Condominium law in China
Condominium law in China is separately covered in the Real Right Law and Law on Property Management. The Real Right Law, enacted in 2007, covers the division between individual and collective property (Real Right Law, 2007). The Property Management Law, enacted in 2003, embraces nearly all the necessary elements of the condominium system that is used in other countries, such as the demarcation of common and private areas, shares in the common property, and mandatory membership of owners in the HOA. Like establishing a business corporation. the formation of the HOA (called ‘owners assembly’ in China; its executive committee is called the ‘owners committee’) requires no approval from the state authorities. This is in sharp contrast to the restrictive control on social organizations which, until a few years ago, required the sponsorship of a state agency (Spires 2011). The Properly Management Law merely requires newly established HOAs to file relevant documents (of meetings records, election results, and particulars of the office bearers) with the local authorities within 30 days of their establishment.
How'ever, this right of condominium owners to form an HOA and the HOA’s autonomy itself are being compromised by counteracting clauses in successive revisions of the law; as well as in the law’s implementation. To understand this trend, the two-tier system of law-making in China must be highlighted. Whilst national law's are made by the National People’s Congress, the provincial-level People's Congress can make regulations regarding the local implementation parameters of relevant national laws. At the same time, administrative departments are empowered to draw up administrative decrees and enforcement gttide-lines in w'hich new measures are often added. Sitch additions are perhaps more important than the law itself as it represents the intention of the state administration to supplement or change the law'.
Despite no restrictions on forming HOAs, the law' requires the establishment process to be ‘guided’ by state agencies. In the first version of the Property Management Law in 2003, the guiding organization was the local housing authority (Property Management Law' 2003, Clause 10). How'ever, the local housing authorities, which are also responsible for a w'ide range of matters concerning housing and properties, seldom have the staff and resotu ces to scrutinize the operations of
Law on paper and law in practice 237
the homeowners’ assemblies and homeowners’ committees. Hence, the guidance of state agencies is unpractical and often remains as a nominal clause in the law.
Yet, a decree by the central government in 2009 (Ministry of Housing and Urban-Rural Development 2009) added street offices (the lowest tier of government in cities) alongside the local housing authorities to guide the establishment of HO As (Clause 54). The street offices were also entrusted with the new role of “supervising and monitoring the daily operations of the homeowners’ assembly and homeowners committee” (Clause 6). Such a provision was eventually formalized in the revision of the Property Management Law in 2018, in which the supervision and monitoring functions were delegated to the residents’ committee (Clause 20). The residents’ committee is a pseudo-state institution of the party state at the grassroots level that exerts considerable power over HOAs.
In China, it appears the guidance role of local housing authorities, street office and the resident committee, has become more than merely providing technical advice about the legal procedures of establishing and operating HOA, but also involves substantive control of HOAs' democratic functions such as the election process. Detailed stipulations in local regulations on the implementation of the Property Management Law are telling of this expanding control over HOA governance. For instance in Shanghai, the establishment and re-election of HOAs now must be driven by a preparatory committee led by the street offices (Shanghai Property Management Regulation 2018, Clause 15), whereas in local Property Management Regulations in Wuhan (Clause 34) and Guangzhou (Clause 60), homeowners committees have to surrender the official seal (which stands for the legal entity, endowing power to make any contract with other parties or make any declarations) of the HOA to the residents’ committee when their term expires, probably to prevent the HOA from continuing operation. Under special circumstances, for instance, when members of the homeowners committee are involved in protests or unlawful practices, the street office can even dissolve the homeowners committee (Shenzhen Property Management Regulations 2019, Clause 27).
More recently, even the ruling communist party of China has begun to play a greater role in condominium governance. This contrasts with policy that establishes “separation of party and government functions” - a guiding principle of the party since the mid-1980s to minimize interference in economic activities (CCCP Central Committee 1987).1
Despite there being no direct mentioning of the specific functions of the local party branch in condominium governance, the neighborhood communist party branch is explicitly acknowledged in the Shanghai Property Management Regulation of 2018 as being at the core of a grassroots governance structure in which the HOA is one component (Clause 6). Similarly, in Beijing, a revised Property Management Law in 2020 makes condominium governance an essential component of ‘party-building’. In Wuhan, Communist Party members are encouraged to contribute to the establishment of ‘red’ homeowners’ committees (Wuhan Property Management Regulation 2018, Clause 29; Civil Affairs Committee of Wuchang District, Wuhan 2019), which are led by loyal members of the communist party to ensure directives of the party are implemented.
Lastly, although there are no restrictions on HOA formation in condominium law in China, the law is ambiguous about the legal status of HOAs. They are neither recognized as an independent legal entity in the Property Management Law nor requir ed to register as an independent social or economic organization. In fact, the naming of HOAs conveys a linguistically subtle but politically significant message. Instead of directly designating the organization as an HOA (or titles bearing similar meaning), the law refers to this entity as a “homeowners assembly.” This downplays the HOA’s status as an organization and instead portrays it simply as a physical assembly. In fact, until only a few years ago, homeowners assemblies were denied status as a legal entity. This meant they were, among other-restrictions, unable to open a bank account. Such limitations have since relaxed, for example, in Beijing, where homeowners assemblies are now allowed to manage their own funds account (Beijing Property Management Regulation 2019, Clause 78).
A brief review on the revisions of the Property Management Law in China has revealed the escalated involvement of street offices, residents’ committees, and even the local communist party branches in the formation and operations of an HOA. Coincidentally, these agencies are the key social control agents in urban China’s neighborhoods. Their roles and functions are pivotal in understanding condominium governance in urban China. The next section will explore this social control system in more detail.