According to Article 15 of the Regulations on Property Seizure, Attachment, and Freezing by People's Courts in Civil Enforcement (Judicial Interpretation No. 21 [2020]) issued by the Supreme People's Court, a court may seize, attach, or freeze property that has been subject to a pending registration, under certain circumstances. Specifically, if the judgment debtor sells a property to a third party who has paid part or all of the purchase price and taken actual possession of the property, but the property title transfer has not yet been registered, the court may take enforcement measures such as seizure, attachment, or freezing. However, if the third party has paid the full purchase price and taken actual possession of the property without fault, the court shall not seize, attach, or freeze the property.
By Xueying Chen
(I)Can the Court Seize, Attach, or Freeze Property with a Pending Registration?
According to Article 15 of the Regulations on Property Seizure, Attachment, and Freezing by People's Courts in Civil Enforcement (Judicial Interpretation No. 21 [2020]) issued by the Supreme People's Court, a court may seize, attach, or freeze property that has been subject to a pending registration, under certain circumstances. Specifically, if the judgment debtor sells a property to a third party who has paid part or all of the purchase price and taken actual possession of the property, but the property title transfer has not yet been registered, the court may take enforcement measures such as seizure, attachment, or freezing. However, if the third party has paid the full purchase price and taken actual possession of the property without fault, the court shall not seize, attach, or freeze the property.
Additionally, according to Article 30 of the Provisions on Handling Cases in Objections and Reconsiderations of Execution (Judicial Interpretation No. 21 [2020]) issued by the Supreme People's Court, in cases involving the enforcement of monetary claims, if a property subject to a pending registration has been seized, the purchaser may file an objection to the disposition of the property. The court should support such an objection. If the property meets the conditions for property rights registration, and the purchaser files a request for exclusion from enforcement, the court should also support the exclusion.
Therefore, even if a property has been subject to a pending registration, a court may still seize or take other enforcement actions, particularly if no valid objection or exclusion from enforcement has been raised or supported. Reference case: (2021) Supreme Court Civil Final 466.
(II)Can the Court Enforce Execution on Property with a Pending Registration?
The key issue regarding whether the court can enforce execution on property with a preliminary registration lies in whether the purchaser has acquired the property for residential purposes.
(1) Purchasers of Commercial Housing for Residential Purposes
According to Article 2 of the Supreme People's Court's Reply on Issues Concerning the Protection of Consumers' Rights in the Purchase of Commercial Housing:
"A consumer purchasing commercial housing for residential purposes and having paid the full price has the right to prioritize the delivery of their property over construction project claims, mortgage rights, and other debts. Consumers who have only paid part of the price, but have paid the remaining amount before the conclusion of the first-instance court hearing, may also apply the above provisions."
It should be noted that for the exclusion of enforcement related to monetary debts, the purchaser must not have other properties available for residential use. According to Article 29 of the Supreme People's Court's Provisions on the Handling of Objections and Reconsideration in Execution Cases: "In the execution of monetary debts, if the purchaser raises an objection to the commercial housing registered under the name of the real estate developer being executed upon, and if the following conditions are met, the People's Court should support the objection:
-A valid written sale contract was signed before the property was sealed by the court;
-The purchased commercial housing is for residential use and the buyer has no other properties available for residential use;
-The amount paid exceeds 50% of the total contract price."
The interpretation of "having no other residential properties" can be understood based on Article 125 of the National Court's Civil and Commercial Trial Work Conference Minutes (hereinafter referred to as the "Nineth Civil Minutes"), which stipulates that the consumer must not have any residential properties within the same administrative district (city or county) as the involved property.
Reference Case: (2023) Supreme Court Civil Final 261
(2) Purchasers of Commercial Housing for Non-Residential Purposes
According to Article 126 of the Nineth Civil Minutes, the above preferential rights aim to protect consumers' living rights in response to irregularities in the pre-sale of commercial housing. Therefore, only those purchasers who meet the conditions of Article 125 of the Nineth Civil Minutes are entitled to such preferential rights. If a purchaser acquires the property for investment, speculation, or non-residential purposes, these preferential rights do not apply.
In cases where the purchaser has not acquired the property for residential purposes, the court may proceed with enforcement on the property with pending registration based on the priority of established mortgage rights or other secured monetary claims. Although the pending registration carries certain property rights effects, it is still considered a claim under civil law rather than a proprietary right and is subordinated to the priority of established security interests and preferential claims.
Reference Cases: (2021) Xiang Min Final 119, (2020) Gan Min Final 109
