Circular on Issues Concerning Further Strengthening the Supervision and Administration of the Real Estate Market and Improving the Pre-Sale System of Commodity Housing

Jian Fang [2010] No. 53

April 13, 2010

To housing and urban and rural development departments of each province and autonomous region, construction commissions of each municipality directly under the Central Government and construction bureaus of Xinjiang Production and Construction Corps,

For the purposes of implementing requirements put forward in the Circular of the General Office of the State Council on Promoting Steady and Healthy Development of the Real Estate Market (Guo Ban Fa [2010] No. 4), further strengthening supervision and administration of the real estate market, improving pre-sale systems of commodity housing, rectifying and regulating the order in the real estate market and protecting legal rights and interest of housing consumers, relevant issues are hereby notified as follows:
　
Article 1 Further strengthening supervision and administration of the real estate market
1. Strengthening supervision and administration of the pre-sale of commodity housing. For any commodity housing project which has not obtained the pre-sale license, the real estate developer responsible for such project may not carry out any pre-sale, or collect deposit or any advance payment from buyers in forms of subscription, preordination, or queuing for numbers or issuance of VIP cards, or collect in a disguised manner, or participate in any sales exhibitions. For any commodity housing project which has obtained the pre-sale license, the real estate developer shall, within 10 days, publicize all licensed housing and price of each set, and shall sell at the publicly announced price that is strictly in line with the declared one. No real estate developer may sell reserved housing to the outside before the ownership of the housing is initially registered, pre-sell commodity housing by means of returning cost or undertaking rent after sale, or conduct any false transaction.
2. Strictly investigating such illegal practices as hoarding and cornering. More efforts shall be made to investigate such illegal practices as hoarding and cornering, artificially forcing up prices, etc. Such practices as failing to sell to the market within the prescribed time limit after obtaining the pre-sale license, or failure to make available all licensed housing, and selling housing at an excessively high price or creating false short supply of housing through signing false sale contracts of commodity housing shall be strictly investigated for punishment.
3. Strengthening supervision and administration of real estate sale agency and real estate brokerage. If agent sale of commodity housing is employed, only real estate brokers that have gone through filing formalities with competent real estate authorities shall be entrusted. Real estate brokerage institutions shall properly publicize their brokerage service items, service contents and service fee rates; they shall explain additional outreach service, if any, to the clients in advance and shall make clear stipulation in the contract for commission, and they may not decompose charging items or forcibly collect drafting fees or bank installment service fees and other fees. Real estate brokerage institutions and employees thereof shall refrain from speculating in commodity housing quota numbers, seeking profit in the form of price gap when they provide agency service, conducting any illegal transaction by signing a "false double-barreled contract (which is a contract consisting a contract which records the genuine intentions of the parties thereto and a "shadow" contract that serves only to deal with inspections by the regulators.)", publicizing false information and un-verified information, and making false atmosphere of brisk sale by insider subscription, hiring persons to queuing for purchase, etc.
4. Strengthening administration of sale contracts of commodity housing. All regions of the country shall improve sample drafts of sale contracts of commodity housing and actively promote online execution and filing systems of sale contracts of commodity housing. Sample drafts of sale contracts of Commodity housing shall make clear stipulations on quality and performances of Commodity housing, ownership of recreation sites, parking places and other facilities, delivery-for-use conditions and responsibilities for breach of contracts, and shall list "Housing Quality Guarantee Letter" and "Instructions for Users" as attachments to contracts; real estate developers shall show purchasers the sale contracts of commodity housing before execution of the contracts.
5. Improving the real estate information disclosure mechanism. All regions of the country shall strengthen and improve the construction of the real estate market information system, and properly disclose market information to the public in a timely and accurate manner. Competent real estate authorities in cities and counties shall publicize to the public approved pre-sale information, information of salable buildings and housing sources and investigation status of illegal practices in a timely manner. Real estate developers shall clearly show their pre-sale licensing status, pre-sale programs, qualifications of the development and construction entities, filing status of real estate brokerage institutions as sale agent and other information on the sale site.
6. Encouraging the promotion of pilot sale of completed Commodity housing. All regions of the country may prepare administrative measures for the sale of completed housing, encourage and guide real estate developers to sell completed Commodity housing. Sale of completed commodity housing shall meet sale conditions of completed housing as specified in the Administrative Measures for the Sale of Commodity Houses; and before the sale, real estate developers shall report relevant certificates and real estate development project manuals compliant with conditions of sale of completed housing to competent real estate development authorities for filing.
