Jurisprudential Analysis of the Priority Status of Consumers' Right to Claim for Delivery of Commercial Housing

2023-06-01

Article 2 of the "Reply of the Supreme People's Court on the Protection of the Rights of Commercial Housing Consumers" (hereinafter referred to as the "Reply") establishes the priority status of the right of commercial housing consumers to request housing delivery (hereinafter referred to as the "priority status"), that is, it has priority over the priority right to receive construction project prices, mortgage rights, and other creditor's rights, and becomes a "super priority" in the real estate field. In the current development situation of the real estate industry, the "Approval" provides strong institutional guarantees and judicial guidance for the practical needs of "ensuring the delivery of buildings and stabilizing people's livelihoods" by clarifying its priority status, which is of great practical significance. At the same time, it is not a temporary response to the problem of "treating headaches and feet with pain", but a stable and long-term institutional norm that is not only consistent with the underlying logic of real estate transactions in China, but also consistent with the internal principles of relevant norms such as the Civil Code, with a solid and rich legal connotation. Firstly, priority status reflects the legal principle of "the fundamental creator of the value of things, who deserves the legal guarantee of the highest status". In real transactions, it is common for businesses to enhance the economic value of others' property by investing in human and financial resources, and construction project contracting is very typical. The contractor generates buildings through construction, thereby enhancing the real estate value of the employer. Correspondingly, the contractor has the right to request the project price from the employer, but it is a creditor's right. Once the employer goes bankrupt or the construction project is mortgaged, the creditor's right will not be guaranteed. Faced with such a large business risk, if the law cannot provide strong protection to protect contractors from worries, no one will be willing to engage in such business, and the real estate industry cannot develop, which is not conducive to the increase of overall social wealth. In order to meet practical needs, the priority right to compensation for construction project prices under Article 807 of the Civil Code has emerged. The contractor has a legal guarantee for the project price due to construction, and there is no need to worry about the unexpected risks caused by the bankruptcy of the employer. Not only that, in the case of the employer owning the building, it is the contractor's labor, materials, funds, and other inputs that generate the building, increasing the employer's liability and property, making it possible to mortgage the construction project, and also providing a guarantee for the realization of other creditors' rights. In this regard, the contractor is the fundamental creator of the value of the building, and without its investment, other rights such as construction project mortgage rights would be baseless. Correspondingly to the contractor's position, Article 36 of the Interpretation of the Supreme People's Court on the Application of Law in the Trial of Construction Contract Disputes (1) clearly stipulates that the priority right to receive payment for construction project prices is superior to mortgage rights and other creditor's rights. Article 1 of the Approval also restates this, reflecting the legal principle of "the fundamental creator of the value of goods should receive the best legal guarantee". In addition to the priority right to receive compensation for the construction project price, the provisions of Chapter 19 of the Property Code, Chapter 2, Section 3 of the Maritime Code, and Chapter 3, Section 3 of the Civil Aviation Law all reflect the aforementioned legal principles. The same applies to priority status. Commercial housing is based on state-owned construction land use rights (hereinafter referred to as "land rights"), and the purpose of development enterprises obtaining land rights is to develop, build, and sell out as soon as possible in order to obtain expected profits. Fundamentally speaking

Edit:Ying Ying    Responsible editor:Shen Chen

Source:rmfyb.chinacourt.org

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