition to the need to comply with the provisions of Article Five of these rules, it shall also be imperative to go through relevant examination and approval formalities according to the provisions of laws and administrative regulations governing foreign- invested enterprises.

Article Seven To set up a real estate developer, an application for registration shall be filed with the administrative authorities for industry and commerce of the people's government above the county level. The administrative authorities for industry and commerce shall, within 30 days upon receipt of the application, grant registration if the conditions as stipulated in Article Five of these rules are met; reasons for the refusal of registration shall be explained if such conditions are not met.

When the administrative authorities for industry and commerce examine the application for registration for the establishment of a real estate developer, they shall solicit the opinion of the real estate development authorities at the same level.

Article Eight Within 30 days upon obtaining the business license, a real estate developer shall present the following documentation for recordation purposes to the real estate development authorities where the registration authorities are located:

(1) A copy of the business license;

(2) The articles of association of the enterprise;

(3) The certificate of investment verification;

(4) The identity certificate of the legal representative of the enterprise;

(5) The qualification certificates and employment contracts of its technical professionals.

Article Nine The real estate development authorities shall, based upon the assets, technical professionals and development and operation performance of a real estate developer, verify and determine the grade of qualification and quality of a recorded real estate developer. The real estate developer shall, in line with the verified and determined grade of qualification and quality, undertake corresponding real estate development projects. The specific methods shall be formulated by the construction administrative authorities under the State Council.

CHAPTER THREE REAL ESTATE DEVELOPMENT AND CONSTRUCTION

Article Ten In determining a real estate development project, it shall be imperative to comply with the requirements as contained in the overall plan for land use, the annual plan for land for construction and the annual plan for urban planning and real estate development. If, in compliance with the State's relevant provisions, the approval of the planning authorities is required, it shall be imperative to make a submission for the approval of the planning authorities and incorporate the project into the annual fixed assets investment plan.

Article Eleven In determining a real estate development project, it shall be imperative to persist in the principle of combining renovation of existing areas with construction of new areas, attach importance to the development of sections where the infrastructural facilities are weak, traffic is jammed, environmental pollution is serious and dilapidated housing is centered, protect and improve the urban ecological environment, and protect historical and cultural legacy.

Article Twelve The land used for real estate development shall be obtained by transfer, with the exception of cases whereby the provisions of laws and the State Council permit the adoption of the allocation approach.

Prior to the transfer or allocation of the land use right, the urban planning administrative authorities and the real estate development authorities of the local people's government above the county level shall present their written opinions regarding the following items and form one of the basis for the transfer or allocation of the land use right:

(1) The nature, scale and development tenure of the real estate development project;

(2) The designing conditions for urban planning;

(3) The requirements for the construction of infrastructural and public facilities;

(4) Definition of the property right of infrastructural facilities after completion; and

(5) The requirements for relocation compensation and resettlement of the project.

Article Thirteen For a real estate development project, the equity fund system shall be established; the equity fund shall account for no less than 20% of the total project investment.

Article Fourteen Development and construction of a real estate development project shall be accompanied by an overall plan for supporting infrastructural facilities and such a plan shall be implemented based on the principle of the underground portion having priority over the ground portion.

Article Fifteen The real estate developer shall develop and construct a project in compliance with the purpose of land use and the time limit for development startup as agreed upon in the contract on the transfer of the land use right. Failure to start up the project development one full year after the expiry of the time limit agreed upon in the transfer contract may lead to the imposition of a land idling fee amounting to less than 20% of the payment for the transfer of the land use right; if development fails to start two full years after expiry, the land use right may be taken back without compensation, with the exception, however, of the situations in which delays are caused by force majeure, action of the government or relevant government authorities, or early stage work necessary for starting the development process.

Article Sixteen The real estate project, developed and constructed by a real estate developer, shall conform to the provisions of relevant laws and regulations, technical standards for construction engineering quality, safety standards, construction engineering prospecting, designing and execution, and contractual stipulations.

The real estate developer shall be responsible for the quality of a real estate project that it develops and constructs.

Prospecting, designing, executing and supervising agencies shall undertaken corresponding responsibilities on the basis of the provisions of relevant laws and regulations or contractual stipulations.

Article Seventeen A completed real estate development project can be delivered for use only after passing the acceptance test; no delivery for use shall be made without the acceptance test or without having passed the acceptance test.

