Movable Property Mortgage Registration Protocol under PRC Civil Code
Registration on the PBOC Zhongdengwang platform within ten days of delivery grants super priority over earlier floating liens under PRC Civil Code Article 416.
Purchase Money Super Priority
Meaning
A special statutory right grants a purchase money lender or supplier priority over earlier registered mortgages on newly acquired assets. This rule of purchase money super priority is established in the civil code to help manufacturing companies obtain financing for equipment upgrades. This provision creates an exception to the first-in-time filing rule.
Legal Status
The secured party who provides the funds for a specific machine receives the first claim on that asset, even if another lender holds a prior floating charge on all the assets of the debtor. To claim purchase money super priority, the supplier must register the transaction on the unified database of the people’s bank of china within ten days after the debtor takes possession of the asset. This registration is a strict condition, and missing the deadline demotes the supplier’s claim.
This rule is modeled on international commercial standards.
Application Condition
Protection applies only to the specific goods financed by the loan or sold under a retention-of-title agreement. The supplier must keep detailed records of the serial numbers to prove which machines correspond to the purchase money transaction. If the inventory is mixed or the machinery is integrated into larger systems, the court can reject the super-priority claim.
This administrative requirement means the creditor must monitor the customer’s factory floor.
Supplier Advantage
Supplier advantages include reduced transaction risk for equipment sellers and encouraged lease financing in the manufacturing sector. It allows buyers to acquire modern machinery even when their existing assets are heavily mortgaged. This mechanism supports industrial modernization.