Prior to 1st October, 2007 China had no published law on real estate. All the real estate related activities such as buying, selling and lending activities were in practice without much significant legal certainty. Even the new law is quite different from the laws prevailing in other nations.
The constitution of China clearly separates land and buildings/fixtures affixed to it. Land can only be owned by states. Urban land can be owned by Sate, rural land can be owned by cooperatives. Rural land can only be used for farming, residences for farming, agriculture support facilities, schools and hospitals. All residential and commercial activities will be on state owned land. But land cannot be sold; only the ownership to use the land can be transferred for a fee. The right to use the land is for specific period of time: Industrial/commercial property can be used for 50 years; residential property can be used for 70 years and recreational property for 40 years. For residential land the right to use the land extends automatically unlike for commercial/industrial or recreational land request for renewal has to be filed. If such request for renewal is not made then the ownership of land along with fixtures goes back to the state.
The right to own a building is separate from that of the right to use the land. A person can own a building but there is a limitation of time on the right to use the land. Land can be freely sold, bought and gifted but subject to the use of land. Ownership and disposition of the land use right, ownership of buildings and fixtures are entered into the relevant land registry. All information is recorded in a unified real property registry. Thus it eliminates any existence of property deed. One very important aspect of Chinese Property Law is that Leases do not form a part of it, they are treated as contract like any other civil law system. Contract rights are personal to the parties and cannot be freely sold and purchased unlike the property law.
There has been a revolutionary change in the Chinese Property law. As per the new law there is hardly any difference in dealings in land use rights and building property rights. The major reason is to create a market economy which was not possible with contract obligations. The Chinese Property Law is a complicated because of its tripartite division among state, collectives and persons but still the new law has opened paths for real estate investment in China.