Section 1I Mortgage Right at Maximum Amount
Article 203 For ensuring the payment of debts, an obligor or third party may provide mortgage security to the obligee for the obligee's rights that will continuously happen within a certain term, and when the obligor fails to pay its/his due debts or any circumstance as stipulated by the parties concerned for realizing the mortgage right happens, the mortgagee has the right to seek preferred payments from the security properties within the maximum amount of obligee's rights. The obligee's rights existing prior to the establishment of the mortgage right at maximum amount may, upon the consent of the parties concerned, be incorporated into the scope of obligee's rights under the mortgage security at maximum amount.
Article 204 Unless it is otherwise stipulated by the parties concerned, in case part of obligee's rights are transferred prior to the establishment of the mortgage security at maximum amount, the mortgage right at maximum amount may not be transferred.
Article 205 Prior to the determination of the obligee's rights under the mortgage security at maximum amount, the mortgagee and the mortgagor may, upon agreement, alter the term for the determination of the obligee's rights, the scope of obligee's rights or the maximum amount of obligee's rights, however, such alteration may not cause any unfavorable influence to any other mortgagee.
Article 206 The mortgagee's obligee's rights shall be determined, if any of the following circumstances occurs,: (1) The stipulated term for the determination of the obligee's rights expires; (2) In case there is no stipulation on such term or the related stipulations are not explicit, and where the mortgagee or the mortgagor requires determine the obligee's rights after two years as of the date for the establishment of the mortgage right at maximum amount; (3) no new obligee's right may happen; (4) The mortgaged property is sealed up or seized; (5) The obligor or the mortgagor is declared bankrupt or is revoked; or (6) Any other circumstance as prescribed by any other law for determining the obligee's rights arises.
Article 207 The mortgage right at maximum amount shall be governed by, in addition to the provisions in this Section, the provisions on general mortgage right as provided for in Section 1 of this Chapter.
Chapter XVII Pledge Right
Section 1 Chattel Pledge
Article 208 For the security of the payment of debts，an obligor or a third party may pledge his (its)
chattels to the obligee for occupation, and when the obligor fails to pay due debts or any circumstance for realizing the pledge right as stipulated by the parties happens, the obligee has the right to seek preferred payments from the pledged chattels. The \or \party\as referred to in the preceding paragraph shall be the pledger, the \the \
Article 209 The chattels，which are forbidden from being pledged by any law or administrative regulation， may not be pledged.
Article 210 For establishing the pledge right, the parties concerned shall enter into a contract on pledge right in written form. In general， a contract on pledge right shall contain the following items: (1) the variety and amount of the principal obligee's rights; (2) the time limit for the obligor to pay off debts; (3) the name, amount, quality and condition of the pledge; (4) the scope of security; and (5) the time for the deliver of pledged properties.
Article 211 The pledgee and the pledger may not, prior to the time limit for paying debts expires， stipulate that the ownership of pledged properties be attributed to the obligee when the obligor fails to pay due debts.
Article 212 The pledge right shall be established after the pledgee has delivered the pledged properties.
Article 213 Unless it is otherwise stipulated in the contract, a pledgee has the right to obtain the fruits of the pledged properties. The \as referred to in the preceding paragraph shall be firstly used for paying the expenses for collecting the fruits.
Article 214 Where a pledgee, without consent of the pledger, illegally uses or disposes of the pledged properties within the duration of the pledge right, and thus damages are caused to the pledger, he/it shall make compensations.
Article 215 A pledgee shall be obliged to properly keep pledged properties; and where pledged properties are damaged or lost by virtue of improper keeping, the pledgee shall make compensations. Where pledged properties may be damaged or lost by act of the pledgee, the pledger may ask for the pledgee to submit them to a competent authority for keeping or require pay debts in advance and take back them.
Article 216 Where any cause not attributable to t the pledge' fault may result in the destruction of the pledged properties or an obvious decrease of the value of the pledge, and which is sufficient to damage the pledgee's rights, the pledgee has the right to require the pledger to provide corresponding security. Where the pledger refuses to do so, the pledgee may auction or sell off the pledged properties, and may, by negotiating with the pledger, seek preferred payments for the obligee's rights in advance with the money generated from such auction or sell-off, or submit the said money to a competent authority for keeping.
