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TheEvolutionofPropertyLawinTaiwan:
AnUnconventionalInterestGroupStory
Yun‐chienChang*
TableofContents
I. Introduction ............................................................................................................ 1
II. Overview of Current Property Law in Taiwan ...................................................... 3
A. Ownership and Registration ........................................................................... 4
B. Use Rights ...................................................................................................... 7
C. Securities Rights .......................................................................................... 12
D. Dian, a Hybrid Form .................................................................................... 16
III. The Reform in 2007–2010 ................................................................................... 17
A. Source of (New) Law ................................................................................... 18
B. Legislature as Rubber Stamp ....................................................................... 21
C. Legal Scholars as the Dominant Force ........................................................ 22
IV. Toward a More Efficient Property Law ............................................................... 23
A. Reducing Information Costs and Inducing Cost-justified Information
Gathering.............................................................................................................. 25
B. Boundary Encroachment .............................................................................. 26
V. Conclusion ........................................................................................................... 28
Keywords
Interestgroup,efficiency,scholar,informationcosts,registration,boundary
encroachment,userights,securityrights,ownership
*AssociateResearchProfessor&DeputyDirectorofCenterforEmpiricalLegalStudies,InstitutumIurisprudentiae,AcademiaSinica,Taiwan.J.S.D.,NewYorkUniversitySchoolofLaw. Email:[email protected].
Yun‐chienChang
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I. INTRODUCTION
ThisbookchapterstudiestheevolutionofstatutorypropertylawinTaiwan.1
Thatis,whatdrivesthelarge‐scaleoverhaulsoftheBookofThings—BookIIIof
theTaiwanCivilCode—during2007–2010andwhethertheamendment
producesmoreefficientlegalrules.UnlikeDemsetz(1967),Krier(2009),
Levmore(2002),andotherswhostudytheevolutionofpropertyrights,this
chapterfocusesnotonwhyresourceschangefrombeingheldincommonsto
beingheldexclusivelybyoneorafewprivateparties,butonwhystatutory
propertylawsareamended,2 whichmayormaynotinvolveprivatization.
Levmore(2002)’sanalyticalframeworkisthestartingbookforthischapter.
Levmore(2002:S451)pointsoutthat“[t]hecontentofprivatepropertyisitselfa
functionofgovernment,andvirtuallyalllegalmovesneedtobeanalyzedin
termsofbothtransactioncostsandinterestgroups.”Thischapterwillexamine
whetherthestatutoryamendmentwasdrivenbyinterestgroups,andtowhat
extentthenewlawhasincreasedeconomicefficiency.“Normativejudgments
abouttheroleofgovernmentinmaintainingandtransformingproperty
arrangementsmustdependonlocalevidenceaboutgivenpiecesofproperty,
industries,andsoforth”(Levmore2002:S451).Inordertounveilthedriving
forcebehindtheamendmentofpropertylawinTaiwan,thischapterpresents
descriptivestatisticsandinterviews,anddigsintoarchivesoflegislativehearings
andmeetingminutesofthetaskforceinchargeofproposingbillstothe
legislature.
Thetransactioncostversusinterestgroupstoriescanbealignedinanother
dimension:formalversusinformalpropertyrights.Thetransactioncoststory
moreeasilyexplainstheemergenceofinformalpropertyrightsin“relatively
close‐knit,egalitariancommunities”(Merrill2002:S338),suchasfurrightsin
Indiantribes(Demsetz1967)andrightsofparkingspaceduringstormin
secondarystreetsinChicago(Epstein2002).Socialnormtheorycouldwell
complementthetransactioncoststory(forexampleaddinginanorm
entrepreneur)inexplainingtheemergenceofpropertycustoms(Ellickson1991).
Bycontrast,interestgrouptheorycanmoreeasilyexplaincontemporarychanges
informalpropertyrights(particularlythosethroughamendmentsof
property‐relatedstatutes,suchaslanduseregulationsandcivilcodes).3 Since
1 OfficialEnglishtranslationoftheTaiwanCivilCodeisavailableathttp://law.moj.gov.tw/Eng/LawClass/LawContent.aspx?PCODE=B0000001.2 Forthedisconnectionbetweentheeconomicsofpropertyrightsandtheeconomicsofpropertylaws,seeLueckandMiceli(2007:187).3 CompareWyman(2005)’sapproachthatemphasizestheroleofpoliticalinstitutioninestablishingpropertyrights(individualtransferablequotainfishery)inordertoincrease
Yun‐chienChang
2
interestgroupsaremorelikelytobenefitfromprivatizationorreallocating
entitlementsthandevolutionintocommons(Levmore2002:S429),andgiven
thatelectedlegislatorsgenerallydonotamendlawtoimproveefficiency
(Levmore2002:S428),wecanexpectthatchangesinpropertystatutestendto
benefitthepoliticallypowerfulattheexpenseofthepoliticallyweak.
YettheBookofThingsintheTaiwanCivilCodeisnoordinarystatutes.The
Bookcontainsmanygeneralandabstractdoctrinessuchasthedoctrineoffirst
possessionthatisunlikelytogreatlyaffectthewealthofmanypeople.Thecosts
ofovercomingthecollectiveactionproblem(Olson2009)arelikelytooutweigh
thetinybenefiteachparticipantreceives.Evenforbiglandowners,statutes
regardingpropertytaxes,landuseregulation,urbanrenewal,eminentdomain,
etc.involvehigherstakesthanthemostly“technical”stipulationsintheTaiwan
CivilCode.Thus,eventhoughthepoliticallypowerfulmaybeabletobullythe
politicallyweak,itmightnotworththeformer’stimeandresourcetodothatin
amendingtheTaiwanCivilCode.
Againstthisbackdrop,thischapterdealswiththeissueofwhoelsethen
drivesthelegislativeamendmentsin2007–2010.Afterall,elected
representatives,aspartoftheinterestgrouppolitics,areunlikelytoinitiateby
themselvestheunsexyamendmentoftheTaiwanCivilCode,asthatwillnot
resultinmuchcampaigncontributionsorvotesinthenextelection.Mystoryis
thatthejuristsdrivethelegalchange.Tobemoreexact,thescholarlyjudges4
andpropertylawscholarsdominatetheamendmentprocess.
