1. Summary of the Judgment
Even though he already had two homes at the time, he still bought another property under the guise of a borrowed name, aiming to circumvent the purchase restrictions imposed by the State Council and Beijing, and to gain extra improper benefits through speculative purchases. If the judiciary does not restrict such behavior and allows it to run rampant, it is tantamount to condoning unreasonable housing demand and the rapid growth of speculative home purchases, encouraging dishonest parties to obtain improper benefits by circumventing national policy red lines. This not only contradicts the judiciary's duty to safeguard social integrity and fairness but also inevitably leads to the failure of national macroeconomic control policies, hinders the implementation of macroeconomic policies, affects coordinated economic and social development, and harms public interests and social order. Therefore, the "Property Entrusted Ownership Agreement" signed to circumvent national purchase restrictions should be deemed invalid for violating public order and good morals.
2. Lawyer's Commentary
For cases where houses are purchased under borrowed names and agreements are signed, before the Supreme People's Court issues Civil Judgment No. 328 (2020), including cases heard by the Supreme Court itself, such as the Supreme People's Court (2020) Supreme Court Min Shen No. 4797 judgment issued on September 29, 2020, it is still held that: "The purchase restriction policy does not affect the validity of the house sale agreement, and such agreements do not fall under the Contract Law of the People's Republic of China." The invalid circumstances of the contract stipulated in Article 52 shall be recognized as legal and valid. ”
The birth of the (2020) Supreme Court Civil Judgment No. 328 was nothing short of a bombshell, deniing the validity of the property holding agreement on the grounds that it was invalid on the grounds of "violating the principle of public order and good morals."
However, this ineffectiveness is not absolutely ineffective. The Supreme Court still gives the actual homebuyer a chance to correct the contract's validity.
As stated in the judgment, "Although the nominee purchase contract between Xu Peixin and Zeng Sawaiwai should have been deemed invalid for circumventing national purchase restrictions and violating public order and good morals, Xu Peixin later eliminated the policy obstacles and was confirmed by relevant administrative authorities to meet the conditions for applying for existing residential properties in Chaoyang District, thus meeting the purchase qualifications, thereby eliminating the grounds for contract invalidity. The validity of the borrowed house purchase contract in question was corrected."
In other words, as long as the actual homebuyer has the qualification to purchase when asserting their contractual rights, the grounds for contract invalidity are considered eliminated, and the nominee purchase contract is valid.
3. Supreme Court judgment
Supreme People's Court of the People's Republic of China
Civil judgment
(2020) Supreme Court Civil Reapplication No. 328
Retrial applicant (defendant in first instance, appellant in second instance): Liaoning CIMCHA Cryogenic Gas Liquefaction Equipment Co., Ltd. Address: No. 1A, North Research Street, Kaiyuan Economic Development Zone, Kaiyuan City, Tieling City, Liaoning Province.
Legal representative: Huo Lating, Chairman of the company.
Authorized litigation agent: Liu Hui, lawyer at Beijing Long'an (Shenyang) Law Firm.
Authorized litigation agent: Ma Miaomiao, lawyer at Beijing Long'an (Shenyang) Law Firm.
Respondent (plaintiff in the first instance, appellee in the second instance): Xu Peixin, male, born September 1, 1971, Han ethnicity, residing in Chaoyang District, Beijing.
Authorized litigation agent: Yan Min, lawyer at Beijing Shifang Yongtai Law Firm.
Third party in the first trial: Zeng Saiwai, male, born February 22, 1948, Han ethnicity, residing in Chaoyang District, Beijing.
The retrial applicant, Liaoning CIMC Ha Deep Cooling Gas Liquefaction Equipment Co., Ltd. (hereinafter referred to as CIMC Ha Shen Company), filed a lawsuit against the third-party entity in the first-instance case against Xu Peixin and the third party Zeng Sawai in the third-instance case of third-party third-party non-party enforcement execution. CIMC Ha Shen Co., Ltd. was dissatisfied with the civil judgment No. 211 (2018) of the Liaoning Provincial High People's Court and applied for retrial with this court. On June 12, 2020, this court issued Civil Ruling No. (2019) Min Shen 1012 of the Supreme Court, bringing the case to trial. This court lawfully formed a collegiate panel and held a public hearing for the case. The retrial applicants CIMC Harshen Company entrusted litigation agents Liu Hui and Ma Miaomiao; the respondent Xu Peixin entrusted litigation agents Yan Min to appear in court to participate in the litigation; the third party in the first instance, Zeng Saiwai, was lawfully summoned by this court but did not appear in court. The trial of this case has now concluded.
