Viewpoint... Exploring the effectiveness of mortgage advance registration in the case of bankruptcy.

In the Supreme People's Court on the application.<中华人民共和国民法典>Before the introduction of the Interpretation of the Guarantee System (hereinafter referred to as the Interpretation of the Guarantee System of the Civil Code), China's legal system on the advance registration of mortgage rights did not clearly stipulate whether the advance registration of mortgage rights has the effect of property rights in the full sense-that is, the effect of priority compensation. However, in recent years, with the changes in my country's economic situation and the market of real estate companies, whether it is a mortgagor or a real estate development company, the risk of bankruptcy due to a break in the capital chain has increased significantly. In the case of bankruptcy, the protection of the legitimate rights and interests of banks and other financial institutions under the mortgage of presale commercial housing has become one of the hot issues.

The second paragraph of Article 52 of the Interpretation of the Guarantee System of the Civil Code of my country provides corresponding provisions on the priority compensation effect of the advance notice registration of mortgage rights, that is, in the case of bankruptcy, if the mortgage belongs to the bankruptcy property and the mortgage right is established Within one year before bankruptcy, the mortgagee can be paid first within the value of the property when the bankruptcy application is accepted. [] Although the above provisions provide for the priority of payment in the case of bankruptcy, there are still problems in their application in the specific case of bankruptcy. In this paper, the author will make a preset classification of bankruptcy situations, and in different bankruptcy situations for the mortgage advance registration of the application of the effectiveness of a brief analysis, in order to teach colleagues.

Before carrying out the specific discussion in this part, the author thinks that it is necessary to define the meaning of "mortgagor" in the second paragraph of the Interpretation of the Guarantee System of the Civil Code. The author believes that the above-mentioned "mortgagor" should refer to the main body of commercial housing pre-purchase as an enterprise, and the reasons are as follows: First, from the perspective of the interpretation of the text and system, my country's "Urban Real Estate Mortgage Management Measures" and "Implementation Rules of the Interim Regulations on Real Estate Registration" In the laws and regulations that stipulate the advance registration of mortgage rights, the "mortgagor" is defined as the buyer of commercial housing, and from the perspective of the legislative spirit behind the above laws and regulations and the original intention of the legislation, the object of its regulation is also the situation where the buyer establishes a pre-mortgage for a financial institution; secondly, my country's current attitude towards personal bankruptcy is still the pilot work period. The law clearly stipulates that personal bankruptcy is quite outdated, so it can also exclude the aforementioned "mortgagor" from being defined as a natural person. In summary, the author believes that the "mortgagor" stipulated in the second paragraph of Article 52 of the "Interpretation of the Guarantee System of the Civil Code" should be the legal entity that purchases presale commercial housing.

After clarifying the subject of the legal relationship pointed to by the law, the author wants to set up the following situation: the enterprise purchases the presale commercial housing from the real estate developer and applies for a loan from the financial institution, and sets the mortgage advance registration with the financial institution with the presale commercial housing it purchases. After the developer has registered for the first time for the subject commercial housing, the purchase enterprise will go bankrupt. The author thinks that under the above circumstances, the main effect problem involved in the application of Article 52 of the Interpretation of the Guarantee System of the Civil Code is: the first paragraph of Article 52 or the second paragraph of Article 52 should be adopted as the basis of the right of claim for financial institutions to realize the advance registration of mortgage rights-that is, the choice of application under the legal competition.

The first paragraph of Article 52 of the Interpretation of the Guarantee System of the Civil Code stipulates that after the completion of the advance registration of the mortgage right, if the first registration of the commercial house has been completed and there is no invalidation of the mortgage right, the mortgagee shall have the priority of compensation. [] It is not difficult to see from the bankruptcy situation preset by the author that when the mortgagor goes bankrupt and the pre-purchased house has been registered for the first time, the first and second paragraphs of Article 52 of the Interpretation of the Civil Code Guarantee System meet the applicable conditions at the same time (without considering the negative conditions). In such a case, what provisions should be used for the application of the law, in other words, the criteria for the application of the two provisions in this case are the key to the effectiveness of the advance registration of mortgage rights.