Article 217 Where a pledgee transfers, without consent of the pledger, the pledge within the duration of the pledge right, and thus destroy or loss are caused to the pledged properties, he/it shall make compensations to the pledger.
Article 218 A pledgee may abandon the pledge right. Where an obligor provide the pledge right by his/its own properties, and the pledgee abandons the pledge right, unless any of other security providers promises to provide the security all the same, other security providers' security liability will be exempted within the scope for which the pledgee has lost the right to seek preferred payments.
Article 219 Where the obligor has paid off the debts or the pledger has fulfilled the secured obligee's rights in advance, the pledgee shall return the pledged properties. Where an obligor fails to pay off its due debts or any circumstance for realizing the pledge right as stipulated by the parties concerned happens, the pledgee may, by negotiating with the pledger, convert the pledge into money or seek preferred payments from the money generated from the auction or sell-off of the pledged properties. When converting the pledged properties into money or selling off them, their market price shall be referred to.
Article 220 A pledger may, upon expiration of the time limit for paying debts, request the pledgee to exercise the pledge right in a timely manner; if the pledgee fails to do so, the pledger may ask for the people's court to auction or sell off the pledged properties. Where a pledger has requested the pledgee to exercise the pledge right in a timely manner, but the pledgee is lazy to do so and thus damages are caused, the pledgee shall make compensations.
Article 221 After pledged properties are converted into money, auctioned or sold off, the value exceeding the obligee's rights shall be attributed to the pledger, and the gap shall be paid off by the obligor.
Article 222 The pledger and the pledgee may, upon negotiation, set up the pledge right of maximum amount. The pledge right of maximum amount shall be governed by, in addition to the related provisions in this Section, the provisions on mortgage right at maximum amount prescribed in Section 1I of Chapter 16 of the present Law by reference.
Section 1I Right Pledge
Article 223 Pledge may be established on any of the following rights which an obligor or third party has the right to dispose of: (1) money orders, checks, and cashier's checks; (2) bonds and deposit receipts; (3) warehouse receipts and lading bills; (4) transferable fund units and stock rights; (5) such transferable property rights in intellectual property as exclusive trademark rights, patent rights, copyrights, etc; (6) account receivables; or (7) other property rights that can be pledged as prescribed by any law or administrative regulation.
Article 224 The parties concerned shall conclude a written contract for the pledge of a money order, check, cashier's check, securities, deposit receipt, warehouse receipt or bill of lading. The
pledge right shall be established after the deliver of the title certificate of the pledge to the pledgee. In case there is no title certificate, the pledge right shall be established after the related department has handled the registration of the pledge.
Article 225 The pledgee may make redemption or pick up the goods, and may, by negotiating with the pledger, seek preferred payments in advance with the redeemed money or the picked up goods, or submit the said money or goods to a competent authority for keeping，in case the date of redemption or delivery of the money order, check, cashier's check, bonds, deposit receipt, warehouse receipt or lading bill of is prior to the deadline of principal obligee's rights.
Article 226 The parties concerned shall enter into a written contract for the pledge of fund units or stock rights. As regards the pledge of fund units or the stock rights that are registered in the securities depository and clearing institution, the pledge right shall be established after the securities depository and clearing institution has handled the registration of the pledge. As regards the pledge of other stock rights, the pledge right shall be established after the administrations for industry and commerce has handled the registration of the pledge. After the fund units or stock rights have been pledged, unless it is otherwise agreed to by the pledger and the pledgee upon negotiations， they may not be alienated. As regards the money incurred from the transfer of fund units or stock rights， the pledger shall fulfill the obligee's rights to the pledgee in advance with it, or submit it to a competent authority for keeping.
Article 227 As regards the pledge such property rights in the intellectual property as registered trademark rights, patent rights, copyrights，etc, the parties concerned shall enter into a written contract, and the pledge right shall be established after the related competent authority has handled the registration of the pledge. After the property rights in the intellectual property have been pledged, unless it is otherwise agreed to between the pledger and the pledgee upon negotiations， the pledger may not alienate the pledge or permit anyone else to use it. As regards the money incurred from the alienation of the pledged intellectual property or the permission of anyone else to use it， the pledger shall use it to fulfill the obligee's rights in advance, or submit it to a competent authority for keeping.
