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Legal Attitudes Towards Informality on City Levels in China

Author

Listed:
  • Lu Shen
  • Kwong Wing Chau

Abstract

Informal housing are housing units without legal title. Despite the lack of legal title, there is a huge black market for informal housing in China. Though it is clearly stated in the law that such transactions are prohibited by the law, in reality, under the pressure of high formal housing prices, the transactions of informal housing have never stopped. Since the informal property rights transferred in those transactions are neither recognized nor protected by the legal institution, disputes arise from these transactions. Different from foreign countries such as the United States, each state of which has its own law and legal system, China practices a unified legislative system. Under the system, various administrative regions may work out local statutes as long as they do not violate the Constitution or the state law or the administrative law. Though the marketization and transactions of informal housing in China is illegal according to the law, there is no criminal conviction on illegal selling or buying. Different from illegal behaviour such as drug selling, disputes over illegal selling of informal housing can always seek legal decisions from courts. Nonetheless, among the disputes over contract validity, ownership, or even will validity where informal housing is involved, different court decisions have been given to similar disputes over the transactions of informal housing though one of the national administrative law has clearly stated the prohibitions of transactions of informal housing in China. Despite under the uniform legal system in China and referring to the same national laws including contract law and relevant administrative law, courts in different cities interpret and practice laws in various manners and even lead to opposite decisions, suggesting certain ambiguity in the legislations. This study aims to explore court decisions and local statutes if there is any, which are relevant to informal housing issues in various cities and provinces in China. Court decisions in a way can reflect where legal institutions stand in the cases of informal housing issues and the variety of decisions given by the courts based on almost the same statues and legislations also imply a certain degree of ambiguity and flexibility in interpretation, which may also contribute to the pricing and transaction volume of informal housing units in real life.

Suggested Citation

  • Lu Shen & Kwong Wing Chau, 2018. "Legal Attitudes Towards Informality on City Levels in China," ERES eres2018_218, European Real Estate Society (ERES).
  • Handle: RePEc:arz:wpaper:eres2018_218
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    Keywords

    China; Court cases; Informal Housing; Law; Property Rights;

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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