To buy a “second-hand” house: are you aware of the risks?

As you would expect, there are many more risks of buying a second-hand house, compared to buying a new apartment from Real Estate developer; for this reason, today D’Andrea & Partners will let you take a look at the dangers you may face when buying a second-hand house.

1. The Hukou’s issue
A Hukou is a record in a Government system of household registration required by law in mainland China; the residence address will be also registered in Hukou. Since in China it is not mandatory for the ex-owner to de-register his/her Hukou, a way for the buyer to be protected is to stipulate a Real Estate contract of which terms and conditions shall include the de-registration of the ex-owner’s Hukou. Anyhow, if the ex-owner refuses to de-register his/her Hukou, it is recommended for the buyer to agree with the counterparty upon the liquidated damages for the delay in de-registration of the Hukou.
With special attention to this matter, at first there is a strong chance that the Hukou’s issue will impact the price when re-selling the house; secondly, if the Hukou of the ex-owner hasn’t been de-registered, it may influence the new owner’s children education, because the criterion of assignment of the public primary school depends on the address stipulated in the Hukou of the child and the parents. For this reason, most of the families choose the area where to live basing on the proximity of the best public primary school. Moreover, if the former owner owes debts to the third party or to the bank, the Court and/or the bank may deliver the summons according to the address recorded in the Hukou system.

2. Lack of the Property Ownership Certificate
As China continuously implements its Real Estate registration system, all the Real Estate rights are subject to registration. An owner without the original Property Ownership Certificate cannot prove the ownership, consequently his/her house cannot be transferred. Therefore, if you are looking for a second-hand house to buy, you should be careful in case the seller delays to show the Property Ownership Certificate or only provides a copy of it.
Inability to provide original Property Ownership Certificate means the lack of guarantee of rights and entails great risks.

3. What happens when co-owners disagree on the sale
There is also the possibility that the house may be owned by many people; in such case, it is called “Co-owners property” and, when selling the house, it is a necessary requirement that all the co-owners shall agree on signing the contract, otherwise the sale will be invalid.

4. What if the house is being rented?
According to Contract Law, if the rented house has been sold, however the lease contract is still valid, so the lessee has the preemptive right to buy the house.
Therefore, if the ex-owner does not deal properly with the lessee, the latter may face the problem of handover.
In conclusion, to buy a house of second-hand is not that easy as it seems; for any further information about and for keeping yourself updated on the potential risks, you may contact our experts via