Upon completion of a real estate development project, the real estate developer shall file an application for the acceptance test with the real estate development authorities of the local people's government above the county level where the project is located. The real estate development authorities shall, within 30 days after receipt of the application for the acceptance test, organize such relevant authorities or agencies as engineering quality supervision, planning, fire prevention and civil air defense to conduct the acceptance test regarding contents involving public safety.

Article Eighteen Upon completion of a cluster real estate development project like a small residential section, a comprehensive acceptance test shall be conducted in line with the provisions of the Article Seventeen of these rules and the following requirements:

(1) The situation regarding the implementation of the urban planning and designing conditions;

(2) The situation regarding the supporting infrastructural and public facilities as required by urban planning;

(3) The situation regarding the acceptance test of the engineering quality of individual engineering projects;

(4) The situation regarding the implementation of the relocation and resettlement; and

(5) The situation regarding property management.

If cluster real estate development projects like a small residential section are developed in phases, the acceptance test may be conducted in phases.

Article Nineteen The real estate developer shall record the main events in the course of construction of a real estate development project in the real estate development project manual and submit it on a regular basis to the real estate development authorities for recordation purposes.

CHAPTER FOUR REAL ESTATE OPERATION

Article Twenty To transfer a real estate development project, the conditions as contained in Articles Thirty-eight and Thirty-nine of the Urban Real Estate Administrative Law of the People's Republic of China shall be met.

Article Twenty-one To transfer a real estate development project, the transferor and the transferee shall, within 30 days after the completion of the formalities for the change in registration of the land use right, present the contract on the transfer of the real estate development project to the real estate authorities for recordation.

Article Twenty-two When a real estate developer transfers a real estate development project, if the relocation compensation and resettlement have not been finished, the rights and obligations in the original relocation compensation and resettlement contract shall accordingly be transferred to the transferee. The project transferor shall notify the relocated person in written form.

Article Twenty-three A real estate developer pre-sells commercial housing shall comply with the following conditions:

(1) It has paid all the fee for the transfer of the land use right and obtained the certificate of the land use right;

(2) It has the construction engineering planning license and the execution license;

(3) Calculated according to the pre-sold commercial housing made available, it has inputted over 25% of the total investment for construction of the project and determined the execution schedule and the date for completion and delivery; and

(4) It has gone through formalities for pre-sale registration and obtained the commercial housing pre-sale permit.

Article Twenty-four When applying for commercial housing pre-sale, a real estate developer shall submit the following documentation:

(1) The certificates as stipulated in Sections (1) through (3) of Article Twenty-three of these rules;

(2) The business license and the certificate of qualification and quality;

(3) The engineering execution contract;

(4) The floor-by-floor plane map of the commercial housing to be presold; and

(5) The program for the pre-sale of commercial housing.

Article Twenty-five The real estate development authorities shall, within 10 days upon receipt of the application for commercial housing pre-sale, make a reply agreeing or disagreeing to the pre-sale. In case of agreement to presale, a commercial housing pre-sale permit shall be issued; and in case of disagreement to pre-sale, reasons shall be explained.

Article Twenty-six The real estate developer shall not make any untruthful advertisement; in the commercial housing pre-sale advertisement, the document number of the commercial housing pre-sale permit.

Article Twenty-seven In the course of commercial housing pre-sales, the real estate developer shall show the commercial housing pre-sale permit.

The real estate developer shall, within 30 days upon the signing of a commercial housing pre-sale contract, go to the real estate development authorities and the land administrative authorities of the people's government above the county level where the commercial housing is located.

Article Twenty-eight For commercial housing sales, both parties shall sign a written contract. The contract shall stipulate the floor space, usable floor area, price, delivery date, quality requirements, property management method and default responsibilities for the commercial housing.

Article Twenty-nine Should the real estate developer entrust an intermediary to act as agent for commercial housing sales, it shall issue an entrustment certificate to the intermediary. When the intermediary sells the commercial housing, it shall show to purchaser of commercial housing the relevant certificates for the commercial housing and the entrustment certificate for the commercial housing sales.

Article Thirty The price for the transfer of the real estate development project and for the sales of commercial housing shall be negotiated through consultation between the parties concerned; however, the price for residential housing entitled to the State's preferential policies shall be the government's guidance price or the government-set price.

Article Thirty-one The real estate developer shall, when the commercial housing is delivered for use, present the purchaser with the residential quality assurance certificate and the residential use instruction book.