Oneoftheoldestandlongestdebateinlawandeconomicsiswhetherand
whythejudge‐madecommonlawtendstobecomemoreefficientovertime,
whilethelegislator‐madestatutesdonot(e.g.Posner1973;Priest1977;Rubin
1977,1982;Parisi2004;Fon,Parisi,andDepoorter2005;Ponzettoand
Fernandez2008;Niblett,Posner,andShleifer2010;Posner2010;Zywickiand
Stringham2010;GaroupaandLigüerre2011).IntheU.S.,analternative
expressionofthisdichotomyisthatprivatelawstendtobeefficientwhile
statutoryregulationstendtobeinefficient(Posner2010:714–16).5 When
applyingthisframeworktocivillawcountries,wherestatutesaresourcesof
privatelaw,thefirst‐orderinquiryiswhetherprivatelaws(civilcodes)willbe
efficientbecauseitdealswithcivilmattersorwhethertheywillbeinefficient
becausetheyareenactedbylegislatures.Anotherdimensionwouldbetoaskin economicefficiency. 4 Iusethetermscholarlyjudgestodescribejudgeswhoeitherserveasadjunctlawprofessorsorpublishlegaltextbooks. 5 CompareRubin(1982:207)whichcontendsthatthestatute‐commonlawdistinctionisoneintime.Thatis,“intheearlyperiodmostlawwasefficientandmostlawwascommonlaw.Inthelaterperiod,mostlawwasinefficientandmostlawwasstatutelaw.”
Yun‐chienChang
3
privatelaws,regardingthesamelegalproblem,whetherthedoctrinein
Americancommonlaworthatincivillawtendstobemoreefficient.Chang
(2013a),forexample,findsthatacode‐stipulatedpropertydoctrine,accessto
landlockedland,inseveralEuropeanandAsiancivil‐lawcountriesaremore
efficientthatitscounterpartdoctrineintheU.S.commonlaw.Garoupaand
Ligüerre(2011:308–21)contendthesuperiorityofFrenchlawintermsof
efficiencyovertheAmericanlaw.ArruñadaandAndonova(2008:83)pointout
thatbothcommonlawandcivillawattheirinceptionsinthenineteenthcentury
werebothefficientadaptationtothelocalcircumstances,andthecivillaw
countriesinthenineteenthcenturyreservedmorerule‐makingpowerstothe
legislature,insteadofthecourt,topreservethemarket.
MystudyhereontheevolutionofpropertylawinTaiwanfurthercomplicates
thisdebate.Ifindthatthelegislaturerubber‐stampedtheproposedbillsentfrom
theexecutivebranch,andthishighlytechnicalandsophisticatedbillisthe
brainchildofanofficialtaskforceconsistingofpropertyscholarsandjudges.In
otherwords,thedepressingstoryusuallytoldbypublicchoicetheorists,suchas
legislativechangesreflectingthenarrowinterestsoflobbyinggroupsanddonors
ofcampaignfunds,isnotapplicablehere.Iftheprimafaciecaseagainststatutes
intermsofefficiencyislifted,canwemakeageneralpredictionastowhether
statuteslikethiswillbewelfareenhancing?6 Iamnotreadytoofferagrand
theory.YetmycasestudyontheevolutionofpropertylawinTaiwansingsa
positivenote,asmyobservationisthattheamendmentsofBookofThingsare
generallyKaldor‐Hicks‐improving.Ofcourse,civilcodesarespecialcases,somy
findingsmaynotbereadilygeneralizable.Butcivilcodesareimportantlaws,so
anytheoryonthegeneralinefficiencyofstatutesshouldbeabletoexplainthem.
Thestructureofthischapterisasfollows:PartIIsummarizesthecurrent
propertylawinTaiwan.PartIIIdescribesthechangesofpropertylawin2007–
2010.PartIVdiscusseswhetherthenewtheTaiwanCivilCodeismoreefficient
thanitspredecessor.PartIVconcludes.
II. OVERVIEWOFCURRENTPROPERTYLAWINTAIWAN
TheoriginalTaiwanCivilCodewasenactedin1929andwentintoforcein
1930whentheNationalistGovernmentstillreignedChina.In1949,thedefeated
Nationalistgovernmentbroughtgold,treasuresfromtheForbiddenCity,millions
ofsoldiersandofficials,andenactedcodestoTaiwan.TheTaiwanCivilCode,in
6 Rubin(1982)haspointedoutthatthereisnoapriorireasonfortheinefficiencyofstatutes,butdoesnotproposeageneraltheorytopredictthe(in)efficiencyofstatutes.
Yun‐chienChang
4
particular,continuedtobetheprivatelawofthelandwithoutinterruption.The
TaiwanCivilCodewasdraftedwiththeassistanceofJapaneseconsultants,andis
heavilyinfluencedbyGermanandSwisscivilcodes(see,e.g.,Tsai2000:54–55).
ThedraftersalsoincorporatedintheTaiwanCivilCodethe“dianright,”a
traditionalChinesepropertyright,anddidnotimportusufructandsecurity
intereststhatwereadoptedintheGermanCivilCodebutdistantfromproperty
practiceinChina.
TheTaiwanCivilCodewentthroughamajoroverhaulin2007–2010(see
PartIII).Thepre‐2009Article757oftheTaiwanCivilCodeadoptedastrict
versionofthenumerusclaususprinciple(MerrillandSmith2000;Hansmannand
Kraakman2002),butthe2009amendmentswitchedtoalooserversionunder
whichpropertycustomscancreatepropertyforms.Nevertheless,sofarcourtsin
Taiwanhavenotyetformallyrecognizedcustomarypropertyforms,thoughthey
havedonesoimplicitly(Chang2014b).Thispartbrieflyoverviewstheproperty
formsformallyrecognizedintheTaiwanCivilCodeasof2014.
A. OwnershipandRegistration
LikeothercivilcodesinfluencedbytheGermanCivilCode,theTaiwanCivil
Codecontrastsownershipandpossession(Chang2014a).Ownershipisafull
titletorealorpersonalproperties,whilepossession,definedasactualcontrol,is
afact.LikeundertheJapanCivilCode(Article86)andChina’sPropertyLawof
2007,landandfixtures(suchasbuildings)areseparatethingsandthuscanbe
(andnotinfrequently)ownedbydifferentpersons.Therearethreetypesof
co‐ownership,tenancy‐in‐common(Chang2012),owners‐in‐common(similarto
butnotexactlythesameasjointtenancy),andcondominium.Asasnapshot,on
Feb.11,2011,20.5%oflandparcelswereco‐owned,whereas5.4%of
apartmentsorhouseswereco‐owned(seeFigure1forthedistributionofthe
numberofco‐owners).7
7 IacquiredadatasetfromtheMinistryoftheInteriorandcalculatethesestatisticsmyself.
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Figure1Thenumberofco‐tenantsinco‐ownedlandandapartment/house
Note:Theunitforcalculatingco‐ownersinlandisalandparcelwithitsownunique“land
number.”Theunitforcalculatingco‐ownersinnon‐landrealpropertiesisoneownershipright.
Thatis,ifthewholebuildingissubjecttooneownershipright,suchasahouse,thestatisticshere
describehowmanypeoplesharethatrightofownership.Ifthebuildingisacondominium,and
dividedintomultipleapartments,becauseeachapartmentissubjecttooneownershipright,the
statisticsheredescribehowmanypeoplesharethatrightofownershipinoneapartment,notthe
ownershipofthewholebuilding.
