Sell China property: your spouse matters a lot sometimes
Mar 03, 2014

Sell China property: your spouse matters a lot sometimes

In advising a client in selling his property outside of Shanghai, I was annoyed by local practice that seems so stupid.

I have sold quite a few properties here in Shanghai on behalf of foreign clients over the years. In Shanghai, things can be simple  and straightforward. For example, when a person is registered as a single owner on a title deed of a property, he or she, either national or foreign, is able to sell the property on his or her own. Shanghai real estate transaction centre won’t delve to ask whether the owner was married at the time of purchase of the property.  The legal ground is firm enough: with the introduction of China Property Law (effective as in 2007), anyone that is duly registered on the title deed of a property is deemed to be legal owner of that piece of property. As a legal owner, she or he shall of course have the power to sell the property as he or she wishes. Whether the owner is married or not does not matter.

But some places outside of Shanghai may have a different practice whereby local real estate authority is always concerned whether the property in question is a community property or the personal property of the owner. If it is a community property, no matter the spouse is registered on the title deed or not, his or her consent to the sale of the property must be presented. Otherwise, they will refuse to effect the title transfer from the registered owner to the buyer.

This practice is old and outdated. It has root in China Marriage Law (latest amended in 2001) in which it is prescribed that major disposal of community properties shall be subject to the mutual consents of the both spouses no matter whether the property is registered in both spouses’ names or not. In most cases, properties bought after marriage is automatically regarded as community properties unless otherwise proved between the spouses.

Due to China Marriage Law, in the past before the enactment of China Property Law, sale of a piece of real property is of course considered a major disposal. If the property in sale is community property, the spousal consent shall have to be sought at the time of sale. The point is that some localities in China has not adapted to new legal environment created by China Property Law which should override related rules in China Marriage Law.  After all, Marriage law should only take effects between spouses and shall not extend its effects to any third party that relies on the real estate registration records in bona fide manners.

Under the old practice, a foreigner may find themselves in trouble: they have to prove his or her marital status in order to sell the property. If married, please present your marriage certificate, and if not, please prove that you are single.

Those proofs originating outside of China shall have to be notarized by local public notary and then be authenticated by Chinese consulate in the foreign country.

What a nuisance!

Comments

  1. Peter says:

    How do you 50% transfer property title to my spouse so she has 100%. Does it still attract tax?

    1. Jason Tian says:

      As spouse, there won’t be any tax imposed on the transfer of share from one spouse to the other.

  2. John Luker says:

    Hello,

    I recently sold my property in Shanghai. I am a US citizen who was working and living in China for the past 10 years. The property was sold, however I need to provide evidence of sale and finances for the US taxes and banks due to the money being transferred into the US. Under current restrictions I am also running into issues getting the money out. My wife is Chinese and is still in China with a power of attorney I setup before I left and we are experiencing many problems moving the money to the proper Chinese banks and US banks to finalize the deal. Could you assist with identifying the forms I can gather for proving sale of real estate and could you assist my wife with sale of property funds transferring out of China for us to buy a home in the US? Thank you.

  3. Sophie says:

    Dear Sir,
    We are selling our apartment in Hefei and we are having trouble getting the Power of Attorney done here in France. We have the chinese model of the commission, but no French public notary is able to write the document. They can only certify our signature on the commission. Is that the same meaning? Thank you.

    1. Jason Tian says:

      Hi Sophie,

      i don’t quite understand your question. what do you mean by “we have the Chinese model of the commission”? Can you tell us more about the property and sale status? we have been helping clients in selling properties in major Chinese cities. we would be happy to help you with yours also. Thanks.

  4. billy says:

    Dear Mr Jason.

    I have a question and a matter with which i would be greatful if you could help me. I am UK citizen living in England. My brother is a Pakistani Citizen who brought a property in Tianjin. He passed away last year and has written his will and the house over to me. I now wish to come to China to sell the property and take the money to europe. Could you please advice on what i need to do and how you could be able to assist me in this matter.