　
Article 2 Improving pre-sale systems of commodity housing
7. Tightening pre-sale license administration of commodity housing. The threshold scale of commodity housing pre-sale licensing and progress requirements of project image shall be determined rationally in light of local situations. The threshold scale of pre-sale licensing may not be less then unit of roof, and pre-sale licensing may not be granted on the floor or roof basis. Green channel of commodity housing pre-sale shall be established in regions where commodity housing is in short supply; administrative efficiency shall be improved and those commodity premise projects qualified for pre-sale shall be supported to go through pre-sale licensing as soon as possible.
8. Strengthening administration of pre-sale proposals of commodity housing. Real estate developers shall sell commodity housing subject to pre-sale programs of commodity housing. Pre-sale programs shall include basic information on the housing project, construction schedule, quantity of the housing under pre-sale, floor space measurement and apportion, specific scope of public parts and public facilities, pre-sale price and charge margin, implementation of pre-sale capital supervision, subject for and modes of assuming housing quality responsibilities, resource consuming indicators of housing and resource-saving measures, etc. Any change to the main content of the pre-sale program shall be subject to filing with competent authorities and publication.
9. Improving monitoring systems of pre-sale payment. Improvement of commodity housing pre-sale capital supervision system shall be accelerated. Regions that have not established the supervision system shall accelerate the formulation of local supervision measures of commodity housing pre-sale capitals. All commodity housing pre-sale capitals shall be put into the supervision accounts to be subject to the supervision by supervisory authorities so as to ensure that pre-sale capitals to be used on construction of commodity premise projects; pre-sale capital will be allocated in line with construction progresses, provided that enough capitals shall be reserved to ensure completion and delivery of the projects.
10. Strengthening administration of return of pre-sold commodity housing. System of real name shall be earnestly adopted in purchasing of commodity housing, and purchase name may not be changed without due approval after purchase. After subscribing commodity housing, if purchasers fail to execute the pre-sale contracts within the prescribed time limit, the subscription shall be removed, and the returned housing shall be sold publicly. If a signed sale contract of commodity housing filed via the Internet is to be removed upon agreement of the two parties thereto, the two parties shall provide applications and explain reasons, and the returned housing shall be sold publicly.
　
Article 3 Strengthening delivery and quality management of pre-sold commodity housing
11. Defining the conditions on the delivery of commodity housing. Local delivery conditions of commodity housing for use shall be prepared in accordance with laws, regulations and relevant construction standards. Delivery conditions of commodity housing for use shall include that the project is completed and accepted after being duly examined, qualified and registered with local competent authorities, supporting infrastructures and public facilities have been established and meet use requirements, fixing of hot measurement devices (if the housing is located in northern China) meet design requirements, premise quality guarantee and premise use instruction systems have been implemented, the subject for assuming commodity housing quality has been defined, and preliminary property management has implemented. When real estate enterprises deliver commodity housing for use, they shall show purchasers the foresaid relevant proof materials.
12. Improving delivery-for-use systems of commodity housing. Delivery-for-use administration systems of commodity housing shall be established and improved so as to ensure that single project quality, energy-saving and environment protection features, supporting infrastructures and public facilities of the commodity housing will meet basic requirements of delivery for use. Regions with the necessary conditions may draw on the experiences of Shanghai, Shandong and other regions of the country to improve delivery-for-use systems of new-built commodity housing through legislation. All regions of the country shall strengthen administration of commodity housing completion and acceptance and actively promote household-based quality acceptance system. In the north, household-based acceptance administration of hot measurement device fixing shall be strengthened.
13. Allocating quality responsibilities of pre-sold commodity housing. real estate developers shall be chiefly responsible for the quality of commodity housing that they develop; and the survey, design, construction and supervision institutions shall assume corresponding responsibilities in accordance with provisions of relevant laws and regulations or contractual stipulations. Legal representatives, persons in charge of a project, technical chief of a project and certified professionals of real estate developers, and survey, design, construction and supervision instructions shall assume corresponding responsibilities on the basis of their own duties. In the case of any quality problems in pre-sold commodity housing, purchasers have the right to claim responsibilities and damages on real estate developers in accordance with laws, regulations or contractual stipulations. After assuming responsibilities, the real estate developers shall have the right to call relevant entities and individuals incurring the quality problems to account for their responsibilities.
