Meaning
Statutory priority rules embedded in Section 807 of the PRC Civil Code grant construction contractors a statutory lien over completed building projects to secure unpaid construction costs. Under PRC civil code article 807, a contractor may request the building owner to pay overdue construction expenses upon project completion. If the owner defaults, the contractor can agree with the owner to convert the property into money or petition a People’s Court to auction the construction project.
The statutory right covers actual construction costs, material expenses and labor wages, while excluding indirect losses and contractual penalty charges.
Priority Position
Contractor claims under this statutory provision take priority over mortgage liens created by project developers and general unsecured debts. Judicial interpretations issued by the Supreme People’s Court establish that worker wage claims embedded within the contractor’s lien rank ahead of land mortgages registered by commercial banks. Consumer buyers who paid for residential units in full retain priority over the contractor’s lien to protect home purchasers.
The contractor’s priority right attaches automatically upon project completion without mandatory public registration.
Procedural Limit
Enforcement must occur within eighteen months from the date the construction debt becomes due under underlying contract terms. Expiration of this statutory window converts the contractor’s claim into a general unsecured debt. Private sale agreements require mutual consent between owner and contractor without infringing on third-party rights.
Exclusion Scope
Buildings designated for public utility, social welfare or administrative state functions fall outside the scope of judicial auction remedies. Contractors holding unpaid claims on public infrastructure projects must seek direct monetary judgments rather than property foreclosures.
