Plaintiff Jiang XX sues Defendants Wu XX, Cheng XX, Shenyang XX Company, Third Party Shenyang XX Real Estate Development Company, and Third Party Xu XX.

A lawsuit challenging enforcement proceedings filed by a third party.

[Keywords] Civil/Subject Matter of the Case/Action for Objection to Enforcement/Confirmation of Property Ownership

【Key Points of the Ruling】

The court held that the property in dispute was a resettlement housing unit located at the resettlement site for Hu XX, and Hu XX had obtained the right to dispose of this property. Subsequently, on March 13, 2012, Hu XX entered into a house purchase agreement with the plaintiff’s husband through a real estate agency, selling the property to Xu XX. On that very day, the full purchase price was paid in full, and the buyer moved in and has been residing there ever since. Moreover, Hu XX signed a house purchase contract with the property developer. Based on the above-mentioned actions, it can be determined that the plaintiff has acquired the disputed property in good faith. Although the plaintiff has not yet completed the transfer registration, this failure was not due to the plaintiff’s delay in handling the transfer. Rather, it was caused by the defendant’s failure to promptly register the property ownership after signing the commercial housing sales contract with the developer and having the contract filed for record. Since the defendant’s delay in registering the property ownership constituted a failure to exercise its rights in a timely manner, the responsibility does not lie with the plaintiff. Therefore, the court ruled that enforcement against this property should be excluded, which meets the legal requirements for excluding enforcement, and thus the court granted the plaintiff’s request.

[Basic Facts of the Case]

Huo XX, a resettler from the property located at No. XX, XX District, paid XXX yuan to the Office of Centralized Financial Management for Administrative and Public Institutions of Shenhe District, Shenyang City, on August 7, 2010, thereby acquiring ownership rights to the property. Subsequently, on March 13, 2012, through a real estate agent, Huo XX signed a sales agreement with the plaintiff’s husband, selling the property to him for XXX yuan. On that same day, the full purchase price was paid in full, and the plaintiff’s husband has been living in the property ever since. Since Huo XX had not entered into a commodity housing sales contract with the developer, the plaintiff’s husband subsequently signed a separate commodity housing sales contract with the developer, stipulating that the price of the commodity housing was XXX yuan. In the case between the plaintiff Wu XX and the defendants Cheng XX and Shenyang XX Company regarding a private loan dispute, the court issued Mediation Document No. XX on September 11, XX, with the mediation result requiring the defendants Cheng XX and Shenyang XX Company to pay the principal amount of RMB XXX yuan together with corresponding interest. After the mediation document became effective, the defendants Cheng XX and Shenyang XX Company failed to fulfill their obligations under the mediation document within the agreed time frame and thus applied for compulsory enforcement. On May 4, XX, the court issued a Notice of Assistance in Enforcement, placing a provisional attachment on XX properties registered under the name of the judgment debtor Cheng XX, including the property involved in this case. The plaintiff filed an objection to the enforcement proceedings, and on October 18, XX, the court issued an Enforcement Ruling dismissing the plaintiff’s objection. Dissatisfied with this ruling, the plaintiff filed a lawsuit with the court. Additionally, on X month X, 2009, Cheng XX signed a commodity housing sales contract with the development company and completed the registration and filing of the commodity housing sales contract for the property located at No. XX.

【Judgment Result】

Judgment Result: 1. No compulsory enforcement may be carried out against the property located at No. XXX.

2. The seizure of the property located at No. XXX;
3. The third party’s “Commodity Housing Sales Contract” No. XX signed with the developer is lawful and valid.
4. Revoke the defendant’s registration of the commodity housing sales contract for Property No. XXX;
5. The court orders the developer company to register the property at No. XX under the plaintiff’s name and to complete the property ownership registration.

