Theory of Property Law

Author: Zhang Yihua / Country: Mainland China
Publisher:
Publishing Date: 2004-01-01
Features:
Section 4: The Effect of Property Rights
The effect of property rights refers to the special legal effects arising from the direct right of control over property that property rights possess. Regarding the effects of property rights, there are three views in the field of civil law:
First, the "two-effect theory," which holds that property rights have priority effects and effects of claims in rem;
Second, the "three-effect theory," which includes priority effects, tracing effects, and effects of claims in rem;
Third, the "four-effect theory," which includes priority effects, tracing effects, effects of claims in rem, and exclusive effects. This book supports the third view.
I. The Priority Effect of Property Rights
The priority effect of property rights is also known as the priority effect of property rights. The priority effect of property rights has long been debated in the field of civil law, with three main views:
One view holds that the priority effect of property rights exists only between property rights and claims, meaning that when both property rights and claims exist on the same property, property rights take precedence over claims. Professor Shi Shangkuan holds this view.
Another view holds that the priority effect of property rights exists only among property rights, meaning that when multiple property rights exist on the same property, which one takes precedence.
The third view holds that the priority effect of property rights involves both a comparison between property rights and claims and a comparison between property rights themselves. The academic community generally supports this view, and this book adopts it.
(1) The Effect of Property Rights Taking Precedence Over Claims
When both property rights and claims exist on the same property, regardless of whether the property rights were established before or after the claims, property rights take precedence over claims. Specifically:
1. When a claim is based on a specific property as its subject of performance, and the same property also has property rights, the property rights take precedence over the claim, regardless of whether the property rights were established before or after the claim. For example, if A sells three houses to B but sells the same three houses to C before fulfilling the payment, and C has already completed the actual performance and registered the transfer of ownership, then C acquires the ownership of the houses, while B can only demand that A bear breach of contract liability. This is because C has a property right in the houses, while B has only a claim, and C's property right takes precedence over B's claim.
2. Claims secured by a security interest take precedence over ordinary claims in the satisfaction of the debtor's specific assets; when the debtor is declared bankrupt, the secured creditor does not need to participate in the bankruptcy proceedings but can directly claim priority satisfaction from the security interest.
3. A (liu zhi quan ren), a (zhi quan ren), and others, when the subject of a claim provided as collateral for a debtor or a third party is subject to forced execution due to another claim, can sue to exclude the execution.
Of course, in modern civil laws of various countries, to protect the interests of some special claimants, the priority of property rights over claims also has exceptions. For example, the "" (mai mao bu po zhu li) principle is a case in point. This means that during the validity of a lease contract, if the lessor transfers the ownership of the leased property, the lease contract remains valid for the new buyer. In other words, the tenant's lease right takes precedence over the buyer's ownership, and the buyer cannot claim to terminate the lease contract and assert its effect. The effect of the first establishment takes precedence over the effect of the later establishment. For example, if A sets up a mortgage right for B using a land use right and then sets up another land use right for C, then B's mortgage right takes precedence over C's land use right. Another example is multiple mortgages on the same property, where the first-established mortgage right takes precedence over the later-established mortgage right in the satisfaction of the value of the mortgaged property.
The principle that the first-established property right takes precedence over the later-established property right generally holds, but there are exceptions:
1. A subordinate right takes precedence over ownership. Although a subordinate right is established after ownership, it has a restrictive effect on ownership, and thus the effect of the subordinate right takes precedence over ownership.
2. Some property rights are legally prescribed to have priority effects, regardless of their establishment time. For example, the Supreme People's Court's "Interpretation of Several Issues Concerning the Application of the Law on Security Interests" (hereinafter referred to as the "Supreme People's Court Interpretation of the Law on Security Interests") Article 79 stipulates: "When a legally registered mortgage right and a pledge right coexist in the same property, the mortgagee has priority of satisfaction over the pledgee. When a mortgage right and a retention right coexist in the same property, the retention right holder has priority of satisfaction over the mortgagee."