[Direct answer]In the Beijing area, the scope of property subject to floating mortgages shall be determined based on the existing and future production equipment, raw materials, semi-finished products, and products of the enterprise at the time the mortgaged property is determined. According to Article 396 of the Civil Code of the People's Republic of China (effective January 1, 2021), the enterprise may set up a floating mortgage on the aforementioned movable property. The mortgage right shall be established upon the effectiveness of the mortgage contract, and it shall not be enforceable against bona fide third parties without registration. The scope of property shall be "determined" when the statutory circumstances arise. It is recommended to check the mortgage contract and registration, clarify the agreed determination circumstances, and consult a professional lawyer in time. For more details, please refer toCreditor-debtor relations and enforcement case services.

1. Problem background and typical scenarios

Floating mortgages are commonly used in financing and credit enhancement for production enterprises. Typical scenarios include: factories borrowing money from banks with an overall mortgage of "existing and future equipment, raw materials, semi-finished products, and finished products"; during the mortgage period, the enterprise normally sells goods, and the creditor worries that "the mortgaged assets will disappear if sold"; when the enterprise goes bankrupt or defaults, both parties have intense disputes over "what constitutes mortgaged property at this moment"; and unregistered mortgages result in bona fide buyers obtaining the property and the creditor being unable to recover it. Many creditors mistakenly believe that floating mortgages can lock in all assets, ignoring the rules of "determination" and "registration against third parties". For equipment and factory buildings, they can be combined with other mortgage types to enhance the security of the mortgage.Real estate sales and construction project servicesLet's discuss and evaluate them together.

II. Key points of contention

The focus of the dispute centers on three points. Firstly, the determination of the time point: the floating mortgage shall determine the property when the debt is not performed, the mortgagor is bankrupt or dissolved, or the agreed circumstances occur, and the normal sale before determination shall not be pursued. Secondly, the registration opposition: if it is not registered, it cannot be opposed to bona fide third parties, but if it is registered, it can be opposed. However, the boundary of the buyer's bona fide is the key. Thirdly, the scope boundary: it is limited to production equipment, raw materials, semi-finished products, and products, excluding real estate and other assets. When handling similar cases in the Beijing area, the review of the registration effect and bona fide acquisition is more stringent, and creditors should pay attention to the completeness of the registration. For enterprise transactions, you can refer to it.Business and contract dispute resolution services for enterprises.

III. Professional analysis by Hengluo Lawyers

Based on our practical experience in handling guarantee and enforcement cases, the most problematic aspects of floating mortgages are the two ends of "determination and opposition". In practice, some creditors claim to pursue the buyer but are rejected before registration; or they only discover after the enterprise goes bankrupt that the mortgaged property has long been lost through normal sales, which greatly reduces the scope of pursuit. Henglu Law Firm usually first verifies the registration of floating mortgages and the circumstances of determination stipulated in the contract, distinguishes between normal circulation before determination and existing property after determination, and then claims priority compensation for specific property. For buyers who have acquired the property in good faith, we will point out the risk of missing registration. The key to such cases is to clearly define "when the determination occurs and what assets are involved at the time of determination", so as to avoid the priority compensation being lost due to disputes over the scope of application. For assets involving multiple fields, we can combine them with other legal services to provide comprehensive solutions.Special services and other case servicesCoordinate and plan everything in an organized and efficient manner to ensure that all tasks are completed on time and within budget.

IV. Practical suggestions and legal basis

The core basis is Article 396 (Subject and Establishment of Floating Mortgage) of the Civil Code of the People's Republic of China (effective January 1, 2021), Article 398 (Determination of Mortgaged Property upon the Occurrence of Any of the Following Circumstances), Article 401 (Determining Circumstances: Non-Performance of Debt, Bankruptcy or Dissolution of the Mortgagor, or Realization of Agreed Circumstances), and the provisions on registration opposition. Practical suggestions: When signing a floating mortgage contract, clearly stipulate the determining circumstances and handle the registration; continuously monitor the mortgagor's operations and asset changes; promptly fix the existing property list and claim priority compensation after the determining circumstances arise; and pay attention to the registration opposition effect against bona fide buyers. For matters involving the registration effect, it can be combined with the relevant provisions of the Civil Code.Beijing Henglu Law FirmTo understand the key points of similar products, please visit our official website.

