Dispute over buying a house under another's name: who owns the property rights?

[2] Compiled from: People's Court Daily
 
[3] Recently, the Jinjiang District People's Court in Chengdu, Sichuan Province, adjudicated a dispute over a housing sales contract, ruling that the agreement signed by the plaintiff and defendant to determine the ownership of an affordable housing property harmed public interests and was invalid, thereby dismissing the plaintiff Tan's lawsuit.
 
Case review
On December 16, 2015, Jiang, the brother-in-law of Tan, obtained the qualification to purchase an affordable housing unit in Chengdu. On December 19, 2016, Tan and the defendant couple, Jiang and his wife, signed an agreement on the ownership of the property, specifying that Jiang and his wife agreed to transfer their qualification to purchase the affordable housing. Although the property was registered under the names of Jiang and his wife, Tan paid the down payment of 63,486 yuan and a loan of 130,000 yuan to purchase it. Tan was the actual owner of the property and had the right to possess and use it. On the same day, Tan and the Jiang couple paid the down payment for the property and obtained a loan of 130,000 yuan in the names of Jiang and his wife.

 
 

On January 4, 2017, Jiang and his wife signed a sales contract with a Chengdu real estate company to purchase the property for a total price of 193,486 yuan with a mortgage loan. Starting from January 13, Tan transferred money to Jiang on a monthly basis, with remarks such as “home purchase loan repayment, mortgage.” From 2018 to early 2022, Tan actually used the property and kept the real estate ownership certificate.
 
On February 18, 2022, Jiang and his wife obtained the registration of ownership of the house and refused to transfer the house to Tan. Tan then filed a lawsuit with the Jinjiang District Court, requesting the court to rule that the house belonged to him.
 
 
[1] Court Opinion
The agreement between Mr. and Mrs. Jiang and Tan to determine the ownership of the affordable housing, along with Tan's actual possession and use of the property, violated the regulations on the management of affordable housing. Although these regulations are departmental rules and generally do not affect the validity of contracts, the content involves national macro-control policies and public order and good customs. Their actions contravened the state's regulatory policies on policy-based housing and harmed public interests. Therefore, the signed agreement was legally deemed invalid, and Tan's claim to confirm ownership of the house was dismissed.
 
 
The [1] The People's Republic of China Civil Code
Article 153   A civil juristic act that violates the mandatory provisions of laws and administrative regulations is void, unless such mandatory provisions do not lead to the voidance of the civil juristic act.
A civil legal act that violates public order and good customs is void.
 
 
[1] The author's perspective
Due to the large populations in many cities but a relative shortage of housing, various purchase restriction policies have been introduced to curb speculative buying and ensure that everyone has a place to live. In this case, affordable housing has a social security nature, typically priced according to government guidance with the principle of covering costs and making small profits. Thus, purchasing such housing usually requires specific qualifications. Those without qualifications have resorted to the idea of buying houses under others' names, but the risks involved cannot be ignored.

The court dismissed Tan's claims in this case. Although Tan and the Jiang couple had signed an agreement regarding the ownership of the property, the court held that the contract violated public order and good morals and was therefore invalid. The property remains registered under the names of the Jiang couple, showing that Tan suffered a silent loss at the hands of his own family, with no way to voice his grievance. The ruling in this case serves as a warning to those who intend to engage in "borrowing names to buy property" — do not always harbor the mentality of finding workarounds for every policy, do not try to exploit loopholes with self-assurance, or you may end up with nothing but wasted effort.