14. Enhancing the commodity housing quality guarantee mechanism. Real estate development to which an ad hoc temporary license is granted shall, when applying for commodity housing pre-sale license, state clearly the subject responsible for commodity housing quality after bankruptcy or dissolution and other liquidations circumstances occur, and the stated subject shall provide a letter of security. The subject responsible for quality shall possess independent legal person status and corresponding compensation capability. All regions of the country shall take whether a real estate developer has established a commodity housing quality guarantee system as an important content of enterprise qualification administration. All regions of the country shall encourage the promotion of quality deposit system for pre-sale commodity housing and study to establish a professional maintenance system.
　
Article 4 Improving supervision and administration mechanisms of the real estate market
15. Implementing a thorough clearance of pre-sale commodity housing projects. All regions of the country shall conduct a clearance and control of commodity housing projects under construction. All commodity housing projects that have obtained the pre-sale license shall be reviewed on a case-by-case basis so as to ascertain the pre-sold commodity housing, housing under pre-sale and of housing, sale of which have not start, and shall publicize the clearance situations to the public; for a real estate project that has yet to start selling housing to the public, the developer thereof shall be ordered to start selling within a prescribed time limit. All municipalities directly under the Central Government, capitals of provinces (or autonomous regions) and cities specifically designated in the State plan shall report clearance results to the Ministry of Housing and Urban-Rural Development prior to the end of June this year.
16. More efforts shall be made to investigate illegal practices. All regions of the country shall strengthen supervision and administration of acts in the real estate market by adopting online disclosure of real estate information, establishment of complain phones, on-site check and other measures to make more effort to investigate illegal practices. Investigation shall focus on projects with a high rate of rejection, abnormal prices and high rate of complaint by consumers. Illegal practices shall be ordered to be rectified within a prescribed time limit and entered into real estate credit files, and online commodity housing contract execution may be suspended; any developer that refuses to conduct such required rectifications shall be subject to statutory punishments which may include cancellation of qualification as real estate developer; information on such violation and punishment shall be circulated to land, finance, and industry and commerce authorities to restrict such enterprises from participating in land purchase, financing and loans, etc.
17. Strengthening administration of real estate credit. All regions of the country shall actively enlarge the functions and covering surface of real estate credit files, give full play to credit files, put sale acts, housing quality, delivery-for-use, information disclosure and other contents into the real estate credit system, and shall take credit files as ground for assessing qualifications of enterprises. All such practices as illegal sale, serious quality problems, delivering unqualified housing for use, failing to publicize information in a timely and accurate manner shall be entered into credit files of the real estate developer, and be exposed to the public.
18. Tightening the responsibility investigation system of relevant persons. Responsibility investigation of the leaders of offending enterprises shall be strengthened. Corresponding responsibilities shall be investigated in accordance with laws on the legal representatives and in-charge persons of real estate developers incurring major project quality accidents, regardless of the positions or titles that such persons may hold or where they are. Administrative responsibilities shall be investigated on relevant officers neglect duties or committed dereliction of work in administration of commodity housing pre-sale; and in the case of abusing power for personal gains or neglecting work, administrative and legal responsibilities shall be investigated on relevant persons held liable in accordance with law.
19. Implementing supervision and check responsibility systems. The management function of competent real estate authorities shall be intensified, and construction of law enforcement officers in the real estate market shall be strengthened. Competent housing and urban and rural development authorities at the provincial level shall strengthen their direction of and check on real estate market supervision and administration on the level of cities and counties (districts). Competent housing and urban and rural development authorities of cities and counties (districts) shall establish a commodity housing market trend monitoring system, and strengthen on-site inspection; construction and planning authorities shall strengthen supervision and administration subject to their own duties. Relevant authorities shall strengthen cooperation, communication and coordination, establish and improve mechanisms of sharing and circulating information and jointly investigating and dealing with violations. Proper report and complaint channels shall be maintained; supervisions by public opinion shall be valued and supported, and contradicts and disputes shall be handled actively and appropriately, results of which shall be publicized in a timely manner.

Market supervision and administration of other commodity housing shall be subject to this Circular by reference.