5. Henglu Law Firm's Reminder

A floating mortgage is a "dynamic" guarantee, where the mortgaged property circulates during the operation, and its scope is only fixed when legal circumstances arise. It is recommended that creditors pay attention to the evidence fixation of registration and determination points, rather than viewing the mortgaged property in a static manner. The mortgagor should also be aware that, after determination, the existing movable property will be subject to priority compensation, and cannot be evaded through circulation. Never conceal the guarantee or transfer assets maliciously without registration. If professional support is needed, the parties may design registration and determination clauses with the help of a lawyer to reduce the risk of failing to recover the debt.

VI. Frequently Asked Questions

Q1: What is the scope of the property subject to a floating mortgage, and how is it ultimately calculated?

The production equipment, raw materials, semi-finished products, and products currently owned and to be owned by the enterprise at the time of "determination of the mortgaged property" shall prevail. The Civil Code stipulates that the floating mortgage shall be determined when the debt is not performed upon maturity, the mortgagor is bankrupt or dissolved, or the agreed circumstances occur. Normal sales before determination shall not be pursued, and the above-mentioned movable properties retained at the time of determination shall be the mortgaged property. The result depends on the time of determination and the actual assets at that time. The lawyer will help you fix the inventory and registration evidence, rather than promising a certain scope of determination.

Q2: To claim priority compensation for a floating mortgage, what evidence do I need to prepare?

The core evidence includes: a floating mortgage contract, which clearly stipulates the subject and the circumstances of determination; a mortgage registration certificate, which proves the effectiveness of the mortgage against third parties; evidence of the debtor's failure to perform the obligation when the debt matures; materials proving the occurrence of the circumstances of determination (such as bankruptcy rulings and default notifications); and a list of the mortgagor's existing production equipment, raw materials, semi-finished products, and products, together with ownership certificates at the time of determination. The materials should be organized around "effective establishment + registered + assets at the time of determination". Failure to register will affect the effectiveness of the mortgage against bona fide third parties.

Q3: How much does it cost to hire a lawyer to handle matters related to floating mortgages?

The attorney's fees are negotiated between the law firm and the client. They are typically charged on a contingency basis or based on a percentage of the litigation value, with the specific fees determined by the client contract. There is no nationwide standard pricing. If the case involves registration, post-enforcement objections, or disputes over bona fide acquisition, the fees will increase accordingly. It is recommended to request a detailed fee breakdown, clarifying the stages of representation and whether it includes third-party fees such as application fees and preservation fees. This should be weighed against the scale of the creditor's claims that are entitled to priority repayment.

Q4: How long does it usually take from the moment the circumstances are confirmed to the moment the mortgage property is compensated?

After the situation is determined, it often takes several months to half a year to litigate for the confirmation of rights; after entering the execution phase, it takes several months for the seizure, evaluation, and auction. If the mortgagor goes bankrupt, the debt will be integrated into the bankruptcy process for unified repayment, and the duration will depend on the progress of the bankruptcy proceedings. Overall, it often takes several months or even longer from the determination to the actual compensation. It is recommended to fix the list of fixed assets and register them for protection as soon as the situation is determined, in order to avoid the loss of property.

Q5: I want to set up or claim a floating mortgage. What should I do specifically in the first step?

It is recommended to proceed in four steps: First, sort out the production equipment, raw materials, semi-finished products, and product ranges that can be used for floating mortgages; Second, sign a written mortgage contract and clearly stipulate the circumstances to be determined, and register it in accordance with the law to obtain the opposable effect; Third, continuously monitor the borrower's operations and asset changes, and determine the list of existing properties when the circumstances arise; Fourth, with the help of a lawyer, claim priority repayment and deal with disputes over bona fide acquisition and execution objections. Throughout the process, keep the contract and registration certificates to avoid the failure of priority repayment due to disputes over the scope of the mortgage.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudication standards in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →\nLegal services for creditor-debtor disputes·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In the event of a dispute, please consult a practicing lawyer in a timely manner.