In my opinion, under the aforementioned circumstances, it is more appropriate to directly apply the first paragraph of Article 52 of the Interpretation of the Civil Code Guarantee System. The reasons are as follows: from the way in which the two paragraphs respectively give priority to the advance registration of mortgage rights, the first paragraph of Article 52 of the Interpretation of the Guarantee System of the Civil Code directly gives priority to the advance registration of mortgage rights on the premise that the first registration is met. The reason why the Supreme People's Court adopted this method, the author believes that it is because when the pre-purchased commercial housing completes the first registration, it already has the initial conditions for handling the real estate certificate (small real estate certificate). Under this premise, the mortgagee only needs to submit an application for advance registration to the real estate registration authority when the real estate certificate is completed to realize the completion of the mortgage registration. In other words, when the first registration of pre-purchased commercial housing is completed, the factors that hinder the realization of the mortgage registration are only a matter of time. For the real estate development enterprise or the mortgagee's malicious delay in not handling the real estate right certificate, it is essentially an improper prevention of the achievement of the condition. "In practice, there is a view that the relevant legal provisions of conditional civil legal acts should be referred to, and the conditions for the creditor to exercise the priority right of compensation should be regarded as having been achieved according to law due to the malicious obstruction of the obligor". [] Therefore, when the first registration of the pre-purchased commercial housing is completed, there is essentially no obstacle to the conversion of the principal registration of the mortgage right, so it is reasonable and feasible to give priority to the advance registration of the mortgage right under this condition.

The second paragraph of Article 52 of the Interpretation of the Guarantee System of the Civil Code is to give priority to the registration of advance notice of mortgage right by means of "drafting", that is, by drafting the registration of advance notice of mortgage right as the registration of mortgage right, the mortgagee can give the registration of advance notice of mortgage right to realize the priority of payment under mortgage registration under certain conditions. On the basis of legal theory, "mortgage registration is used to prove the subrogation of mortgage compensation, that is, to record the priority of mortgage compensation on the mortgage",[] while mortgage advance registration focuses on "ensuring the smooth realization of the mortgage registration request right, aiming at the priority realization of the mortgage registration request right". [] In other words, although the registration of advance notice of mortgage cannot directly produce the effect of real right as the registration of mortgage right, it has essentially played a certain level of real right protection in the way of ensuring and promoting the realization of mortgage right registration. Therefore, some scholars believe that "the difference between the registration of advance notice of mortgage and the registration of mortgage principal lies in the time limit, that is, whether the time limit for fulfilling the obligation to formally establish mortgage right (this registration) has been reached". [] The "accelerated maturity regime" in insolvency law provides jurisprudential theoretical support for breaking through these differences and achieving a proposed effect. Under the proposed system based on "accelerated maturity system", the advance notice registration of mortgage right is directly given the effect of priority compensation "will not substantially change the original rights and obligations of creditors and debtors, but will realize the balance of interests in the legal relationship by the loss of the interests of one party in the legal relationship". [] For example, the mortgagor will declare bankruptcy when the pre-purchased commercial house is not registered for the first time. In this case, the debt and debt relationship between the mortgagor and the mortgagor is often difficult to be recognized by the administrator as a common interest debt or a bankruptcy right, so if the preparation is not carried out to give the mortgage advance registration priority effect, it is difficult to achieve the principle of fairness pursued by the bankruptcy law at the applicable level.

In summary, the first paragraph of article 52 of the Interpretation of the Civil Code Guarantee System is a special fiction provision that directly gives priority to compensation, while the second paragraph is a special fiction provision with a legal basis. In the circumstances set by the author in this part, if the pre-purchased commercial housing has been registered for the first time and complies with the relevant provisions of the first paragraph of Article 52 of the Interpretation of the Civil Code Guarantee System, the provisions of the first paragraph can be directly applied without the need to go near and far and then apply the provisions of the second paragraph under the special preparation.

In this part, the author wants to set up the following scenario: the mortgagee has already set up advance registration of mortgage right for the loan relationship of presale commercial housing, but when the pre-purchased commercial housing has not been completed or the first registration cannot be made due to the direct loss of any party, the mortgagee will be bankrupt.