CIMC Harshen applied for retrial, requesting the revocation of the first and second instance civil judgments, the decision to dismiss all of Xu Peixin's claims or remand for retrial, with the case acceptance fees to be borne by Xu Peixin. Main facts and reasons: (1) The original trial court's determination that Xu Peixin paid the house price, possessed the property, and maintained a nominee relationship lacked evidence. Regarding payment, Xu Peixin herself only paid 2.5 million yuan for the house. The money is not a type of item, so it cannot be inferred that Tianjin Hongbai Trading Co., Ltd. transferred money to Tianjin Ankai Environmental Protection Product Trading Co., Ltd. (hereinafter referred to as Ankai Company) to Xu Peixin's wife, Jiang Moumou. Jiang Moumou and Zeng Sawai each hold 50% of the shares, and it cannot be ruled out that Ankai Company paid on behalf of Zeng Waiwai. Moreover, Zeng Sawai and Xu Peixin have a common interest in excluding enforcement of the property in question. Regarding actual possession, Beijing Tiantai Changfu Construction & Decoration Engineering Co., Ltd. (hereinafter referred to as Tiantai Company) issued property fee invoices after the court ordered Zeng Sawai to bear joint and several guarantee liability, which cannot prove that Xu Peixin previously possessed the property in question. Moreover, the contradictions between Xu Peixin's statements in the first and second instances are unreasonable. Regarding entrusted holding, all three pages of the "Entrusted Property Holding Agreement" are due to light aging, which is unreasonable and raises suspicions of artificial light aging. The party should bear the consequences of failing to provide evidence. (2) The original trial court confused the relationship between property rights and the underlying property rights, and the determination that Xu Peixin enjoys property rights to the house was a misapplication of law. Article 2 of the Supreme People's Court's Interpretation (I) on Several Issues Concerning the Application of Property Rights refers to real rights contracts, not property rights themselves. According to Article 15 of the Property Law of the People's Republic of China, property rights contracts do not require registration and confirmation. The nominee holding agreement in question is merely a creditor's relationship between the contracting parties, does not have opposing effect, and does not create the effect of establishing property rights. (3) CIMC Hazhen Company has a legitimate interest in the property involved and is a creditor protected by the commercial appearance principle. (4) According to Article 312 of the "Interpretation of the Supreme People's Court on the Application of Rights," if a third party simultaneously requests confirmation of rights, the court may make a judgment together in the judgment. However, Xu Peixin did not file a claim for confirmation of rights in the complaint, and the original trial proactively confirmed rights beyond the scope of the claims, which was procedurally unlawful.
During the review of the retrial application for this case, the court lawfully returned the copy of the retrial application and notice of response to Xu Peixin by mail, but Xu Peixin did not submit a defense opinion to this court. After the case was brought for trial, Xu Peixin appeared in court after the court successfully served the notice of response and other legal documents, arguing that the original judgment was factual and correctly applied the law, and should be upheld. Main facts and reasons: (1) Xu Peixin obtained the Real Estate Ownership Certificate for the property involved by selling the original house under his name, which was verified to meet purchase restrictions, and registered as the owner of the property. The factual basis for the property in question has been lost because it was registered under Zeng Saiwai's name, making it the subject of enforcement in CIMC Ha-Shen Company's enforcement application. The enforcement objection lawsuit cannot provide remedies for the rights of the property against CIMC Ha-Shen Company. (2) Xu Peixin is sufficient to exclude compulsory enforcement because he holds property rights to the property in question. Article 2 of the "Interpretation (I) of the Supreme People's Court on Several Issues Concerning the Application of the Righteous Holder" contains two layers of meaning: first, there are indeed cases where the registered rights holder and the actual rights holder do not match; second, in such cases, the rights of the actual rights holder must be protected. In the nominee purchase relationship, Xu Peixin's property rights are precisely the circumstances protected by this interpretation. Xu Peixin completed the signing of the purchase contract for the property in question, as well as the payment for the house and move-in fees, and as the property owner, he naturally has the