【Reasons for the Ruling】

The court holds that, pursuant to Article 28 of the “Provisions of the Supreme People’s Court on Several Issues Concerning Objections and Review Cases in People’s Courts,” in the course of enforcing monetary claims, if an objection is raised against real estate registered under the name of the judgment debtor and such objection meets the following conditions and the rights claimed can be exempted from enforcement, the people’s court shall uphold the objection: (1) a valid written sales contract was signed before the property was sealed by the people’s court; (2) the property had been lawfully occupied prior to the sealing by the people’s court; (3) the full purchase price has been paid, or part of the purchase price has been paid as agreed in the contract, with the remaining balance to be paid according to the court’s requirements for enforcement; (4) the failure to complete the transfer registration was not due to any fault of the buyer himself. In this case, the property in dispute is a resettlement housing unit located in Huo XX’s area, and the plaintiff obtained title to this property. Subsequently, on March 13 of Year XX, the plaintiff’s husband, Xu XX, entered into a house purchase agreement with the plaintiff through a real estate agency, selling the property to the plaintiff’s husband. On that very day, the full purchase price was paid in full, and the plaintiff’s husband took possession of the property and has continued to occupy it ever since. Furthermore, the plaintiff’s husband signed a house purchase contract with the property developer. All these actions demonstrate that the plaintiff acquired the disputed property in good faith. Although the plaintiff has not yet completed the transfer registration, this failure was not attributable to the plaintiff’s delay in handling the transfer. Rather, the defendant entered into a commodity housing sales contract with the developer and filed a record of the contract for the property located in XX. Since the defendant failed to promptly register the property ownership, this constituted a failure to exercise its rights in a timely manner, and thus the responsibility does not lie with the plaintiff. Therefore, in accordance with Article 312 of the Interpretations of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, in cases where a third party files an objection lawsuit against enforcement measures, after trial, the people’s court shall handle the case as follows: (1) If the third party enjoys civil rights over the subject matter of enforcement sufficient to exclude enforcement, the court shall rule that the subject matter of enforcement shall not be enforced; (2) If the third party does not enjoy civil rights sufficient to exclude compulsory enforcement over the subject matter of enforcement, the court shall dismiss the claim. If the third party simultaneously requests confirmation of its rights, the people’s court may render a joint judgment on such request in its ruling.

【Relevant Statutes】

According to Article 28 of the “Provisions of the Supreme People’s Court on Several Issues Concerning Objections and Review Cases in People’s Courts,” in the enforcement of monetary claims, if an objection is raised against real estate registered under the name of the judgment debtor and such objection meets the following conditions and the rights claimed can be exempted from enforcement, the people’s court shall uphold the objection: (1) a legally valid written sales contract entered into prior to the seizure by the people’s court; (2) lawful possession of the property prior to the seizure by the people’s court; (3) full payment of the purchase price has been made, or a portion of the purchase price has been paid as agreed in the contract, with the remaining balance to be paid in accordance with the court’s requirements for enforcement; (4) the failure to complete the transfer registration was not due to reasons attributable to the buyer himself/herself.

Article 312 of the Supreme People's Court’s Interpretations on the Application of the Civil Procedure Law of the People’s Republic of China provides as follows: “With respect to an action for objection to enforcement brought by a non-party, after trial, the people’s court shall handle the case according to the following circumstances: (1) If the non-party enjoys civil rights over the subject matter of enforcement sufficient to preclude enforcement, the court shall rule against enforcing such subject matter; (2) If the non-party does not enjoy civil rights over the subject matter of enforcement sufficient to preclude compulsory enforcement, the court shall dismiss the claim. If the non-party simultaneously brings a claim seeking confirmation of its rights, the people’s court may render a judgment on such claim in conjunction with the ruling.”

[Lawyer’s Perspective]

Although the subject matter of this case amounts to just over three million yuan, for the homebuyer, it involves the fundamental right to secure basic livelihood. When I took on this case as counsel, the third party—the plaintiff’s husband—had already filed an objection, which was dismissed by the executing court, yet he failed to file a lawsuit challenging the execution within the statutory 15-day period. Consequently, both procedurally and substantively, this case presented significant challenges. In this case, the attorney filed a request for enforcement supervision with the procuratorial organ in the jurisdiction of the executing court, challenging both the enforcement actions and the relevant rulings. Additionally, the attorney visited the local housing demolition authority and obtained crucial documentation pertinent to the case.

This case involves the following specific facts and challenges in the application of law:

First, if the party raising an objection to enforcement fails to file a lawsuit challenging the enforcement within fifteen days, how can their rights be effectively remedied in the current legal vacuum?

