Review Of Construction In Progress Mortgage

Construction in Progress Mortgage(CIP mortgage) is a relatively new kind of mortgage, it has a great incentive in our country’s house market and fund rising. But because of the special aspect of the subject of CIP mortgage, which is in change all the time and the undetermined future outcome, it raises a lot of conflict in both theory and practice, and clarification and united is needed in order to make the system much more efficient. In this article, author clarifies the different laws and regulation related to CIP mortgage, gathers specifications from different local governments, compares many famous cases in this area, building a basic understanding of this system in this progress. On this basis, the author also studies three different security rights which conflicts with CIP mortgage, and comes up with several advices for it.There are three chapters in this article besides introduction.The first chapter focuses on the key elements of CIP mortgage. The first issue is to determine principal and subject of this mortgage. Since CIP mortgage was first invented in house market, regulations in this area are more specific and detailed, even there is a trend in which the principal of this mortgage is seemed to be defined only to bank and house developer. After researching the Property Law, Guaranty Law and related judicial interpretations, the author believes that the special aspects of CIP mortgage is the subject of the mortgage, rather than principal. Since the ownership of real estate and the use right of land are separate, and some scholars have different understanding of mortgage object, and CIP is in construction phase during which ownership has not been acquired, different understandings of the CIP mortgage object concurrently exist, including whether CIP can be the object of mortgage, the scope of CIP collaterals, and the execution object after realization CIP mortgage. Through comparison and discussion of related legal principles, the author identifies the scope of CIP mortgage object. And through illustrating relevant laws and regulations, the author clarifies the substantial and formal elements of CIP mortgage.The second chapter is about the effect of CIP mortgage. As one kind of real property mortgage, CIP mortgage has most factors of normal mortgage, such as the scope of guaranty, the duration period. But it had to be admitted that there are some special factors which only belongs to CIP mortgage. The author concludes rules of this mortgage in its scope and duration through comparing the normal mortgage and CIP mortgage. As to the transfer of the registration when the construction is complete, the author searched how to make the transfer smoothly with changing the rights and duties of principals.The third chapter is about the conflict and resolution between the CIP mortgage and three different guaranty rights, which are mortgage on land-use right, contractor’s payment privilege on construction, and loan bank’s right of mortgage. Through comparing these three different guaranty rights’ nature, characters and their establishment, the author finds out the reason for the conflict, determine the sequence of the repayment, finally, confirms the resolution for the conflicts between CIP mortgage and the three guaranty rights. The author also come up with suggestions for CIP mortgage considering these different situations. The first issue that needed to be solved is to fix the registration system of CIP mortgage. Although the state requires to establish a unified registration system over the country by law, but it still needs time, which makes CIP mortgages maybe registered improperly. The author also advises to set up construction payment deposit in order to guarantee the rights of creditors. In order to fix the conflict between rights of banks and mortgagees, the author advise to clarify the inform duty of developer, both by sale contracts and registration process.