Titlesto,andlesserpropertyinterestsof,realpropertiescanbedejure
transferredonlyafterregistrationinthelandregistry.Taiwan,likeGermany,
adoptstheTorrensregistrationsystem(Arruñada2012:72–73).8 Land
registrationismandatoryandtheDepartmentofLandAdministration,Ministry
oftheInterior,hasactivelymappedlandinTaiwanandputlandintheregistry.At
theendof2012,thetotalareaofTaiwanis36,192.82squarekilometers,9 of
which3,493,7.12squarekilometersareregistered.10 Thatis,only3.47%ofland
isunregistered(Figure2),ofwhichmuchisstatelandthatisexemptedbythe 8 ForacliometricstudythatshowsthatintroducinglandregistrationinTaiwanunderJapaneseruleintheearlytwentiethcenturyhadincreasedlegalcertaintytotitleandthusincreasingfarmers’long‐terminvestment,seeKoo(2011).9 Statisticfromhttp://ebas1.ebas.gov.tw/pxweb/Dialog/Saveshow.asp(lastvisited2014/2/5).LandinTaiwanattheendof2012wasdividedinto14,959,589parcels. 10 Statisticfromhttp://sowf.moi.gov.tw/stat/year/list.htm(lastvisited2014/2/5).
10%
20%
30%
40%
50%
60%
70%
Pe
rcen
tage
2 5 10 15 20 25 >30Number of co-owners
LandApartment / House
Yun‐chienChang
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LandActforregistrationpurposes.Ontheotherhand,registrationoffixturesis
optional.Buildersoftheirownhouses,forexample,canchoosetoleavetheir
constructionsofftheregistry,attheexpenseofnotbeingabletotransfertitlesor
establishlesserpropertyinterestsdejure.Manydevelopersdonotregister
buildings,however,becausetheyhavefailedtocomplywiththebuildingcode.
Thatis,theycannotregistereveniftheywantto.(Thetaxauthoritiesseekout
thesefixturesandputtheminthe“taxregistry”tolevypropertytaxes.)These
kindsoffixtures,called“illegalbuildings”inTaiwan(Chang2014g)and“small
properties”inChina(Qiao2014)(seealsoQiaochapterinthisbook),cause
courtsinTaiwanalotoftrouble:numerousillegalbuildingsexistandwere
transacted,andyetlegallyspeakingnoformalpropertyrightscanchangehand.
Sincelate1950s,TaiwanSupremeCourtwasforcedtocreateanewtypeof
propertyrights,called“defactodisposalright.”Iwilldiscussthisinformal
propertyrightsinmoredetailinChang(2014b).
Figure2ChangesinpercentageofregisteredlandinTaiwan,2005–2012
DataSource:MinistryoftheInteriorStatisticalYearbook.Percentageis
calculatedbasedontheassumptionthatthroughouttheyearsthetotalsizeof
Taiwanisalways36,192.82squarekilometers.
96.5396.596.4595.77
91.37
87.69
84.18
82.49
8085
9095
100
% o
f re
gist
ered
land
2005 2006 2007 2008 2009 2010 2011 2012year
Yun‐chienChang
7
B. UseRights
TheTaiwanCivilCodeasofJune2014acknowledgesthreetypesofusufruct,
oruserights:superficies,easement,andagriculturalright.Emphyteusis,or
permanenttenancyrights,atraditionalformthatdatesallthewaytoRomanlaw
butrarelyutilizednowadays(Hsieh2007:26;Figure3),11 wasabolishedin2010
andreplacedbythenewagriculturalright.Asnotedabove,landandfixturesare
separaterealestates,whichmakesuperficies,orabove‐groundrights,12 acrucial
rightinlanduseplanning(leaseisatypeofcontractundertheTaiwanCivil
Code).Afixtureownerwillneedasupercifiestolegallyusethelandunderneath
herbuilding.Supercifiesislegallyeffectiveuponregistration.Whencontracting
overtemporaryimmovablepropertyuses,manypropertyownersstilluseleases,
whichhaveonlyinpersonameffect,resultinginmanylawsuitsanddisputes
regardingtearingdownofbuildings,ownersofwhichdonothavetherighttouse
theunderlyingland.13 Despitetheeaseofcreatingsuperficiesanditsin‐rem
effect,inrecentyears,perplexingly,thereisadownwardtrendinusing
superficiesuntil2012(Figure4andFigure5).Implementedlessthanfiveyears,
agriculturalrightshaveyettoprovetheirusefulness(Figure6).Before2010,
easements(orservitudes)canbesetbetweentwolandparcels.Nowtheycanbe
setbetweenanyrealproperty,suchasbetweenahouseandalandparcel.Only
easementsappurtenant,butnoteasementsingross,areallowed(Su2011:495–
97).No‐competitioneasementnevertakesoffinTaiwan;evenpassage
easementsarenotprevalent.AsFigure7shows,easementsarestunningly
infrequentlyused,14 thoughabigjumpinregistrationin2013isworthnoting.
11 Wang(2010:347–48)pointsoutthatthedemiseofemphyteusisshouldbeattributedtothelarge‐scalelandreforminthe1950s,duringwhichtheland‐uselawsstipulatedthattenantsreceivedownership—througheminentdomainand“givings”(BellandParchomovsky2001)—aftertwentyyearsofleasing.Permanenttenants,asaresult,essentiallydisappeared. 12 Above‐groundrightsarealiteraltranslation.Superficiescaninfactbeestablishedfordevelopmentsbelowlandsurface.SeeArticle832oftheTaiwanCivilCode.13 Article425‐1:“Thelandandthehouseonsuchlandbelongtooneperson,hetransfersonlytheownershipoflandofthehousetotheother,ortransferstheownershipoflandandhousesimultaneouslyorinsequencetothedifferentpersons,theleaseispresumedtobeconstitutedbetweenthetransfereeofthelandorofthehouseandthepersonoftransferor,orbetweenthetransfereeofthehouseandofthelandinthedurationoftheuseofthehouse.ThelimitationoftheperiodinthefirstparagraphofArticle449shallnotbeapplied.” Article838‐1:“Wherethelandandabuildingonsuchlandareownedbythesameperson,asuperficiesisdeemedtohavebeencreatedandtoexistatthetimewhenthelandandthebuildingarethereaftersoldbyauctionofcompulsoryexecutiontodifferentbidder,andtherental,term,andscopeofthesuperficiesshallbedeterminedbyagreementbetweentheparties.Ifsuchanagreementcannotbereached,thepartiescanapplytoacourtforajudgmentdeterminingthese.Thesameruleshallapplywheneitherthelandorthebuildingisauctioned.”14 In1999–2004,easementswereestablishedlessthan300timeseachyear(Wang2010:346).