The lawyer reviewed the relevant legal provisions and judicial interpretations, noting that failure to file a lawsuit within the statutory time limit will result in the loss of any opportunity for redress. The lawyer had hoped that the procuratorate could lodge an appeal against the enforcement ruling; however, this approach proved difficult to implement in practice. Ultimately, after thorough investigation and clarification of the facts, it was determined that at the time the plaintiff and the third party purchased the property, they were still married. Yet, during the period when the third party raised an objection to the enforcement proceedings, the plaintiff and her husband had already registered for divorce for personal reasons. Consequently, the plaintiff holds half of the ownership rights to the property in question. Moreover, when the third party signed the sales contract with the developer, the plaintiff was present, and her signature appears on the payment receipt as confirmation. Based on these clarified facts and the collection of relevant evidence, the plaintiff once again filed an objection to the enforcement proceedings in her own name. The court of first instance, applying the principle of marital joint property, granted the plaintiff the right to object to the enforcement proceedings, thereby establishing the necessary precondition for resolving this case and laying a solid foundation for the plaintiff’s eventual victory.

Second, during the period when the plaintiff’s husband signed the commodity housing sales contract with the developer, the property had already been registered under the name of a microfinance company by the developer through a pledge guarantee. Does this situation constitute a statutory circumstance in which the transfer registration was not completed not due to reasons attributable to the buyer himself?

This fact was a major point of contention between the parties during the court proceedings. Initially, including the presiding judge in the first-instance trial, it was held that the plaintiff’s husband had failed to exercise due diligence when purchasing the property. Specifically, at the time of signing the sales contract, he had not complied with the relevant regulations requiring the developer to register the transaction, nor had he verified the property’s ownership status with the appropriate authorities. Consequently, it was argued that he should bear legal responsibility and could not be considered entirely without fault. To address this issue, my client presented the following arguments to the court: First, we provided evidence showing that the developer had repeatedly promised the plaintiff and her husband that they would promptly complete the registration procedures. This fact was acknowledged by the court, demonstrating that the plaintiff had actively asserted her rights. Second, we obtained evidence documenting the developer’s agreement with a microfinance company regarding the assignment of security interests. The property in question was indeed included within the scope of the loan guarantee; thus, the purported sale was, in reality, a disguised loan guarantee. As such, the earlier sale transaction lacked genuine intent. Third, it would be unfair to impose an excessively high duty of care on the plaintiff in this case. The plaintiff’s purchase and sale contract was genuine and valid, as confirmed by the real estate agent. To support this claim, the plaintiff submitted bank transfer records showing payments totaling over three million yuan. The seller provided the plaintiff with documentation confirming the relocation and the completion of related property procedures. Furthermore, both the plaintiff and the seller jointly visited the relevant relocation authorities to verify the authenticity of these documents. Subsequently, the plaintiff and the seller went together to the property developer, who confirmed the validity of the sale and signed a formal residential property sales contract with the plaintiff and her husband, explicitly promising to handle the registration of the contract. The plaintiff reasonably relied on this promise, which she viewed as a bona fide expression of good faith. Moreover, property registration information is not publicly available and is not something that anyone can freely access. Therefore, it would be unreasonable to hold the plaintiff to an excessively stringent standard of care. Given that the plaintiff and her husband had already fulfilled the ordinary level of care expected of a reasonable person, they deserve protection under the law.

Third, whether the property involved in the case qualifies as a housing unit subject to demolition compensation and resettlement has a significant impact on the outcome of this case. The property in question is described as a resettlement compensation unit in the receipt issued by the resettlement entity; however, the demolition compensation agreement does not clearly specify this point. If the court were to determine that the property is indeed a housing unit designated for demolition compensation and resettlement, pursuant to Article 7 of the Supreme People’s Court’s Interpretation on Several Issues Concerning the Trial of Disputes over Commodity Housing Sales Contracts, the plaintiff would have a priority right to obtain such housing. Nevertheless, since the evidence in this regard is not entirely sufficient, both first- and second-instance judgments failed to recognize this fact.

Ultimately, through the judgments of both first and second instances, the plaintiff’s rights were legally protected, demonstrating the fairness of the law. The client expressed full appreciation for the lawyer’s representation strategy and work.