Right of Residence and Cross-border Estate Planning for Properties in China
First, right of residence is a right in real properties, and to be more speciﬁc, a right created in residential properties only.
Article 366 of China Civil Code, one of the provisions regarding usufructuary rights, deﬁnes the right of residence as follows:
Article 366 An owner of right of residence is, pursuant to the terms of contract, entitled to a usufructuary right of possessing and using the residential properties of others for purpose of satisfying the need of residence in life.
Quotation of Original Provision in Chinese and English Translation
As a legal concept, the deﬁnition of right of residence comprises the following key elements
for purpose of accurate understanding thereof:
(1) it is a property right, a usufructuary right, not purely a contractual or obligatory right, even though it is created out of a contract. It entitles the holder of the right to possess and use a physical property, in this case, a home; it is worthy of a note that this right of residence can only be created upon residential properties, not commercial properties.
(2) it is a right created in the property owned by others. You don’t have right of residence to your own properties since there is no need for this. If you own a property yourself, you have the absolute right to reside in it;
(3) it is a right created by law to satisfy the basic life need of residence, not for proﬁts, not for business purpose. In practice, it is most likely to be created for family members or someone that has a close personal relationship to the owner of the property such as a personal caretaker for elderly people.