UC Law SF International Law Review


Brain Y. Lee


In the fall of 1995, the PRC National People's Congress adopted the Guarantee Law, along with other banking legislation, to reform its troubled financial sector. As the first national secured transaction law in the PRC, the Guarantee Law standardizes the process of taking security and provides commercial banks with a legal tool to more effectively exercise credit allocation and debt recovery against defaulting debtors.

This Note focuses on how the newly-enacted Guarantee Law impacts the procedures and process of taking mortgage interests of real property in the PRC. In particular, it explores how the local mortgage laws in Beijing, Guangzhou, and Shanghai interact with the Guarantee Law to create special issues and rules. In addition to its legal examination, this Note also considers practical enforcement issues with respect to foreclosing mortgage interests via consultation, mediation, arbitration, and litigation. Finally, it assesses the Guarantee Law as a remedy to China's credit allocation and debt recovery problems and makes recommendations aiming to increase its efficiency.