China's Ministry of Housing and Urban-Rural Development, Ministry of Natural
Resources and the National Financial Regulatory Administration issued a notice
tightening supervision of commercial housing sales and presale funds. Municipal
and county housing authorities will oversee presale funds; designated
housing-fund supervisory agencies must sign fund-supervision agreements with
developers and open supervised accounts at the project's lead bank. All buyer
payments, including down payments and personal housing loans, must be fully
deposited into these supervised accounts. Funds will be released only after
project completion acceptance and when utilities and other delivery conditions
are met. If a developer defaults and cannot deliver on time, buyers may rescind
the purchase agreement; developers must refund payments and bear breach
liabilities. Developers are required to specify escrow-account rights and
obligations in sale contracts.
