Meaning
Statutory provisions in the national code define the registration requirements for mortgages on immovable property. Under prc civil code article 402, a mortgage on land use rights or buildings is only created once it is registered with the relevant authority. This marks a shift from contract-based security to registration-based security for real estate.
The rule ensures that third parties can rely on the public record to identify existing liens.
Property Scope
Assets such as urban land, forest land, and permanent structures fall under the rules of this section. When a party applies prc civil code article 402, they must include all buildings attached to the land in the registration. The law prevents the separate mortgaging of land and the buildings sitting on it.
Registration Mandate
Failure to record the interest means the mortgage does not legally exist in the eyes of the law. While the underlying loan contract remains valid, prc civil code article 402 ensures that the creditor has no priority over other claimants without the official entry. This rule provides certainty to the real estate market by making the public record the final word on encumbrances.
Legal Boundary
The provision stops at immovable assets and does not cover moveable equipment or vehicles.
