Chinese Translations for China’s Real Estate Market

Chinese Translation for Real Estate Transactions

We’ve blogged about the need for Chinese to English legal translation services for foreign investments in the U.S. real estate by Chinese real estate investors.  On the other hand, there’s a growing need for English to Simplified Chinese legal translation services for China’s burgeoning real estate market. But did you know that a person cannot currently own real estate in China? Did you know that legal rules and principles with regard to real property are only now beginning to take shape in China?

It may seem shocking that the kind of growth and development that China has experienced in the last decade is based on uncertain, shifting sands with regard to real estate ownership. Yet, China has become an economic powerhouse nonetheless.

The reason that China’s property laws have not kept up with China’s economic boom has to do primarily with the collision of China’s political philosophy with the world’s economic realities. Specifically, China is a Communist country. Individuals and private businesses cannot own land. The land belongs to the commons – to everyone – which means in reality that the government controls the real property in the country. Yet, businesses and developers are driven by self-interested (i.e., capitalist) motives to profit from developing the land in China.

Accordingly, China’s Communist government is feeling pressure to create legal certainty around property ownership, but is slow to move because of political inertia and the desire to hold on to its communist tradition. This article will explore the potential changes that are on the horizon for China and real property rights in that country.

In addition, as China moves closer to giving property rights to private businesses and individuals, foreign investors and corporations will want to navigate those new rules and will need English to Chinese legal translators to do so. All Language Alliance, Inc. is a premier legal translation service that will be vital in that process. We not only translate documents from English to Simplified Chinese, from English to Traditional Chinese and other Asian languages, but we understand complex legal text to make sure that translations are legally accurate. Email us today for more information.

Current State of Land Use Rights in China

As noted above, China does not currently permit the private ownership of land. Rather, a private individual or business is permitted to use land that is owned by the government. That land use right does not, however, go in perpetuity. It is typically a land use right for 40, 50 or 70 years depending on how the land is used. Interestingly, any structures on the land can be owned by a business or individual, yet the real property itself is still owned by the government.

These land use rights in China date back to the 1980s. That means that most land use rights are in their first generation, i.e., those first to purchase rights to the use of land are, for the first time, coming up on the termination date of their right. That circumstance presents three distinct questions about what happens next.

1. Will the holder of the land use right have the ability to renew that right when it expires?
2. If there is an option to renew, then will the rights holder have to pay for the renewal?
3. If a payment must be made, then how much will the renewed land use right cost?

The answer to those questions is only speculation at this point. In a 2017 legal research piece, titled “What Will China Do When Land Use Rights Expire?” Professor of Law at the University of Tennessee College of Law Gregory M. Stein has some possible answers to the questions above.

The Possible Future of Land Use Rights in China

He capitalizes on the fact that the Chinese government’s past behavior can be a good predictor for its conduct in the future. He notes that the Chinese government tends to wait to see what private business and industry will do before passing laws. The government does that because, in essence, it likes to see what works in the marketplace before making rules, thereby maximizing the potential for a law to be successful.

As to the three questions above, Professor Stein concludes that, first and foremost, the Chinese government will most likely allow holders of land use rights the ability to renew them. To do otherwise, Stein maintains, would introduce tremendous instability into China’s real estate market.

With regard to whether rights holders will have to pay to renew, the options are that the government will (i) charge fair market rate, (ii) charge a little less, or a lot less, than fair market rate, or (iii) allow the right to renew for free.

In predicting which option the Chinese government will chose, Professor Stein turns to the fact that the Chinese government desires to minimize social unrest, to wait until the private sector has time to experiment before passing laws, and to benefit from the ongoing real estate boom.

As to residential rights, Stein argues that the government will likely charge some small amount, less than fair market rate, for the renewal of land use rights. This “renewal fee,” or “real estate tax” will be small enough to minimize the unrest that may come from charging for rights that residential rights owners already paid once.

With regard to commercial and industrial property, Stein notes that those rights holders are more sophisticated business people. They likely appreciate that they only hold use rights, and therefore will expect to have to pay to renew. Thus, it is possible that the government may charge these rights holders something that is closer to fair market value, but still less (particularly because government officials personally benefit from their relationships with these business and industry owners).

Chinese Legal Translations for Renewal Transactions

Without question, many holders of land use rights in China are not Chinese. Rather, multi-national companies and other foreign individuals have a stake in the land use rights in the country. Those individuals and entities will need to engage in a significant way with the Chinese government to settle the issue of land use right renewals, and how much one needs to pay for them. That will require a lot of legal process, which will need to be translated from English to Simplified Chinese.

Look no farther than All Language Alliance, Inc. to help you with those complex transactions. Our professional Mandarin Chinese translators are standing by to assist you and your company to make sure that your English legal documents are translated to Simplified Chinese accurately and completely, the first time. Contact our legal translation service today to hire a Mandarin interpreter, and to obtain English to Chinese certified document translations for doing business in China, or for China’s real estate market.

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