Yun‐chienChang
8
TheamendedtheTaiwanCivilCode(Articles799‐1and859‐4)and
CondominiumAdministrationActenabledevelopersandresidentstouse
covenantsrunningwithrealpropertiesinplanningandmanagingcondominium
orlarge‐scaleneighborhoods.Doctrinally,thisisabreak‐through,butthemarket
hasnotpickedupthistool.15
Figure3Numberofemphyteusisregistration,byregistrationtypeandbyyear
DataSource:MinistryoftheInteriorStatisticalYearbook
15 Myconjectureisthatdevelopersusein‐rem“condominiumregulations”(allowedbyCondominiumAdministrationActfortwodecades)insteadofthenewtypeofeasement.Inmanyscenarios,bothfunctionsimilarly.
40
32
14
41
26
010
2030
40N
umbe
r of
cre
atio
n
2005 2006 2007 2008 2009
1
10
3 25
010
2030
40N
umbe
r of
tran
sfer
2005 2006 2007 2008 2009
22
17
33
18
25
010
2030
40N
umbe
r of
can
calla
tion
2005 2006 2007 2008 2009
Yun‐chienChang
9
Figure4Numberofsuperficiesregistration,byregistrationtypeandbyyear
DataSource:MinistryoftheInteriorStatisticalYearbook
10688
9731
7958
6119 5814
4541
25262950
6375
2,00
06,
000
10,0
00N
umbe
r of
cre
atio
n
'05 '06 '07 '08 '09 '10 '11 '12 '13
1182 1088 1065 989
2074
1145 1088 1106 9882,00
06,
000
10,0
00N
umbe
r of
tran
sfer
'05 '06 '07 '08 '09 '10 '11 '12 '13
1177 938505 486 262 184 151 150 149
2,00
06,
000
10,0
00N
umbe
r of
cha
nge
'05 '06 '07 '08 '09 '10 '11 '12 '13
8722 84458076
68866494 6713
59375315
6363
2,00
06,
000
10,0
00N
umbe
r of
can
cella
tion
'05 '06 '07 '08 '09 '10 '11 '12 '13
Yun‐chienChang
10
Figure5Numberoflandparcelsaffectedbynewsuperficiesregistrations,byregistrationtypeand
byyear
DataSource:MinistryoftheInteriorStatisticalYearbook
1637114857
11423
9395 90897069
43595222
10977
07,
000
14,0
0021
,000
Num
ber
of c
reat
ion
'05 '06 '07 '08 '09 '10 '11 '12 '13
2360 2652 2301 1893
4743
2227 2075 1742 1818
07,
000
14,0
0021
,000
Num
ber
of tr
ansf
er
'05 '06 '07 '08 '09 '10 '11 '12 '13
1840 1380 823 844 453 428 532 281 303
07,
000
14,0
0021
,000
Num
ber
of c
hang
e
'05 '06 '07 '08 '09 '10 '11 '12 '13
2220921975
19329
16135
1373514522
1252311708
14527
07,
000
14,0
0021
,000
Num
ber
of c
ance
llatio
n
'05 '06 '07 '08 '09 '10 '11 '12 '13
Yun‐chienChang
11
Figure6Numberofagriculturalrightregistration,byregistrationtypeandbyyear
DataSource:MinistryoftheInteriorStatisticalYearbook
996 10131062
025
050
075
01,
000
Num
ber
of c
reat
ion
2011 2012 2013
10 19 41
025
050
075
01,
000
Num
ber
of tr
ansf
er
2011 2012 2013
3 2
025
050
075
01,
000
Num
ber
of c
hang
e
2011 2012 2013
17 24 23
025
050
075
01,
000
Num
ber
of c
ance
llatio
n
2011 2012 2013
Yun‐chienChang
12
Figure7Numberofeasementregistration,byregistrationtypeandbyyear
DataSource:MinistryoftheInteriorStatisticalYearbook
C. SecuritiesRights
ThecurrentTaiwanCivilCodespecifiesthreetypesofsecuritiesrights:16
mortgage,pledge,andretention.Mortgage(calledhypothecinEuropeancivil‐law
countries)isbyfarthemostpopularlesserpropertyinterestsinTaiwan,with
hundredsofthousandsofregistrationfilingtocreatenewmortgageseachyear.
Therewasadecreasingtrendofusingmortgage,againpuzzling(Figure8;Figure
9;Figure10).The2009amendment,however,mayhavehaltedtheslide.The
numberofregistrationfilingforcreatingnewmortgagesandthenumberofland
parcelsorbuildingsnewlysubjecttomortgageremainstablesince2009.
The2009amendmentformallyintroduceasub‐typeofmortgageintothe
code,maximum‐amountmortgage.Despitethestrictnumerusclaususprinciple
intheoriginaltheTaiwanCivilCode,courtsandbankssincethe1960shave
recognizedthisformofmortgagerights(Chang2014b),whichsoftensthe 16 Unlikemanyothercivillawcountries,theTaiwanCivilCodeexplicitlytreatssecurityrightsastypesofpropertyforms,ratherthancontractualformsorintermediateforms(ChangandSmith2013).
136
225284
223171
206 200239
765
020
040
060
080
0N
umbe
r of
cre
atio
n
'05 '06 '07 '08 '09 '10 '11 '12 '13
260 237
342 330379 380 366
266
392
020
040
060
080
0N
umbe
r of
tran
sfer
'05 '06 '07 '08 '09 '10 '11 '12 '13
7 6 9 15 14 19 35 18 28
020
040
060
080
0N
umbe
r of
cha
nge
'05 '06 '07 '08 '09 '10 '11 '12 '13
32 50 3168 67 62 37 28
71
020
040
060
080
0N
umbe
r of
can
cella
tion
'05 '06 '07 '08 '09 '10 '11 '12 '13
Yun‐chienChang
13
accessoryprincipletoallowbothpartiestostipulatethemaximumamountof
creditsintheloancontract,andthelenderdoesnothavetoborrowoutthefull
amountattheoutset.Businesslendingoftentakesthisform.Bycontrast,home
mortgageisalwaysintheformofthetraditionalmortgage.Homemortgageloans
areheavilyregulatedevenbeforethe2008U.S.FinancialCrisis.Homemortgage
paymentsaregenerallyamortized.
Figure8Numberofmortgageregistration,byregistrationtypeandbyyear
DataSource:MinistryoftheInteriorStatisticalYearbook.Statisticsincludethenumberof
ordinarymortgageandmaximum‐amountmortgage.