right to exclude infringement. Even before obtaining the real estate registration certificate, Xu Peixin was protected because her property rights had priority over monetary claims. Moreover, by searching recent judgments from the Supreme People's Court and local high people's courts, all aim to protect the legitimate rights and interests of actual property owners, aiming to protect the purpose of third-party enforcement objection lawsuits. Based on the principle of the same case and judgment, this case should be recognized as having a civil right to exclude enforcement. (3) CIMC Harbin Shenzhen Company does not fall within the scope of creditors protected by legitimate interest arising from commercial appearances. The purpose of the commercial appearance principle is to maintain transaction security and stability, with the focus on commercial transactions. Only when a third party chooses to conduct a commercial transaction based on trust registration can their reliance interests be protected. Zeng Sawai had previously signed the "Maximum Guarantee Contract." At that time, the property in question had not yet completed property registration, and personal information such as online signing for commercial housing was not publicly disclosed. CIMC Hashen Company did not enter into this guarantee contract based on trust that Zeng Sawai owned the property rights or filed and registered the property. (4) The original trial procedure was lawful and did not exceed the scope of the litigation requests. According to Article 312, Paragraph 2 of the Supreme People's Court's Interpretation on the Application of Enforcement Action, a third-party objection to enforcement is a combination of a confirmation lawsuit and a constitutive lawsuit. In this case, it was confirmed that Xu Peixin's ownership of property rights to the property involved in the case and the exclusion of compulsory enforcement have the same claim in the litigation claims. Therefore, the original trial did not extend the appeal request for trial and does not involve procedural illegality.
During the review of the retrial application for this case, Zeng Saiwai did not submit any statement of opinion to this court. During the retrial of this case, he provided written opinions stating that Xu Peixin, due to Beijing's purchase restriction policy, was unable to purchase the property involved and therefore negotiated to purchase the house under Zeng Saiwai's name and sign a holding agreement. The purchase, payment, and renovation of the house involved were all carried out by Xu Peixin herself, and she also used the house herself. Therefore, the owner of the house involved is Xu Peixin, and Zeng Waiwai was only a temporary retainer and had no actual connection to the house.
Xu Peixin's first-instance lawsuit requests: to suspend the enforcement of the civil ruling (2016) Liao 01 Zhi 579 and lift the seizure of the property located in Chaoyang District, Beijing (hereinafter referred to as the property in question); The litigation costs shall be borne by CIMC Harshen Company. Main facts and reasons: Xu Peixin actually paid to purchase the property involved by signing a "Property Entrusted Holding Agreement" with Zeng Sawai, and has been possessing and using it ever since. Although the property in question is registered under Zeng Saiwai's name, the property ownership certificate does not equate to ownership. Zeng Sawai is not the true owner of the property and has no authority to dispose of the house. The court lacks legal basis for seizing and auctioning the property as Zeng Saiwai's property.
Facts ascertained by the first-instance court: On December 20, 2012, Xu Peixin and Zeng Sawai signed a "Property Entrusted Holding Agreement," stipulating that all rights of ownership, use, income, disposal, and other rights of the property involved belong to Xu Peixin; Xu Peixin signed the purchase contract and other supporting legal documents in Zeng Sawai's name, and at the time of handover, the property ownership certificate and land use certificate for the property were registered under Zeng Sawai's name; Zeng Saiwai only held the property on behalf of Xu Peixin and did not have any rights. Without Xu Peixin's written consent, Zeng Sawai could not unilaterally dispose of the property. The buyer (i.e., the "handler"), the bottom right corner of each page of the agreement, and the signature of Party B (the proxy) on the last page all indicate "Zeng Saiwai".
On December 24, 2012, Jin paid Beijing Xingtai Real Estate Development Co., Ltd. (hereinafter referred to as Xingtai Real Estate Company) 200,000 yuan for the purchase of a house; Between January 14, 2013 and May 14, 2013, Ankai Company paid Xingtai Real Estate Company a total of 23,892,000 yuan in 25 installments; On May 8, 2013, Xu Peixin paid Xingtai Real Estate Company 2.5 million yuan for the purchase by card, totaling 26,592,000 yuan.