    Kind regards

    Billy

    1. Jason Tian says:

      HI Billy, it will take a lot of work and time before you can sell the property and take the money out of China. First you need to complete the inheritance of the estate before you can sell it. By completing the inheritance, i mean you need to go through legal proceedings here in China to have the title deed of the property updated with you being the new owner. The sale of the property in China is not straightforward and may take months before you can wrap it up. Repatriation of the sale proceeds can also be problematic if you don’t take this step into consideration from the very beginning. We can help you throughout the whole process of inheritance and sale and money repatriation.

  5. Kent Fang Ching says:

    Hello! I am a US citizen who inherited 3 properties in Shanghai. I have a couple of questions. 1) the largest property is the one that I already have a buyer for and my realtor negotiated that the buyer would pay all the taxes and fees associated with the sale. However, because I have more than one property, the tax would be quite high for the buyer so we agreed to have the buyer pay 30% as a down payment but we would not transfer the deed to his name until June of 2016, that way we can sell the other smaller properties and then when that is done then this apartment would count as me only having one apartment therefore saving a big tax payment for the buyer. Is all this legit? Do you see any issues with this agreement? 2) when I asked the realtor if an escrow account would be used for the transaction I was told that the funds would be transferred directly from the buyer’s account into mine, is this common practice? Shouldn’t there be an escrow account? 3) I was told at my bank (SPDB) that if I provide all my documentation of the sales of properties that I would be able to wire the funds back to my US account, do you foresee any issues I may encounter? Thank you for your time, dealing with these properties sales as a foreigner in China is definitely a roller coaster!!!

    1. Jason Tian says:

      is this buyer for the biggest property a firm buyer? so long as the buyer agrees, it can be done provided that the contract terms are written air-tight to deal with any possibilities that may arise down the road.

      In Shanghai, escrow account is seldom used in practice. Indeed, it is not bad for seller esp in regard of the down payment that will directly come into your account.

      You can wire your money out to USA so long as you prepare all documentation. That is not a problem but with some paperwork to be done. If you have time, you can always do it yourself.

      Overall, if you agree, you can hire my service in helping to sell the properties which is a service i have been providing foreign sellers for many years here.

  6. Qi Lu says:

    Hi Jason,
    I have an apartment in Shanghai and want to sell it. When I bought the property, I have chinese passport, but now I have UK passport. WOUld you advice me what I need to do before I can put the property into market?

    Thanks

    1. Jason Tian says:

      Hi Qi Lu, I understand that you have emigrated to UK and become a UK citizen there. You can sell it so long as you can prove your UK ID refer to the same person identified by your China ID.

      However, it will take more time to repatriate your sale proceeds back to UK because there is a separate route regarding emigrating Chinese citizens transferring their China assets out of China. It will take two years

      How big is your property? and how much is its rough value? Contact me via email later.

  7. Nice article Jason! This will definitely come in handy for property owners or people considering selling their property. Especially foreigners need to be well informed about the rules.

    1. Jason Tian says:

      There are some general rules in regard of property transactions in China as China is carry out the uniform legislature throughout the country. But in practice, local governments may step up some local rules. So it is important to know what documents are exactly required to be prepared. This can be a big headache for foreigner owners of Chinese properties.

  8. Zam says:

    Hi,

    May I know is there any time limit after buying the property, when it can be sold again? If so, does this rule apply to the foreigners?

    I bough an apartment last year in Suzhou, and have been told by the property developer that people could only sell their property after 5 years of purchase.

    Thanks,

    1. Jason Tian says:

      Hi Zam, i answered your question via email already. As said, there is no time limit before you can sell the property you buy in China. The 5 year is not about restriction of sale. It is about business tax and personal income tax. If you hold the property over five years, your business tax can be lower and your income tax can be exempted provided that this property is the only property you have in China.

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