and has the right to seek preferred payments from such chattels.

The "obligee" 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 the 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 "fruits" 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 of 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 deficit.

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 loses 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 right 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.

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 right 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.

(Source: www.fdi.gov.cn , not the official translation)