CHINA Law and Practice Contributed by: Nancy Zhang, Xiaoying Tian, Qian Gu and Liangqian Ying, JunHe LLP
3.10 Taxes on Loans There are no existing, pending, or proposed mortgage recording or similar taxes in connec - tion with mortgage loans or mezzanine loans related to real estate. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning The PRC laws applicable to strategic planning and zoning at state level mainly include the Land Administration Law, and the Urban and Rural Planning Law. Local governments shall, in accordance with these laws, prepare the urban planning and zon - ing, and reasonably determine the development scale, steps and construction standards of the urban locality. 4.2 Legislative and Governmental Controls Applicable to Design, Appearance and Method of Construction In addition to the relevant laws and regulations, such as the Construction Law and Regulation on the Quality Management of Construction Projects, the design, appearance and method of construction are governed by the national standards promulgated by the relevant authori - ties of the state council, such as: • the General Standard for Civil Building; • the Unified Standard for Energy-Saving Design of Industrial Buildings; • the Code for Fire-Protection Design of Build - ings; and • the General Standard of Quality Control in the Construction of Buildings and Municipal Projects.
quently transfer the NPLs to both foreign and domestic investors through open processes such as public bidding or auctions. 3.7 Subordinating Existing Debt to Newly Created Debt An existing mortgage debt may become sub - ordinated to a newly created mortgage debt, the mortgage interest of which has been duly registered, only if the mortgage over such exist - ing debt has not been duly registered. But if the mortgage over the newly created debt has also not been duly registered, the existing debt will rank pari passu with the newly created debt. 3.8 Lenders’ Liability Under Environmental Laws The lender, being the mortgagee of the real estate, will not generally be held liable. However, if the lender becomes the land use right owner in respect of such real estate as a result of fore - closure (or enforcement) of the mortgage, the lender may be held liable for such non-compli - ance if the party that caused the pollution cannot be identified. 3.9 Effects of a Borrower Becoming Insolvent The security interests created by a borrower in favour of a lender will not be made void if the borrower becomes insolvent, and the lender may continue to claim its senior debt against the collateral, although this will be subordinated to the contractor’s lien. In the event of restructuring during the bankruptcy proceedings, the lender will have to temporarily suspend its enforcement of the mortgage (unless damage to the collateral or a situation is likely to decrease the value of the collateral and might endanger the mortgagee’s interests). If the borrower enters into reconcilia - tion or a liquidation procedure, the lender may continue to enforce the mortgage.
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