A Study on the Conflict Between Homebuyer Priority Rights and Mortgage Rights

Abstract

Under the pre-sale system of commercial housing, homebuyers usually pay the purchase price before delivery and registration, resulting in delayed registration of ownership. When developers default or suffer capital chain disruptions, the houses are prone to seizure and judicial disposal, giving rise to conflicts of priority between consumers, mortgagees, and holders of construction project price priority rights. Through a series of judicial rules, the Supreme People’s Court has established preferential protection for residential homebuyers; however, this has also brought about coordination challenges between the principle of equal treatment of creditors and the publicity of real rights. This article reviews the evolution of relevant judicial rules, analyzes the boundaries and controversies concerning the effectiveness of consumers’ priority rights in excluding compulsory enforcement and claiming transfer of ownership, and proposes review approaches for special circumstances such as debt settlement by housing and secondary purchasers. Furthermore, it suggests strengthening supervision over pre-sale funds, clarifying the legal status and application conditions of consumer priority rights through legislation, and improving the dynamic disposal mechanism of mortgage rights under the framework of transfer with mortgage, so as to strike a balance between basic housing security and transaction safety.