Guiding Opinions of the Supreme People's Court on Further Regulating Online Judicial Auction Work

Fa [2024] No. 238

Notice of the Supreme People's Court on Issuing Guiding Opinions on Further Regulating Online Judicial Auction Work

Higher People's Courts of all provinces, autonomous regions, and municipalities directly under the central government, Military Courts of the People's Liberation Army, and Production and Construction Corps Branch of the Xinjiang Uygur Autonomous Region Higher People's Court:

The Guiding Opinions of the Supreme People's Court on Further Regulating the Work of Online Judicial Auctions are hereby issued. Please follow and implement them carefully in accordance with the actual situation.

The Supreme People's Court

October 29, 2024

Guiding Opinions of the Supreme People's Court on Further Regulating Online Judicial Auction Work

In order to further standardize the conduct of online judicial auctions, focus on improving the level of property disposal in execution, and effectively protect the legitimate rights and interests of parties, in accordance with the Civil Procedure Law of the People's Republic of China (hereinafter referred to as the Civil Procedure Law) and relevant judicial interpretations, combined with the practice of execution work, the following opinions are proposed to do a good job in online judicial auctions.

1. Conduct due diligence on the current status of the property. The executing court shall investigate the current status of the property and shall not exempt its investigation responsibilities on the grounds of "current status auction". The following assets should be investigated with a focus on the following matters:

(1) For real estate, ownership relationships, occupancy and usage, layout plans, transaction tax items and rates, known defects, and other information should be investigated through methods such as retrieving registration information, conducting on-site surveys, and conducting household surveys;

(2) For motor vehicles, information that has a significant impact on the value of the vehicle, such as registration information, violation information, emission standards, and mileage, should be investigated;

(3) Regarding food, it is necessary to investigate whether it has expired, whether it has spoiled, whether it belongs to prohibited production and sales items, and other information to prevent counterfeit and inferior food from entering the market through online judicial auctions, which may harm the health and safety of the people;

(4) For equity, it is necessary to investigate the shareholding ratio, subscribed capital, paid in capital, investment period, financial statements, as well as information such as dividends and bonuses that have a significant impact on the value of equity.

2. Strictly examine the authenticity of the burden of rights. In the process of property investigation, the executing court should increase its efforts to identify false burdens of rights. If a third party claims that there are burdens of rights such as lease or residence on the property, the focus should be on the time of contract signing, lease or residence period, rent payment, occupation and use, etc., to examine the authenticity of the burden of rights. If the facts and claims presented by the third party are contrary to daily life experience and business transaction habits, the request for the third party to dispose of the "lease right" and "residence right" will not be supported. If an outsider has objections, they can seek relief through the objection procedure. If it is found that the person subject to enforcement and a third party have colluded maliciously to reverse the signing of a lease contract, fabricated a long-term lease agreement, or other means to evade or obstruct enforcement, they shall be held legally responsible in accordance with the law.

3. Carefully verify the construction project price situation. When the court disposes of construction projects, it shall investigate whether the construction project price is owed in accordance with the law, and handle it according to the following situations:

(1) If it is found that there is or may be an unpaid construction project price, but there is no claim from the right holder, the executing court may identify the relevant right holder through posting auction notices, retrieving engineering contracts, questioning the executed party, etc., notify them to claim their rights in a timely manner, strive to resolve disputes in one go, and reduce subsequent disputes.

(2) If a third party who has not yet obtained a basis for execution claims to have priority in receiving compensation for the construction project price and requests priority compensation, the executing court shall review the construction contract and inquire with the executed party. After examination, it is determined that the third party to the case does not have priority for compensation. If the third party is dissatisfied, they may resort to the objection procedure or file a separate lawsuit for relief; If it is determined that a third party has priority for compensation, they should be included in the distribution plan. If the parties are dissatisfied with the plan, they can seek relief through the distribution plan objection and the distribution plan objection litigation procedure.

(3) If the priority payee of the construction project price claims that they have reached an agreement with the debtor to offset the debt with a house, and apply for exclusion of execution based on this, the executing court shall handle it in accordance with Article 238 of the Civil Procedure Law.

4. Standardize the application of inquiry methods. For properties such as residential buildings and motor vehicles that do not require on-site inspection or appraisal by professionals and have big data transaction references, online inquiry methods can be chosen. If the parties or interested parties believe that online inquiry should not be applied or that the results of online inquiry deviate significantly from market value, and apply for entrusted evaluation, the executing court may allow it after examination.

Industrial plants, construction in progress, land use rights, comprehensive markets with a large number of shops, real estate with high decoration value, as well as special or complex properties such as equity and mining rights, currently do not have the conditions for inquiry. When the parties cannot reach a negotiated agreement, entrusted appraisal should be applied.

5. Improve the procedures for changing the value of assets involved in criminal cases. If a criminal judgment involves the execution of property, and the last auction of the involved property fails to result in a transaction, the executing court shall, in accordance with Article 12 (2) of the "Several Provisions of the Supreme People's Court on the Execution of Property Related Parts of Criminal Judgments" (Interpretation [2014] No. 13), consult with the financial department and the victim on whether they agree to receive the property or return it as compensation. If the financial department or the victim does not agree to receive the property or return it as compensation, an auction without reserve price can be conducted. However, for the auction of high-value assets such as real estate, mining rights, and bulk stocks without reserve prices, the margin and price increase should be reasonably determined, and after deliberation by the court, it should be submitted to the leadership of the competent authority for approval.

6. Truthfully disclose auction property information. The executing court shall fully and truthfully disclose the current status, occupation and use, known defects and rights burdens of the auctioned property obtained from the property investigation, and shall strictly prohibit concealing or exaggerating the defects of the auctioned property.

