Item (2) of Article 37 of the Guarantee Law and Item (2) of Article 184 of the Property Law clearly stipulate that "collectively-owned land use rights such as cultivated land, homestead, private plots and private hills" shall not be mortgaged.
Because this contract mode with the family as the production and business operation unit is a universal right to guarantee the basic living conditions of members in rural collective economic organizations, it has a strong social security nature and welfare function. With this right as collateral, once the mortgagee's rights are realized, the mortgagor may lose the minimum living conditions and cause serious social problems. Therefore, the law stipulates that it cannot be used as collateral.
Article 52 of the Supreme People's Court's Interpretation on Several Issues Concerning the Application of the Guarantee Law stipulates: "If the parties mortgage the crops and the land use rights that have not been separated from them at the same time, the mortgage of the land use rights is invalid."
Article 15 of the Supreme People's Court's Interpretation on Applicable Legal Issues in the Trial of Rural Land Contract Disputes also stipulates: "If a contractor mortgages or pays off debts with his land contractual management right, it shall be deemed invalid."
However, according to Article 34, Item 5 of 1 of the Guarantee Law, Article 49 of the Rural Land Contract Law and Item 3 of Article 180 of the Property Law, the contracted management rights of wasteland and other land obtained through bidding, auction and public consultation can be mortgaged with the consent of the employer. Because this is conducive to promoting the development and utilization of wasteland, and its business cycle is longer.
Extended data
Paragraph 2 of Article 37 of the Guarantee Law and paragraph 2 of Article 184 of the Property Law clearly stipulate that "collectively owned land use rights such as cultivated land, homestead, private plots and private plots of hills" shall not be mortgaged. This is because the contracted management mode with the family as the production and business operation unit is a universal right to ensure the basic living conditions of members in rural collective economic organizations, which has a strong social security nature and welfare function.
With this right as collateral, once the mortgagee's rights are realized, the mortgagor may lose the minimum living conditions and cause serious social problems. Therefore, the law stipulates that it cannot be used as collateral.
Baidu Encyclopedia-People's Republic of China (PRC) Rural Land Contract Law (laws and regulations)