Under the above circumstances, because the first registration of the pre-purchased commercial housing cannot be completed, the second paragraph of Article 52 of the Interpretation of the Guarantee System of the Civil Code shall be applied as the basis for the right of claim without further elaboration. However, in this case, there are two issues regarding the effectiveness of the advance notice registration of mortgage: first, whether the priority compensation effect of the proposed mortgage registration extends to the unbuilt part under the premise that the presale commercial housing has not been completed; second, whether the advance notice registration of mortgage under the proposed system has in rem subrogation if the first registration is not possible due to the loss of the presale commercial housing.

As the construction of the presale commercial housing has not yet been completed, the developer is unable to register the real estate for the first time on the presale commercial housing. If the mortgagor enters the bankruptcy proceedings at this time, although the mortgagor may obtain the right of priority compensation in accordance with the second paragraph of Article 52 of the Interpretation of the Civil Code Guarantee System, the scope of its priority compensation right, I .e. whether the priority compensation right is limited to the construction progress at the time of the acceptance of the bankruptcy application, that is, the definition of the "value range" in Article 52, paragraph 2, of the Interpretation of the Civil Code Guarantee System, "The people's court shall support the value range of the mortgaged property when accepting the bankruptcy petition" is still debatable.

The author believes that the priority compensation scope of the obligee of the advance notice registration of mortgage right involves the interests of financial institutions, house purchase enterprises, real estate development enterprises, other creditors of house purchase enterprises and other subjects in the bankruptcy procedure, which can most directly reflect the principle of fair settlement in the bankruptcy law, so it is particularly important to clarify the priority compensation scope of the advance notice registration of mortgage right in the case of bankruptcy. In view of the view, in the presale commercial housing has not been completed, failed to go through the first registration of the mortgagor bankruptcy, then the mortgage notice registration right holder priority compensation should include the scope of the presale commercial housing has not yet been built, the reasons are as follows:

From the perspective of bankruptcy law, the substantive interests of the creditors, the bankrupt enterprise itself and the third party with which it has an interest are the most important elements of bankruptcy practice. From the presale commercial housing buying and selling behavior pattern behind the mortgage advance registration, the purpose of the mortgage advance registration is to provide guarantee for the creditor's and debt relationship arising from the purchase of the complete house that has been built and obtained the title certificate. If the scope of advance notice registration of mortgage right is limited to the part that has been built at the time of bankruptcy acceptance, for financial institutions, the value of collateral must not cover the scope of its creditor's rights and debts, and its legitimate rights and interests will definitely suffer corresponding losses; for developers, due to the presale in the process of commercial housing sales, when the pre-purchaser applies for loans from financial institutions, generally "the real estate development enterprise provides phased guarantee" [], if the value of the collateral cannot cover the scope of the creditor's rights and debts it guarantees, the guarantee liability of the developer enterprise will inevitably increase, and it is difficult to say fairness for the real estate development enterprise. Some scholars believe that if the priority scope of mortgage notice registration is extended to the part of the building that has not yet been built, it will reduce the value of the bankruptcy property and harm the legitimate rights and interests of other bankruptcy creditors. The author believes that whether it is mortgage registration or mortgage advance notice registration, the reason why the security right can produce exclusive priority compensation effect is due to the existence of its registration behavior, that is, the registration behavior gives the security right credibility in the form of publicity, and other legal relationship subjects generate inner conviction that the subject matter is or is not a certain behavior based on the content of publicity, thus forming a corresponding meaning. Thus, in the case of bankruptcy, the legitimate rights and interests of other creditors will not be logically and de facto derogated from by the existence of the act of advance registration of mortgages and the formulation of article 52, paragraph 2, of the Interpretation of the Civil Code Guarantee System.

When the presale commercial housing has not yet been registered for the first time, it is lost, and the mortgagee has been bankrupt, whether the mortgagee can claim priority compensation for the compensation, compensation and other subrogation of the presale commercial housing, the theoretical and practical circles have different views on this. Some scholars have argued that "the registration of advance notice of a mortgage is not a typical security interest and should not have subrogation effect" []. In my opinion, the second paragraph of Article 52 of the Interpretation of the Civil Code Guarantee System adopts the proposed method to give priority to the registration of mortgage notice, and under the circumstances of meeting its provisions, the registration of mortgage notice also enjoys the subrogation of traditional security interests, otherwise it is suspected of breaking through the existing legal provisions.