On March 8, 2013, Xingtai Real Estate Company signed the "Beijing Commercial Housing Ready-to-Move-in Sale Contract" with Zeng Saiwai, agreeing that Zeng Sawai would purchase the property involved in the case for a total price of 26,592,000 yuan, with the buyer's signature as "Zeng Saiwai." On the same day, both parties signed a "Declaration," agreeing to sign the contract online through the Beijing Real Estate Transaction Ownership Management System (No. XF404847). Both parties would use the "Declaration" and the online contract to jointly apply to the Chaoyang District Housing Administration Bureau of Beijing for house registration, and no written contracts would be submitted. The buyer's signature as "Handler" is "Zeng Sawai". On January 8, 2016, Zeng Sawai issued a "Power of Attorney" to Wang, entrusting Wang to handle the real estate registration procedures for the property involved in the case on his behalf. On February 19, 2016, the ownership of the house involved was registered under Zeng Sawai's name, with the "Real Estate Ownership Certificate" numbered Jing (2016) Chaoyang District Real Estate Rights No. 0026334.
On April 25, 2014, CIMC Harbin and Shenzhen Corporation, as the principal and the Shenyang Branch of Industrial Bank Co., Ltd. (hereinafter referred to as Industrial Bank), as the lender, signed the "Entrusted Loan Loan Contract" and "Supplementary Agreement" with Daqing Qingran Natural Gas Co., Ltd. (hereinafter referred to as Qingran Company) as the borrower, agreeing to provide an entrusted loan of RMB 29.1 million to supplement working capital, with a loan term of six months. On April 25, 2014, Industrial Bank signed a "Maximum Guarantee Contract" with Shi, Qin, Zeng Saiwai, Zhou, and Ma, stipulating that these individuals would bear joint and several guarantee liability for the 29.1 million yuan loan, with a maximum principal limit of 29.1 million yuan, covering principal and interest. On May 16, 2016, the court of first instance issued Civil Judgment No. (2015) Shen Zhongmin San Chu Zi No. 00152, ordering Qingran Company to return the principal of the loan to CIMC Harshan Shenzhen Company of 23,279,999.43 yuan and interest (interest of 4,722,607.52 yuan as of July 24, 2015, and interest calculated at the rate of overdue loans of the same type from July 25, 2015 until the date the judgment confirms payment); Shi, Qin, Zeng Saiwai, Zhou, Ma Moumou bears joint and several liability for payment.
After the judgment took effect, CIMC Harshen Company applied to the first-instance court for compulsory enforcement. On October 17, 2016, the court of first instance issued Civil Ruling No. (2016) Liao 01 Zhi 579, sealing the property registered under Zeng Sawai's name. On October 21 of the same year, the first-instance court deducted 1,329,000 yuan from the Shangdi Branch of Bank of Beijing Co., Ltd. under Zeng Sawai's name. On January 23 and February 10, 2017, CIMC Harbin Shenzhen Company successively issued receipts for Qingran Company's enforcement payments of 1,825,316.07 yuan and 1,542,786.38 yuan.
On August 27, 2016, the property involved was registered for mortgage (Certificate No.: Beijing [2016] Chaoyang District Real Estate Certificate No. 0064559), with Bank of Beijing Co., Ltd. Hongxing Branch as the mortgagee and Zeng Saiwai as the mortgagor.
On October 14, 2016, Xu Peixin's dedicated driver paid the parking space rent of 14,160 yuan for the property in question to the Chaoyang branch of Beijing Ziweifeng Parking Management Co., Ltd. On November 4 of the same year, Xu Peixin paid the gas company 114 yuan for the house in question; On December 26, Xu Peixin paid the heating fee for the property involved in the case to the heating fee center of Beijing Zhengdong Electronic Power Group Co., Ltd. for the years 2014-2015, 2015-2016, and 2016-2017, totaling 15,676.8 yuan per year.
On April 11, 2017, Xu Peixin filed an objection to enforcement by a third party to the court of first instance. On April 24, 2017, the court issued Enforcement Ruling No. (2017) Liao 01 Enforcement Objection No. 422, rejecting Xu Peixin's objection.
In this case, on June 28, 2017, the first-instance court, upon application by Xu Peixin and CIMC Hashen Company, commissioned the Liaoning Renhe Judicial Appraisal Center to conduct document appraisals on the "Beijing Commercial Housing Ready-to-Move-in Sale Contract," "Declaration," and "Power of Attorney" where the three characters "Zeng Sawai" were signed by Xu Peixin' and the specific date Xu Peixin signed the "Property Entrusted Holding Agreement submitted to the court." On August 28, 2017, the Liaoning Renhe Judicial Appraisal Center issued Document Inspection Judicial Appraisal Opinion No. [2017] Wenjian Zi 0819, stating: The three signature handwritings of "Zeng Sawai" were all written by Xu Peixin; The "Zeng Sawai" handwriting in the "Property Entrusted Holding Agreement" lost inspection conditions due to light aging, and the exact signing date cannot be determined. Both parties have no objection to Xu Peixin's appraisal conclusion that he wrote about Zengwaiwai.
