On Fraud In The Real Estate Transaction And Its Containment

With the rapid development of the real estate industry in China, more and more fraudulent practices in real estate deals have emerged. Different from other common commodity buying and selling, real estate deals are often complicated and are involved in large amount of money. As a result, the sufferers' losses are often more considerable and troublemaking when fraudulent practices happen. Therefore, how to prevent fraudulent practices effectively in real estate deals is very important to safeguard the legal benefits of consumers, to maintain normal economic order and to accelerate the sustainable healthy development of real estate business.The article is going to discuss this issue form the following aspects.In part I , the definition of fraudulent practices is clarified. As no uniform definition has been given in laws in China, there is no unanimous agreement on the definition of frauds in laws theoretical circle .Therefore, it is important to clarify the nature of fraudlent practice both in theory and in practices. Starting from the analysis of the concept of fraudulent practices, after the comparison of different definitions in related laws, the article gives a clear definition of fraudulent practices i.e., fraudulent practice is an act that the actor purposefully puts up a false phenomenon and conceals the truth ,which may lead to others' misunderstanding and being cheated.In part II, analysis is made about antifraud rules in countries adopting either continental legal system or the UK and US legal system. By way of Analyzing and comparing relevant regulations in the General Rules of Civic Law, Contact Law, Firm Law, Security Law, etc, a better understanding about the fraud practice can be achieved.In part III, fraudulent practice in real estate industry is analyzed, which is categorized into two types, i.e., the developers' fraudulent practice and agents' fraudulent practice. By listing different fraudulent practices made by developers and agents, the definition of fraudulent practice has been further clarified in practices. With the rapid development of real estate industry in China, real estate developersand agents have made irreplaceable roles in improving the urban habitants' living condition, promoting stable development of Chinese economy and safeguarding both the buyer and the seller's legal rights. But we still worry about the fact that people's distrust over developers and agents is obvious.Part IV is the main body of this article, in which measures have been discussed to prevent fraudlent practices in real estate deals. Against unfaithful practices in real estate deals, the author advocates the credit rebuilding in real estate industry, which is essential to protect the benefits of both the real estate developing companies and the consumers, and an important basis and effective guarantee of the healthy development of real estate companies. In order to rebuild the credit of real estate industry, laws and regulations on credit of real estate industry must be promulgated, perfected and fulfilled; and a supervision system as well as a real estate credit announcement system must be built by way of exerting the roles of the government and industrial associations and making full use of the media and the public opinions. In order to fight with fraudulent practices in real estate deals, punishing compensation system should be adopted. Before the promulgation of the Consumers' Right Law in 1993, there was no punishing compensation system of any kinds in relevant Chinese laws. After a theoretical discussion of such a system, the author suggests to introduce this system into real estate industry. After an analysis of real estate deals in last decade in those countries, in which deals of properties take effects only after being notarized in accordance with laws, we found that there were rare fraudulent practices, and fewer disputes(even if these happen, only violation of contracts was concerned). Therefore, the author suggests that we introduce this successful experience into China from those countries or regions, i.e., registration of properties must be notarized first, so that we can restrain fraudulent practice in a legal way. Related government departments should strengthen the system building concerning agents of real estate, perfect regulations, break regional monopolization or monopolization in agemt market, and take effective measurements to prevent unfair competition effectively by way of either economic or legal ways. Only thus doing,can sound conditions for development be created for the intermediary market in real estate industry. Property insurance refers to property risk guarantee services provided to the beneficiaries after investigation and confirmation of the right of the properties to be insured carried out by the insurer. The establishment of property insurance can safeguard the legitimate interests of the buyer and seller in real estate deals to the maximum degree.