616223637060
548573
491036472629 481142
459220 458474
519953
02
00
00
04
00
00
06
00
00
0N
um
be
r o
f cr
ea
tion
'05 '06 '07 '08 '09 '10 '11 '12 '13
21557 23981 11795 14552 9811 4938 4341 4211 11229
02
00
00
04
00
00
06
00
00
0N
um
be
r o
f tr
an
sfe
r
'05 '06 '07 '08 '09 '10 '11 '12 '13
41992 47685 44125 34874 39657 48439 51135 51302 56137
02
00
00
04
00
00
06
00
00
0N
um
be
r o
f ch
an
ge
'05 '06 '07 '08 '09 '10 '11 '12 '13
524750 526887
474615
431271 424978451138
431941 422116
462795
02
00
00
04
00
00
06
00
00
0N
um
be
r o
f ca
nce
llatio
n
'05 '06 '07 '08 '09 '10 '11 '12 '13
Yun‐chienChang
14
Figure9Numberoflandparcelsaffectedbynewmortgageregistrations,byregistrationtypeand
byyear
DataSource:MinistryoftheInteriorStatisticalYearbook.Statisticsincludethenumberof
ordinarymortgageandmaximum‐amountmortgage.
928557961461
836538
746470711953 731272
703325 706949
801126
04
00
00
08
00
00
0N
um
be
r o
f cr
ea
tion
'05 '06 '07 '08 '09 '10 '11 '12 '13
85986 8675752036 64159 60034 47116
20401 30399 30491
04
00
00
08
00
00
0N
um
be
r o
f tr
an
sfe
r
'05 '06 '07 '08 '09 '10 '11 '12 '13
86124 98529 93053 79413 97207 113974 119286 123157 125971
04
00
00
08
00
00
0N
um
be
r o
f ch
an
ge
'05 '06 '07 '08 '09 '10 '11 '12 '13
836756 843304
773916
701590671001
718154687773 676405
733533
04
00
00
08
00
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um
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'05 '06 '07 '08 '09 '10 '11 '12 '13
Yun‐chienChang
15
Figure10NumberofApartment/Houseaffectedbynewmortgageregistrations,byregistration
typeandbyyear
DataSource:MinistryoftheInteriorStatisticalYearbook.Forthedefinitionofapartment/house,
seethenoteaccompanyingFigure1.Statisticsincludethenumberofordinarymortgageand
maximum‐amountmortgage.
BothpledgesofthingsandpledgesofrightsareallowedintheTaiwanCivil
Code,andthustheobjectsofpropertyrightsdonothavetobecorporealthings.
Pledgeofrightsisoftenusedtoborrowcashbypledgingstocks.Pawn,the
commercialpledgeofthings,isofficiallyrecognizedbytheTaiwanCivilCodein
2007tobeaspecialtypeofpledge,andisregulatedseparately.Pawnshopscan
beseeneverywhereinTaipeiCity,thecapitalofTaiwan,withadvertisementsthat
claim“everythingcanbepawned.”Pawnshopsarealsointhebusinessofchattel
mortgage,whichisrecognizedasapropertyformbyPersonalPropertySecured
TransactionsAct.17 ThelegislatorsofthisActborrowedthisinstitutionfromthe
U.S.Onlycertainregister‐ablepersonalproperties,suchasmotorvehiclesand
vessels,canbemortgaged.
Rightofretentionisstrictlyspeakingastatutorypledgegiventocreditors
whohappentobeinpossessionofthelenders’movableswhenthelatter
17 TheofficialEnglishtranslationofPersonalPropertySecuredTransactionsActisavailableathttp://law.moj.gov.tw/Eng/LawClass/LawContent.aspx?PCODE=G0380024.
928557961461
836538
746470711953 731272
703325 706949
801126
04
00
00
08
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'05 '06 '07 '08 '09 '10 '11 '12 '13
85986 8675752036 64159 60034 47116
20401 30399 30491
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'05 '06 '07 '08 '09 '10 '11 '12 '13
86124 98529 93053 79413 97207 113974 119286 123157 125971
04
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ge
'05 '06 '07 '08 '09 '10 '11 '12 '13
836756 843304
773916
701590671001
718154687773 676405
733533
04
00
00
08
00
00
0N
um
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'05 '06 '07 '08 '09 '10 '11 '12 '13
Yun‐chienChang
16
defaults.
D. Dian,aHybridForm
Ahybridform,dianright,wasrarelyusedinthepastseveraldecades.As
Figure11demonstrates,dianrightsareevenmoreunpopularthanthe
permanenttenancyright,andyetthelegislaturepreservesthisformandgreatly
amendstherelevantstipulationsintheTaiwanCivilCode,hopingtorekindle
interestsindianright(Hsieh2007:27).DianrightcanbetracedbacktotheSung
DynastyinChina(about1000yearsfromnow)(Huang2001;Zhang2011;
Ellickson2012),andwasquitepopularinTaiwanuntil1923(thelaterstageof
theJapancolonization),whentheJapanesegovernmentmandatesabolishment
ofcustomarypropertyformsandconformationwithJapanCivilCode(Tsai
2000:51–52;Wang1997:371;Wang2010:348),whichdoesnotrecognizedian
right.Unreportedstatistics(fromtheMinistryoftheInteriorStatisticalYearbook)
wouldshowthatamajorityofdianregistrationsin2005–2012tookplacein
KinmenCounty,anoffshoreislandthatisveryclosetoMainlandChinaandhas
neverbeenruledbyJapan.Thispartlyexplainswhydianrightsarestillused
there.
Yun‐chienChang
17
Figure11Numberofdianregistration,byregistrationtypeandbyyear
DataSource:MinistryoftheInteriorStatisticalYearbook
III. THEREFORMIN2007–2010
TheMinistryofJustice,Taiwan(MOJ),isinchargeoftheenactmentand
revisionofmanylawsinTaiwan,includingtheTaiwanCivilCode.In1988,the
MOJorganizedataskforcecomposedofjudgesandlegalscholarstodraftthe
proposedrevisionsoftheBookofThingsintheTaiwanCivilCode.After300
meetingsover8years,thebillwassenttothelegislature,butwasnotpassed.In
2003,theMOJorganizedanothertaskforcetoimprovethebill.Therevisedbill
wasdividedintothreepartsandsentouttothelegislatureseparately.In2007,
2009,and2010,thelegislaturepassedthepartonsecurities,thepartsongeneral
principleandownership,andthepartsonusufructandpossession,respectively.
Before2007,therewere210articlesintheBookofThingsandonlyoneofthem
hadbeenrevisedsinceitsenactmentin1929inChina.18 Afterthe2010revision,
therewere277articlesintotal—82newarticleswereaddedand15articles
18 Article942wasrevisedin1995tocorrectatypo.
22
11
4 46
12
6
2
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2030
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n
'05 '06 '07 '08 '09 '10 '11 '12 '13
8 9
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911
13
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'05 '06 '07 '08 '09 '10 '11 '12 '13
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'05 '06 '07 '08 '09 '10 '11 '12 '13
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'05 '06 '07 '08 '09 '10 '11 '12 '13
Yun‐chienChang
18
weredeleted,and135articleswererevisedfor137times.19 Thispartfirst
describestherevisionandthenexaminesthedrivingforceofit.