The first-instance court held that regarding whether Xu Peixin and Zeng Sawai had formed a relationship of nominal house purchase. Appraisal confirmed that the signature and handwriting of "Zeng Saiwai" in the "Beijing Commercial Housing Ready-to-Move-in Sale Contract," "Power of Attorney," and "Declaration" were all signed by Xu Peixin, which all parties acknowledged. Considering the "Property Entrusted Holding Agreement" and Zeng's admission in court to claim Xu Peixin as the owner of the property, it can be proven that Xu Peixin handled the entire process of the house sale and ownership registration. Xu Peixin provided payment vouchers for herself, Jin, and Ankai Company to pay Xingtai Real Estate Company a total agreed amount of 26,592,000 yuan. Based on witness testimony, it can be confirmed that Xu Peixin paid the house in question. Receipts for heating fees and witness testimony provided by Xu Peixin prove that the property in question was actually occupied and used by Xu Peixin. The above evidence corroborates each other and is sufficient to prove that Xu Peixin and Zeng Sawai borrowed names to buy houses.
Regarding CIMC Harshēn Company's claim that regardless of whether the property holding agreement is genuine, its purpose and method of circumventing national purchase restrictions are improper and legally reprehensible. The purchase restriction policy is an administrative regulatory measure in the real estate market, not a mandatory provision by law or administrative regulations. Xu Peixin occupies Zengsaiwai's purchase qualification, and Zengsaiwai loses its purchase qualification, which will not result in the failure of the regional purchase restriction policy and does not harm the public interest. The property holding agreement and commercial housing sales contract involved were formed before the loan contract between CIMC Harshen Company and Qingran Company, as well as the guarantee contract with Zeng Saiwai, and there was no malicious transfer of assets, debt evasion, or harm to others' interests. Therefore, this does not deny Xu Peixin's property rights to the house in question.
Regarding whether Xu Peixin enjoys civil rights sufficient to exclude compulsory enforcement. The public credibility effect arising from real estate property registration is an external effect on the public, but it is only a presumption effect. When parties have evidence proving the true rights holder, they can overturn this presumption and maintain the factual truth. In this case, the "Property Entrusted Holding Agreement" and the "Beijing Commercial Housing Ready-to-Move-in Sale Contract" signed by Xu Peixin on behalf of Zeng Waiwai both occurred before the court sealed the property in question. Xu Peixin actually paid the full purchase price and paid the parking space rental fees and other living expenses before the seizure, and has been in use of the property ever since. Therefore, Xu Peixin is not the property owner listed in the registration book, which does not affect her right to expect property rights over the property in question. CIMC Harbin and Shenzhen Company did not conduct loan transactions against the property in Zeng Sawai's name, but only sealed and executed Zeng Sawai's assets due to its guarantee obligations. The house involved was not collateral and was not preserved during litigation; it was only sealed after insufficient assets were found during enforcement. Therefore, CIMC Harbin and Shenzhen Company has no need to protect reliance interests regarding the property involved, and the scope of protection for creditors under the non-commercial appearance principle is to protect legitimate interest creditors. In summary, it can be determined that Xu Peixin, as the actual buyer of the house in question, enjoys a right to expect property rights sufficient to exclude compulsory enforcement.
Regarding the burden of litigation costs in this case. Xu Peixin knew or should have known that registering the purchased house under Zeng Saiwai's name would cause legal risks. Zeng Saiwai, as the person subject to enforcement, failed to actively comply with the effective judgment and was at fault for the litigation that led to this case. Therefore, the case acceptance fees were jointly borne by Xu Peixin and Zeng Saiwai. In summary, according to Article 227 of the Civil Procedure Law of the People's Republic of China and Articles 311 and 312 of the Supreme People's Court's Interpretation on the Application of the Civil Procedure Law of the People's Republic of China, the judgment states: The property involved shall not be executed; (2017) Liao 01 Zhi Yi 422 enforcement ruling is invalid. The case acceptance fee of 191,800 yuan was jointly borne by Xu Peixin and Zeng Saiwai.