The residential quality assurance certificate shall clearly list the quality grade verified by the engineering quality supervisory agency, scope of warranty, period of warranty and the warranty agency. The real estate developer shall undertake the commercial housing warranty responsibilities in line with the provisions contained in the residential quality assurance certificate.

Within the warranty period, if the original use functions are affected and losses are incurred to the purchaser due to the warranty of the commercial housing conducted by the real estate developer, the developer shall undertake compensation responsibilities according to law.

Article Thirty-two After commercial housing is delivered for use, if the purchaser thinks that the quality of the major structure is sub- standard, an application may be filed with the engineering quality supervisory agency for re-verification. If verification proves that the quality of the major structure is indeed sub-standard, the purchaser has the right to ask for refunding; if losses have been incurred to the purchaser, the real estate developer shall under compensation responsibilities according to law.

Article Thirty-three The purchaser of pre-sold commercial housing shall, within 90 days upon delivery for use of the commercial housing, go through the formalities for change in the land use right and the registration of house ownership; the purchaser of spot commercial housing shall, within 90 days upon signing of the sales contract, go through the formalities for change in the land use right and the registration of house ownership. The real estate developer shall assist the purchaser of the commercial housing in going through the formalities for change in the land use right and the registration of house ownership and provide necessary certificates.

CHAPTER FIVE LEGAL RESPONSIBILITIES

Article Thirty-four In case of unauthorized engagement in real estate development and operation in violation of the provisions of these rules and without the business license, the administrative authorities for industry and commerce of the people's government above the county level shall order the termination of real estate development and operation activities, confiscate the illegal gains, and decide at its discretion to impose a fine amounting to less than five times the illegal gains.

Article Thirty-five In case of unauthorized engagement in real estate development and operation in violation of the provisions of these rules and without the certificate of qualification and quality or in excess of the certificate of qualification and quality, the real estate development authorities of the people's government above the county shall order a time limit for corrective measures and impose a fine amounting to between RMB 50,000 yuan and RMB 100,000 yuan; if no corrective measures are taken after the deadline, the administrative authorities for industry and commerce shall revoke its business license.

Article Thirty-six In case of delivery for use of housing which has not gone through the acceptance test in violation of these rules, the real estate development authorities of the people's government above the county shall order a deadline for the developer to go through the formalities for the acceptance test; if such formalities are not gone through after the deadline, the real estate development authorities of the people's government above the county shall organize relevant authorities and agency to conduct the acceptance test and impose a fine amounting to between RMB 100,000 yuan and RMB 300,000 yuan. If the acceptance test is not passed, punitive measures shall be taken according to the stipulations of Article Thirty-seven of these rules.

Article Thirty-seven In case of delivery for use of housing which has not passed the acceptance test in violation of these rules, the real estate development authorities of the people's government above the county shall order repairs within a deadline and impose a fine amounting to less than 2% of the total building cost of the housing delivered for use; if the act is serious in nature, the administrative authorities shall revoke the license; if losses are incurred to the purchaser, compensation responsibilities shall be undertaken; and, if serious casualties, accidents or other serious consequences have been caused and criminal offices committed, the criminal liabilities shall be investigated and dealt with according to law.

Article Thirty-eight In case of unauthorized transfer of a real estate development project in violation of the stipulations of these rules, the land administration authorities of the people's government above the county shall order a termination of the law-breaking activities, confiscate illegal gains and decide at its discretion to impose a fine amounting to less than five times the legal gains.

Article Thirty-nine In case of unauthorized pre-sale of the commercial housing in violation of the stipulations of these rules, the real estate development authorities of the people's government above the county shall order a termination of the law-breaking activities, confiscate illegal gains and decide at its discretion to impose a fine amounting to less than 1% of the already collected pre-payments.

Article Forty When any State authorities employee neglect his duties, play favoritism and commit irregularities and abuse his powers, if criminal offenses are committed, the criminal liabilities shall be investigated and dealt with according to law; if such acts do not constitute criminal offenses, administrative punishments shall be meted out according to law.

CHAPTER SIX SUPPLEMENTARY PROVISIONS

Article Forty-one In terms of real estate development and operation on the state-owned land inside the urban planning zone and in terms of the exercise of supervision and administration of real estate development and operation, these rules shall be used as references.

Article Forty-two The collectively-owned land within the urban planning zone can only be used for real estate development and operation after such land has been appropriated and converted into state-owned land according to law.

Article Forty-three These rules shall go into effect as from the date of promulgation.