A. Sourceof(New)Law
ManylawsinTaiwanwerereviseduponsuggestionsbytheExecutiveYuan
(thecabinet)ortheJudicialYuan(responsibleforsupervisingjudges,etc.).Either
Yuangenerallysendstothelegislatureadocumentthatstartswithanexecutive
summarythatisfollowedbyatablethatcontainsthreecolumns:thecurrent
statutes,theproposedrevisions,andthe“underlyingreasons”foramendment,
articlebyarticle.Thatis,eachamendedarticleisaccompaniedbyitsown
underlyingreason.Thesereasonsarenotofficial(i.e.thelegislaturedoesnot
passthesereasons),buttheyaregoodsourcesforprobingintothedrivingforces
oflegalchanges.
Table1showsthetypologyofchangesintheBookofThings.Amongthe179
articlesthatweresubstantivelyamended,theunderlyingreasonsfor102ofthem
(57%)indicatetheinfluenceofdomesticscholarlytheories,domesticcourt
precedents,andforeigncivilcodes.AccordingtomyinterviewwithHon.
Tsay‐ChuanHsieh,20 the77articlesthatweresubstantivelychangedwithouta
clearlegalsourcemightinfacthaveanimplicitsourceortwo,butthetaskforce
consideredsuchsourcesasincomprehensive,soratherleavingoutthesource
references.Notethatalthoughquiteafewjudgeshaveservedinthetaskforce,
andcitingtheprecedentsasthereasontoamendstatutorylawsisquite
reasonable,courtprecedentsareonlycitedin18underlyingreasons.21 By
contrast,foreignlawsarecited59times.Theoriesbylawprofessorsalsofeature
in45underlyingreasons.
Figure12breaksdownthesourcesoftheforeigncivilcodes.JapanCivil
Codeisthecitationchampion,butthecitationnumberover‐statesitsinfluence,
as12referencesconcernthenewpropertyform,maximum‐amountmortgage,
19 Twoarticlesregardingfinder‐keeperruleswereamendedtwiceeachduringthistimeframe.Thesecondrevisionswereinitiatedbylegislatorsthemselves,nottheMOJtaskforce.20 Hon.HsiehisaformerGrandJusticeoftheConstitutionalCourtandamemberofthetaskforcesince1988(alsochairingthe2003taskforce).21 Icountthenumberoftimesusinganarticleasoneunit.
Yun‐chienChang
19
thattheTaiwanCivilCodeimportedfromtheJapanCivilCodealmostwholesale.
TheoriginalTaiwanCivilCodewasheavilyinfluencedbyGermanandSwissCivil
Codes,sotheircontinuedinfluenceisnotsurprising—referencestoGermanCivil
Codeconcentrateinstipulationsregardingownershipandgeneralprinciple.The
QuebecandDutchCivilCodesinspirethetaskforcepartlybecausetheyare
relativelynew.22 Theunderlyingreasonsaccompanyingstipulationsregarding
tenancyincommonrefertomultiplejurisdictions.Inoneinterestingcase(Article
943),thetaskforceamendsanarticletodefectfromtheJapanCivilCodeand
turntotheGermanandSwissCivilCode.
22 InterviewwithHon.Hsieh.
Yun‐chienChang
20
Table1TypeofandReasonforAmendmentintheBookofThingsinTaiwanCivil
Code
TypeofandReasonforAmendment Frequency Percent
Deletion 15 5.0
Textualamendment 40 13.3
Notamended 67 22.3
Substantivechanges 179 59.4
Changewithoutclearsources 77 25.6
Followingscholarlytheories 23 7.6
Followingforeignlaws 38 12.6
Followingcourtprecedents 6 2.0
Consistentwiththecivilcodeorotherlaws 8 2.7
Followingscholarlytheoriesandforeignlaws 13 4.3
Followingothercombinationsofscholarly
theories,foreignlaws,andcourtprecedents13 4.3
Total 301 100.0
Source:author.
Figure12Numberofreferencestoforeigncivilcodes
Source:author.
The_Netherlands
Austria
Quebec
Italy
Korea
Switzerland
Germany
Japan
0 10 20 30 40Number of references
Yun‐chienChang
21
B. LegislatureasRubberStamp
ThetwoMOJ‐convenedtaskforcesworkedinasimilarfashion(Hsieh
2007:18–19):TheymetregularlytodiscussthecontentsoftheBookofThings,
finishedafirstdraftandcirculateditwidelytocallforcommentsfromother
governmentagencies,professionalguidesandassociations,andthecivilsociety.
Basedonthecommentsreceived,theyworkedonaseconddraft.MOJwould
sendtheseconddrafttotheExecutiveYuanandtheJudicialYuan,whichinonly
veryfewcircumstancesmademinorchangesoftheirown,andthensentthe
legislativeproposaltothelegislature.Thatis,thelegislaturewasbasically
reviewingabillthatscholarlyjudgesandscholarsshape.
Didthelegislaturerejecttheproposalastooivory‐tower?AsTable2shows,it
didnot.226ofthe232articles(97%)thatthetaskforceproposedtoamend
werequicklyoreventuallypassedasproposed.Thelegislaturemadeallfive
substantiverevisionsin2009regardingmortgage.Oneexplanationforthe
isolatedactivismisthatagroupoflegislatorsproposeditsownbillbasedon
concreteproposalsbyanindependentgroupofpropertyresearchers,so
deviatingfromthetask‐forceversionisalsolow‐cost.Anotherpossible
explanationisthatmortgagestipulationsmaygreatlyaffectthebusinessmodels
and/orrevenuesforbanksandrealestatedevelopers;thus,theymayhave
lobbiedunderthetablefororagainstcertainrevisions.Nonetheless,thebig
pictureisthatthelegislatureisonlyrubber‐stampingtheproposalbythetask
force.
Yun‐chienChang
22
Table2Legislative(re)actiontotheproposedamendmentbythetaskforce
Legislativeaction Frequency Percent
Passasproposed 226 75.1
Textualrevision 1 0.3
Substantiverevision 5 1.7
Amendmentafterowninitiation* 2 0.7
Notamended 67 22.3
Total 301 100.0
Source:author.
*Strictlyspeaking,thetwoself‐initiatingamendmentsareindependentoftheeffortsbytheMOJ
torevisetheBookofThings,asthesetwoamendmentsarequickreactiontothepopularoutrage
overalawstudentwhofoundalostobjectandrequesteda10%paymentallowedbytheoriginal
law.
C. LegalScholarsastheDominantForce
Bynow,itshouldbeclearthatscholarlyjudgesandpropertyprofessors
(particularlythelatter23)arethedominantforcebehindtheevolutionof
propertylawsinTaiwanin2007–2010.Scant,ifany,evidenceexiststosupport
theconjecturethatinterestgroupsfromthebusinesssectorexertedsignificant
influenceovertheamendment.Seeminglyneutralandhighlytechnical,the
amendmentofthecivilcodeinTaiwanappearstoconstituteanatypical
phenomenonintheeyesofpublicchoicetheorists.
