1.         What are the general procedures or steps for buying a property in Shanghai?

Generally, the following procedures will follow, provided that the transaction takes place in Shanghai:

(1)    You get your real estate agent to find candidate properties for your inspection.

(2)    Upon finding your suitable target property, you will be required to sign an intermediary agreement with the agent in which your proposed terms and conditions for purchasing the target property will be recorded and which will be presented to the seller.

At the same time you sign this preliminary agreement, you will also be required to pay a sum of earnest money to show your sincerity about the deal.

(3)    If the seller agrees with your proposed terms and conditions, he will sign the agreement, and thereupon that agreement become binding upon you. Generally, in accordance with a usual clause, that earnest money will transform into a deposit.

(4)    Then in accordance with that preliminary agreement, you and the seller will be executing the official sale and purchase contract for the target property (“S&P Contract”). Thereupon, you may need to pay the down payment to the seller.

(5)    In case that you need bank loan to financing your purchase, with your notarized S&P Contract, you will execute documents for obtaining your loans and go through other formalities therefor.

(6)    Upon bank’s approval of your loan application, you and the seller will go to the governmental real estate registration agency to effect title transfer and mortgage registration.

(7)    When the governmental registration agency approves the title transfer and issue the title certificate to you and the mortgage certificate to the bank, the bank will wire your loan (converted into RMB first) into the seller’s designated bank account. Thereupon, the deal is completed.

These steps are not statutory requirement and are the relatively simple process of making a property deal. In the event that the seller still has mortgage loan over the property to be sold, the procedures will be more complex. Moreover, if you want to make sure of your money safety during the deal, there will be third-party money-supervising mechanism involved, which will make the deal process more complicated.

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