Article 228 As regards the pledge of receivables, the parties concerned shall enter into a written contract, and the pledge right shall be established after the related credit rating institution has handled the registration of the pledge. After the receivables have been pledged, unless it is otherwise agreed on by the pledger and the pledgee upon negotiations， the pledger may not alienate the pledged receivables. As regards money incurred form the alienation of accounts receivable， the pledger shall use it to fulfill the obligee's rights in advance, or submit it to a competent authority for keeping.
Article 229 The pledge of rights shall be governed by， in addition to the provisions prescribed in this Section， the provisions in Section 1 of this Chapter on the pledge of chattels.
Chapter XVIII Lien
Article 230 Where an obligor fails to pay off its due debts, the obligee may take lien of the chattels that are owned by the obligor and lawfully occupied by the obligee, and has the right to seek preferred payments from such chattels. The \as referred to in the preceding Paragraph shall be the lienor, and the occupied chattels shall be the property under lien.
Article 231 The chattels taken as lien by the obligee and the obligee's rights shall fall into a same legal relationship, except for the lien between enterprises.
Article 232 As regards chattels of which no lien may be taken as prescribed by law or stipulated by the parties concerned, lien may not be taken of them.
Article 233 Where a property under lien is a divisible object, its value shall be equal to the amount of debts.
Article 234 A lienor shall assume the obligation to properly keep the property under lien, and shall make compensations in case the property under lien is damaged or lost by virtue of improper safekeeping.
Article 235 A lienor has the right to obtain the fruits generated from the property under lien. The \as referred to in the preceding paragraph shall be firstly used for the payments of the expenses for collecting the fruits.
Article 236 A lienor shall, after the property is taken as lien, stipulate with the obligor the term for the fulfillment of the obligee's rights; and in caseof no or unclear stipulation, two months or more shall be given to the obligor for fulfilling the obligee's rights, except for such chattels that are not easy to be kept as fresh goods, perishable goods, etc.. Where the obligor fails to fulfill within the time limit, the lienor may convert the property under lien into money by negotiating with the obligor, or seek preferred payments from the money generated from the auction or sell-off the property under lien. When the property under lien is converted into money or sold off, its market price should be referred to.
Article 237 An obligor may, upon expiration of the time limit for fulfilling the obligee's rights, require the lienor to exercise the lien; and where the lienor fails to do so, the obligor may ask for the people's court to auction or sell off the property under lien.
Article 238 The obligor shall after the property under lien is converted into money, auctioned or sold off, enjoy the ownership of the value exceeding the obligee's rights or make up shall be attributed to the gap.
Article 239 The lienor has the right to seek preferred payments in case the right to mortgage or the right of pledge has been established on a chattel before it is taken as lien.
Article 240 The lien shall perish in case a lienor losses the possession of the property under lien or accepts other security separately provided by the obligor.
Part V Possession Chapter XIX Possession
Article 241 In case the possession occurs on the basis of a contractual relationship, the related stipulations in the contract shall be apply to the use, proceedings and default liability of the realty or chattel concerned; and the relevant legal provisions shall apply if there is no such stipulation in the contract or the stipulations are not clear.
Article 242 Where a possessor causes infringes to the realty or chattel under his (its) possession when using them, it/he shall make compensations if being malicious.
Article 243 Where a realty or chattel is possessed by a possessor, the holder may ask for the return of original object and fruits thereof, but necessary expenses for the maintenance of this realty or chattel paid by the bone fide possessor shall be paid possessor l.
Article 244 Where a realty or chattel under possession is damaged or lost, the possessor shall return the insurance money, damages or indemnities for the said destruction or loss to the holder if the holder requires compensations; and a malicious possessor shall make compensations in case the impairment to the holder has not been sufficiently made up.
Article 245 Where a realty or chattel under possession is encroached on, the possessor has the right to require the return of the original object; where any act impairs the possession, the possessor has the right to request the termination of impairment or danger; and where any damage is caused by virtue of encroachment or interference, the possessor has the right to require compensations. The claim of a possessor for returning the original object shall perish, if the possessor fails to exercise it within one year as of the date of encroachment. Supplementary Rules
Article 246 A local regulation may, before any law or administrative regulation prescribes the scope, organ and measures for uniform registration of realties, provide for related matters in accordance with the related provisions in the present Law.
Article 247 The present Law shall enter into force as of October 1, 2007.