Fromtheget‐go,amendingtheBookofThingsisthepetprojectofthelegal
elites,fordoctrinalandotherpracticalneeds,ratherthandrivenbythedemand
fromthecivilsocietyorthebusinessworld.24 TheTaiwanCivilCodewasenacted
in1930togovernresourcesinChina.Inthelate1980sitbecameclearthat
propertytransactionsinthemodernTaiwansocietyutterlysquarewiththe
implicitassumptionsofsmall‐farmer,isolatedeconomyintheoriginalBookof
ThingsintheTaiwanCivilCode.Foroneprominentexample,whenthesecond
taskforcewasformed,landregistrationwasstoredinelectronicdatabases,and
almostalllandparcelswereregistered.Thecapacityoflandregistryhas
sky‐rocketedascomparedtothatin1930.Negligibleexpensesandthehuge
accompanyingbenefitsofloweringinformationcostsmakeitsensibletoopen
23 Inthe2003taskforce,amajorityofthemembersarefull‐timepropertylawprofessors.24 ComparePosner(2010:719)whichdiscussescriminalcodesareproductsof“broad”interestgroup.
Yun‐chienChang
23
thedoorformoreinformationtoberegistered,andtomaketheregistered
informationbindingtothirdpartieswhoareignorantoftheinformation.
Atypicaltransactioncoststorywouldbydefinitionsuggestthatthenew
BookofTingsismoreefficient,whereasatypicalinterestgroupstorywouldcast
doubtonwhethertherevisedcivilcodeincreasessocialwelfare.Mystoryisat
mostanatypicalinterestgroupstory.Lawprofessorsandscholarlyjudgescould
ofcourselobbyfortheirownpersonalinterests.Butotherthanbeingknownas
thenewframeroftherevisedBookofThings,thepersonalstakesinvolvedin
shapingthenewcivilcodeareratherlow.Asaresult,these“framers’”
worldviewsmightplayamoreimportantrole.Theirexperienceofpursuinga
doctorateormasterdegreeinlawinforeigncountries(mostofthemdid)25 and
thefactthattheTaiwanCivilCodeismodelledafterEuropeancivilcodespartly
explainwhyforeignlawsarefrequentlycitedasauthoritiesintheunderlying
reasons.Giventhattherearemuchmorelawprofessorsthanjudgesinthe
secondtaskforce,theworldviewstorymayalsoexplainwhy“theconventional
wisdomamonglegalscholars”iscitedmoreoftenthanSupremeCourt
precedents,whicharelegallymoreauthoritativeandpracticallymore
influential–albeitoftencriticizedasflawedbyscholars.
Theworldviewstoryisagnosticaboutwhetherthenewcodeismore
efficientthantheoldcode.Asatleasttwomembersinthetaskforce(Yeong‐Chin
SuandJer‐shengShieh)frequentlydrawonpropertylawandeconomicsintheir
ownwritings,itisnotentirelycrazytohypothesizethatchangesincivilcodes
couldbeKaldor‐Hicks‐improving.Inthenextpart,IdiscusswhethertheTaiwan
CivilCodeevolvestowardamoreefficientsystem.
IV. TOWARDAMOREEFFICIENTPROPERTYLAW
TorenderconclusiveevaluationofwhetherTaiwanmovestowardamore
efficientpropertysystemisapparentlybeyondthescopeofthisbookchapter.
ButIshallofferageneralobservationanddiscussinmoredetailtwoexamplesin
thefollowingsections.
Generallyspeaking,thereformoftheBookofThingsincreasesefficiency.
Mostamendments“addresslocalproblemsunderlocalrestrictionsandspecific
determinants”(GaroupaandLigüerre2011:291)andcanbeconsidered
25 InherstudyonConstitutionalCourtJusticesinTaiwan,W.Chang(2013)foundthattheexperienceofstudyinglawabroadinaparticularcountrystatisticallysignificantlyaffectswhichcountry’slawsorcasesaJusticecitesinherconcurringordissentingopinions.
Yun‐chienChang
24
successful.Regardingsecurityrights,inparticularthewidelyusedmortgage
rights,thenewlawclarifiesmanydoctrinesandofficiallyincorporates
maximum‐amountmortgageandmaximum‐amountpledgeofthings.Legal
certaintygenerallyincreasesassetvalues.Inaddition,whilethenumerusclausus
principlekeepsinformationcostsincheck(MerrillandSmith2000;Smith2011),
thenumberofpropertyformsinTaiwanissofewthat“frustrationcosts”are
veryhighanddesiredtransactionsarehardtostructure(Chang2010).Tomatter
mattersworse,withoutproperty‐formtrustandfutureinterests,propertylawin
Taiwanishardlyrecursive(Smith2011).Arguably,thenumberofpropertyforms
inTaiwanbefore2007issub‐optimal.The2010amendmentexpandedthescope
ofeasement(frombetweenlandparcelsonlytobetweenallrealestates26);
createdanewformofsuperficies,dividedsuperficies,27 whichcanbeestablished
on,above,andbelowsurface;andgotridoftheantiquatedpermanenttenancy
right,replacedbyanewagriculturalrightthatarguablyfitsthecurrentand
futureneedsofresidentsinTaiwan.Moreover,thenewlegalservitudeofpassage
doctrineexcludestheapplicabilitytolandthatbecomeslockedduetovoluntary
act,greatlyreducingthepossibilityofopportunisticbehaviors(Chang2013a).
SectionsAandBofthispartwilldiscusstwoexamplesofefficientamendmentin
moredetail.
Onemightbringthetaskforcetotaskfornotgoingfarenough.Easementsin
gross,reversemortgages,realresidentialrights,etc.arenotincorporatedinthe
BookofThings.Trustandleaseremainpartwaybetweencontractandproperty.
Despitetheoverlycomplicatedstipulationsregardingpossession(Chang2014a),
thepossessionchapterintheBookofThingsunderwentnofundamentalchange.
Butconsideringtheunprecedentedlylargescaleofreformandthemanydecades
thetaskforcetooktofinishtheproject,theircreditsshouldnotbetakenawayfor
theseomissions.
Certainchanges,however,areinefficient,andthesechangesappeartobe
correlatedwithill‐advisedjudicialprecedents.Regardingprescriptiveacquisition
oflesserpropertyinterestsonregisteredimmovableproperties,theoriginal
TaiwanCivilCodeimplicitlydisallowedit,andyeta1971SupremeCourt
precedentrecognizedit.Whileitmightmakesensemorethan40yearsagoto
twistthemeaningofthelawtoallowsuchpractice,giventhecomprehensive
digitizationoflandrecordsinTaiwanandtheriseofGoogleMapandGoogle
26 Note,however,that,accordingtomyinterviewwithanofficialresponsibleforrealpropertystatisticsintheMinistryoftheInterior,nolocalgovernmentsince2011hasreportedanyregistrationofeasementsbetweenbuildings. 27 SeeArticles841‐1–841‐6oftheTaiwanCivilCode.
