For simple transactions, the parties typically sign a real estate sale and purchase contract, which is submitted to the local registry for title transfer registration. PRC national and local authorities have published model forms of sale and purchase contracts (in Chinese only) for reference by sellers and buyers.

For more complicated transactions, parties may also need to sign the following documents:

• Framework or master agreement for the transaction
• Release agreement for an existing mortgage
• New mortgage agreement
• Escrow agreement for down payment and stage payment
• Estoppel certificates to be signed by tenants
• Sub-deed of mutual covenants
• Easement agreements

The seller of property is generally deemed by the law to have given warranties to the buyer that the seller has good title to the property being sold and that the property is not subject to adverse encumbrances.

For commercial transactions, the buyers usually will negotiate more extensive representations and warranties from the sellers to cover environmental matters, tenancy, tax, easements and other matters of concern to the buyer.

The general rule is that a sale and purchase contract for real estate will become legally binding upon due execution by the seller and the buyer. PRC law allows the parties to set conditions precedent for transaction closing and title transfer.

Title will only be transferred from the seller to the buyer upon due registration of the transfer at the local registry.

A corporate buyer typically pays for the following costs in a sale and purchase of real estate:

• Buyer’s agent’s fees
• Its own legal costs
• Due diligence costs for consultants who have prepared building condition reports, environmental assessments, valuation appraisals and real estate surveys
• Due diligence costs for inquiries made to statutory and government bodies
• Nominal fees for title registration
• Deed tax of 3–5% of the transfer price
• Stamp duty of 0.05% of the transfer price

A corporate seller typically pays for the following costs in a sale and purchase of real estate:

• Seller’s agent’s fees
• Its own legal costs
• VAT and surcharge (the VAT rate is 11% of the transfer price with allowance for deduction of input VAT, or (i) if the corporate seller is a small-scale taxpayer, the VAT rate is 5% of the transfer price without deduction of input VAT; or (ii) if the corporate seller is a general taxpayer and the real estate project is an old project with construction permit issued on or before 30 April 2016, the seller can opt to adopt simple method VAT which is 5% of the transfer price without deduction of input VAT, and the surcharge is from 6–12% on payable VAT)
• Land appreciation tax (at progressive rates of 30–60% on the taxable gains)
• Corporate income tax (25% on net profit)
• Stamp duty of 0.05% of the transfer price