Article 52, paragraph 2, of the Interpretation of the Guarantee System of the Civil Code provides for the bankruptcy of the mortgagor as a pre-purchaser, but in practice, it seems that the bankruptcy of real estate development enterprises is more common, and this situation is more concerned by people from all walks of life. Because Article 52 of the Interpretation of the Guarantee System of the Civil Code has epoch-making significance in the application of the effect of advance registration of mortgage rights, the heat of argumentation on whether this provision can be applied to the bankruptcy of real estate development enterprises has been high. The author thinks that in some cases of bankruptcy of real estate development enterprises, the interpretation of the guarantee system of the Civil Code is still applicable from the perspective of interpretation.

When the presale commercial housing has been registered for the first time and the real estate development enterprise enters the bankruptcy procedure, the author thinks that the provisions of the first paragraph of Article 52 of the Interpretation of the Guarantee System of the Civil Code should be selectively applied at this time to give the mortgage advance registration right holder the priority of compensation: that is, if the pre-purchaser of the mortgage object meets the provisions of Article 2 of the Reply on the Protection of Consumer Rights of Commercial Housing, he enjoys the priority, the pre-purchaser's mortgage advance registration right holder may directly claim the right of priority compensation to the real estate development enterprise in accordance with the first paragraph of Article 52 of the Interpretation of the Guarantee System of the Civil Code. The reasons are as follows: in the case of bankruptcy of a real estate development enterprise, if the pre-purchaser of commercial housing enjoys the priority of the buyer, he can claim the right of bankruptcy recovery from the real estate development enterprise on the premise that the first registration of the pre-purchased commercial housing is completed. When the pre-purchaser exercises the right of repossession, the mortgagee may, in accordance with the mortgage contract, require the pre-purchaser to register the mortgage for him and give priority to the payment. If the right is exercised in the above-mentioned way, it will not only increase the cost of exercising the right and reduce the efficiency of exercising the right, but also do not conform to the original intention of Article 52 of the interpretation of the guarantee system of the Civil Code to give priority to the right holders of advance registration of mortgage rights. Therefore, the author believes that in this case, the first paragraph of Article 52 of the interpretation of the guarantee system of the Civil Code only stipulates that the priority of real estate development enterprises should be claimed.

In this case, if the exercise criteria described by the author above are met, the provisions of Article 52, paragraph 1, of the Interpretation of the Civil Code Guarantee System can also be directly applied. However, the author thinks that the validity of the mortgage notice registration in this case is: on the renewal of part of the value, the mortgage notice registration and the common interest creditors who will be paid first. The author believes that in this case, priority should be given to the interests of public creditors, that is, the priority right to be paid in the advance notice registration of mortgage right cannot reach the value of the renewal part. The reasons are as follows: if the presale commercial housing has not been completed when the real estate enterprise enters bankruptcy, the manager may decide to introduce investors to renew the project, and the nature of the renewal fund is common interest debt. "In the process of bankruptcy reorganization, the third party invests funds to complete the construction of the building, but at this time, it directly grants the right holder of mortgage advance notice registration to enjoy the priority of compensation for the completed building, which may damage the interests of the third party and is not conducive to the implementation of the bankruptcy reorganization system" []. Therefore, out of the consideration of the value of equity under the bankruptcy law system, at this time, the priority compensation scope of the mortgage notice registration right holder should be limited to the value of the continued construction.

The author believes that under this circumstance, the first and second paragraphs of Article 52 of the Interpretation of the Guarantee System of the Civil Code have no applicable conditions. The reason is: The Interpretation of the Guarantee System of the Civil Code is essentially a mandatory law to give mortgage The advance notice registration of the right has priority in compensation. Such legal provisions must have strict applicable conditions. It is not appropriate to make excessive expansion interpretation when the law is applied, otherwise it will be suspected of destroying the existing real right legal system. Therefore, in this case, the mortgage notice registration right holder can not claim the right of priority compensation, only on the grounds that the purpose of the contract can not be realized to claim the termination of the mortgage contract or at the same time require the real estate development enterprise to assume the stage of guarantee liability, in order to minimize the loss.