Home purchase under nominee name means that one party (the actual investor) purchases a property under the name of another person (the nominee buyer). The property ownership is registered under the nominee buyer’s name, while the actual investor occupies, uses and enjoys the benefits of the property, and keeps possession of the housing sales contract, real estate ownership certificate and other relevant documents.
Common Circumstances of Home Purchase Under Nominee Name
In practice, parties adopt nominee home purchase for various reasons: being ineligible to buy affordable housing, having a bad bank credit record, or being unable to apply for a mortgage loan due to housing credit restriction policies. Under such circumstances, they purchase property under another person’s name and change the counterparty of the housing sales contract to the nominee.
Such cases are extremely common. If the nominee buyer and the actual investor maintain a good relationship, the actual investor can live in and use the property as usual despite the nominal registration under another person’s name. However, once the nominee claims proprietary rights over the property, the stable status will be broken.
Case Interpretation by Legal Precedent
Party B obtained the qualification to purchase affordable housing due to house demolition. Seizing the opportunity, Party A bought the house by using Party B’s affordable housing qualification and paid the full consideration. Soon afterwards, a dispute arose between the two parties.
Party A filed a lawsuit, requesting the court to confirm that it is the legitimate owner of the property and order Party B to cooperate in transferring the property ownership registration to Party A. By contrast, Party B argued that the property registered under his name belongs to his personal property, and claimed that the money paid by Party A was actually a loan borrowed by Party B from Party A due to financial difficulties.
How shall the court determine the ownership of the property in this case?
The core dispute of the case lies in whether a nominee home purchase relationship exists between Party A and Party B and the validity of such relationship.
Party A signed and held the housing sales contract, purchase invoices, loan repayment vouchers, paid the down payment and monthly mortgage installments, and has resided in and used the property since its delivery.
Considering the actual capital contribution, occupation and usage of the property, as well as the possession of purchase documents and ownership certificates, the above facts are sufficient to presume the existence of a nominee home purchase relationship between Party A and Party B. Party B’s claim that the fund was a private loan due to financial difficulties lacks factual evidence.
It should be reminded that the court adopts strict rules of evidence adjudication. Adhering to the principle of property right registration under nominal title, the court will not easily uphold the existence of a nominee home purchase relationship.
Even if the existence of the nominee home purchase relationship is substantiated in fact, Party B further argued that the transaction of such housing is subject to special national regulations and restrictions. Party A’s act of purchasing the house under a nominee name was an attempt to evade national laws and policies, and thus Party A’s claim should not be upheld. What is the court’s stance on this issue?
The court of first instance held that nominee home purchase is essentially a transaction involving housing purchase qualification. The affordable housing involved is merely a restricted-circulation property rather than a prohibited-circulation property.
In this case, Party B obtained the affordable housing qualification due to house demolition, not on the ground of financial hardship. The nominee home purchase arrangement between Party A and Party B did not harm national interests or the legitimate rights and interests of any third party.
In addition, more than five years have passed since the issuance of the property ownership certificate and the payment of deed tax, meaning the restriction on market transaction has expired. Hence, the conditions for handling the ownership transfer registration of the disputed property have been satisfied.
Both the first-instance and second-instance courts upheld Party A’s claims: confirming Party A’s ownership of the disputed property and ordering the transfer of property registration to Party A.
Nominee home purchase is usually intended to circumvent specific regulatory restrictions or take advantage of preferential policy terms. Whether such conduct infringes upon national interests, public interests or the legitimate rights and interests of a third party is a key consideration for the court in judging the validity of a nominee home purchase relationship.