If the auctioned property is immovable property, the executing court shall publicize the occupation and use of immovable property in the auction notice, and shall not use expressions such as "unclear occupation" or "others occupying" in the auction notice. If it is decided to auction with "lease right" or "residence right", important information such as occupation and use, rent, term, and relevant rights holder information should be truthfully disclosed.

If laws, administrative regulations, and judicial interpretations have restrictions on the bidding qualifications of buyers, they should be publicly announced in the auction notice.

7. Improve the self disposal mechanism of the executed person. If the second online judicial auction fails, and the creditor applies to offset the debt with property or a third party applies to purchase at the failed price, the executing court shall notify the executed party. If the executed party claims to dispose of the auctioned property at a price higher than the unsold price, the executing court may allow it after examination and temporarily suspend the procedure of using the property as collateral or third-party purchase.

The self disposal period shall be determined by the executing court based on the property status, market conditions, etc., and generally shall not exceed 60 days. If the buyer disposes of the real estate transaction on their own, the executing court may issue a transfer order after the buyer has paid the full price to the executing court. If the buyer pays part of the price and applies for financing through loans or other means for the remaining price, and submits relevant financing and other procedures to the executing court, the executing court may issue a transfer order after coordinating with the real estate registration agency, and both parties shall handle the "sealed transfer" procedure. If the person subject to enforcement fails to dispose of it on their own, the executing court shall initiate procedures such as using property to offset debts or purchasing from a third party.

8. Increase the delivery of real estate relocation. When disposing of real estate, except for legal reasons, the executing court shall be responsible for vacating and delivering it, and it is strictly prohibited to declare "not responsible for vacating" in the auction announcement.

If it is necessary to organize the delivery of eviction, the executing court shall prepare a eviction plan and actively urge the executed person and relevant occupants to move out voluntarily. For those who still refuse to move out voluntarily after being urged, they should be strictly removed in accordance with the law, and law enforcement records and security measures should be taken.

During the process of eviction, if the executed person or a third party commits acts such as damaging property or obstructing execution, they shall be fined or detained according to the severity of the circumstances; If a crime is committed, criminal responsibility shall be pursued in accordance with the law.

9. Strictly discuss and approve major issues. The executing court shall establish a power list and ledger for major matters, and make joint decisions on important matters such as starting price, increase in price, burden of rights, auction of only housing, self disposal, debt to equity, and third-party purchase at unsold price. The decisions shall be submitted for approval according to procedures, and the chief judge's review and approval system shall be strictly implemented. The decision shall not be made by one executing personnel alone.

10. Strengthen the management of auction auxiliary work. Higher and intermediate people's courts should strengthen the unified management of auction auxiliary work in their jurisdiction, and increase guidance on auction auxiliary work for major, complex, and sensitive cases. Intermediate people's courts that meet the conditions may, based on the actual situation in their jurisdiction, set up relatively fixed personnel or teams to be responsible for the auxiliary work of auctions in their jurisdiction. If the executing court entrusts auction auxiliary work to auction auxiliary institutions, it is necessary to strengthen the supervision of the performance of auction auxiliary institutions, and it is strictly prohibited to entrust matters that must be handled by executing personnel according to laws and judicial interpretations to auction auxiliary institutions for completion; It is strictly prohibited for auction assistants to use case handling systems, accounts, and keys, and to prevent the leakage of case handling secrets; It is strictly prohibited to have private contact with bidders. If on-site sample viewing is required, there must be two or more auction assistants present; It is strictly prohibited for auction auxiliary institutions, auction auxiliary personnel, and their close relatives to participate in bidding for the property they undertake auction auxiliary work for; It is strictly prohibited to disclose the information of potential bidders to third parties; It is strictly prohibited to collect fees without authorization and exclude potential bidders in violation of regulations. Effective management measures should be formulated based on the actual work in the jurisdiction, clarifying the responsibilities and list of auction auxiliary institutions, standardizing billing methods and standards, and strictly regulating the admission and exit procedures of auction auxiliary institutions. We need to establish a mechanism for holding accountable those who violate discipline and laws. If auction auxiliary institutions are found to have illegal or irregular behavior or do not meet the requirements for storage, disciplinary measures such as suspension, cancellation of entrusted qualifications, or even expulsion will be taken depending on the circumstances.

11. Crack down on behaviors that disrupt the order of online photography in accordance with the law. People's courts at all levels should actively cooperate with public security, housing construction, market supervision and management departments to crack down on acts that seriously disrupt the online judicial auction order by exaggerating, deceiving, misleading and other means to publicize and provide one-stop services such as "pre auction investigation", "clearing and housing", and "docking with the court" to induce buyers to pay high commissions, or even forging judicial documents to defraud property. We need to establish a normalized working mechanism and maintain the order of online judicial auctions in accordance with the law by increasing publicity on online judicial auctions, regularly publishing typical cases, and conducting special activities.

12. Deepen comprehensive supervision of online photography. People's courts at all levels should strictly carry out their work in accordance with the requirements of laws and judicial interpretations, ensuring that online judicial auctions are open, transparent, timely, efficient, and leave a full record. We should actively accept the full supervision of the auction activities by the parties and the public, and promptly verify, correct, and respond to social concerns regarding auction issues raised by the parties, the public, or the media.

We should actively accept legal supervision from the procuratorial organs, promote information sharing, smooth supervision channels, and standardize, normalize, and institutionalize the implementation of procuratorial supervision. For auction or eviction delivery cases that are significant, sensitive, complex, or strongly reflected by the people, the procuratorial organs may be invited to supervise the execution activities on site.