Yun‐chienChang
25
Earthalongwithland‐recordappsdevelopedbyTaiwangovernment,itarguably
makesmuchlesssensetodeviatefromthepropertyruleasfarasregisteredreal
estatesareconcerned(Chang2014b).YetthenewArticle772oftheTaiwanCivil
Codeexplicitlyrecognizesprescriptiveacquisitionoflesserpropertyinterestson
registeredrealproperties.
Co‐ownershippartitionlawsuitsareverynumerousinTaiwan(morethan
1000lawsuitsperyearatthedistrictcourtlevel;seeChang2013).Theoriginal
TaiwanCivilCodegavejudgesdiscretiontochoosebetweenpartitioninkindor
partitionbysale,andpartialpartitionsuchaspartitioninkindwithoweltyis
explicitlyallowed,too.Inthepre‐amendmentera,districtcourtshavedeveloped
morethanadozenwaysofpartialpartitionmethodsandusedthemquite
frequently(Chang2012:536).TheSupremeCourt,however,haslongpreferred
partitioninkind.The2009amendmentobeyedthewishoftheSupremeCourt,
ignoringthatpartitioninkindisnotalwaysthemostefficientwaytodissolve
jointinterests(ChangandFennell2014).
Finally,Section2ofthenewlyenactedArticle826‐1allowscovenantstouse
co‐ownedmovablepropertiesbetweentheco‐ownerstoruntotransferees,as
longasthetransfereesknoworcouldhaveknowntheexistenceofsuch
covenants.ThisstipulationcodifiesthedoctrineinventedbyJudicial
InterpretationNo.349bytheConstitutionalCourtofTaiwan.28 Thedoctrine
suffersfromtwoproblems(Chang2011:1278–80).First,fortheco‐ownerswho
plantocontractforacovenant,thevalueofitisuncertain,asthecovenantmay
notbindagood‐faithtransfereewhocouldpopupanytime.Second,formany
transactingpartieswhowantnopartofarestrictingcovenant,theywillhaveto
spendinvestigationcoststofigureoutwhetheranycovenantexists(thosewho
donotverifycouldbeconsideredasthe“could‐have‐known”).Asfarasmovables
areconcerned,mostoftheseinvestigationsmightbefutileandinvestigation
costsarethuswasted.
A. ReducingInformationCostsandInducingCost‐justifiedInformation
Gathering
Thetaskforcedoesnotexplicitlyputreducinginformationcostsinthe
centerstage(reducingtransactioncostsdoeshaveafewcameoappearancesin
theunderlyingreasons),butquiteafewnewstipulationsservetoreduce
28 OfficialEnglishtranslationofJudicialInterpretationNo.349isavailableathttp://www.judicial.gov.tw/constitutionalcourt/en/p03_01.asp?expno=349.
Yun‐chienChang
26
informationcosts.29 Inparticular,thenewTaiwanCivilCodeallowsseveraltypes
oftransactionalterms(suchasrentandlimitationsonthetypeofusesallowed)
insuperficies,servitude,agriculturalrights,andmortgagetoberegistered,30 and
thesecovenants,onceregistered,haveinremeffectandbindtransferees.This
caninasensebeviewedas“contractizationofpropertyrights”thatgivesfleshto
theboneprovidedbythenumerusclaususprinciple.Althoughthesestipulations
cannotbeusedtocreatenewpropertyforms,31 theybetterempowertransacting
partiestotailortheirneedsinanin‐remfashion,andatthesametimenot
over‐loadinginformationalburdensonpotentialtransactingthirdparties.This
shallenhanceefficiency.
Traditionally,good‐faithpartyisprotectedinpropertylaw,butthelawand
economicliteraturehasstartedtodistinguishbetweengood‐faith(withoutfault)
andinnocence(ornegligentlygood‐faith)(LandesandPosner1996;Mackaay
2012;Sterk2012;Chang2013b).Innocent,ornegligentlygood‐faith,partiesare
thosewhocouldhaveknowncertainfactshadtheyexpendedsomecostsin
verification,andtheexpectedbenefitofverificationishigherthanthecost.The
amendmentoftheTaiwanCivilCodeisconsistentwiththislineofresearch.Insix
newstipulations,32 regardingbothrealpropertiesandpersonalproperties,
partieswhoarebad‐faithor“good‐faithoutofgrossnegligence”33 aretreated
equally—notprotected.Thesestipulationsshallinducerelevantpartiestoverify
titlesandotherinformationinacost‐justifiedway.34
B. BoundaryEncroachment
TheoldTaiwanCivilCodecontainedonesimplearticleonboundary
encroachment.The2009amendmentexpandedittothreesophisticatedarticles
(Articles796,796‐1,and796‐2).Intheoptionallawterminology(Calabresiand
Melamed1972;Ayres2005;Chang2013c),theoldTaiwanCivilCodegivesthe
encroachedpartythechoicebetweenRule1(withaminorprerequisite)and
29 Alawprofessorwhoservedinthetaskforcehasemphasizedtheimportoftheexpansionofregister‐ableinformation(Su2012:477,493).30 SeeArticles836‐1,836‐2,838,850‐3,859‐2,and873‐1oftheTaiwanCivilCode.31 Article826‐1oftheTaiwanCivilCodeallowsregisteredcovenantsbetweenco‐tenantstorunwiththerealproperties(Chang2012;ChangandSmith2012).Thiscanbeusedtocreatenewpropertyforms(Su2012:475–480).Forexample,JohnwhowantstorentMary’sapartmentforresidentialuseinpropertyformcanbuyasmallshareofMary’sapartmentandusetheco‐tenant’scovenanttoarrangetheresidentialrights.32 SeeArticles799‐1IV,826‐1II,881III,899III,928II,and948IoftheTaiwanCivilCode.33 Somearticlesusethephrase“couldhaveknown.”34 Asnotedabove,Article826‐1IIsuffersfromotherproblems,notsharedbyotherstipulationslistedinfootnote32.
Yun‐chienChang
27
Rule2,andthenewTaiwanCivilCodetinkerswiththeprerequisiteandaddsa
“safetyvalve”(Smith2009a:2128–29;2013)—courtscanremovetheoptionof
Rule1afterconsideringpublicandprivateinterests.
Specifically,thenewboundaryencroachmentdoctrineisasfollows:the
entitlementoftheneighbor(whoselandistrespassed)isgenerallyprotectedby
thepropertyrulewhentheencroachmentisintentionalorgrosslynegligent,if
theneighborimmediatelyobjectstothetrespassuponbeingawareofit.The
entitlement,however,isonlyprotectedbytheliabilityruleiftheneighborfailsto
promptlynotifythenegligenttrespasserofherdisapproval.Andunderthe
liabilityrule,theneighborcaneitherrequesttheencroachertopurchase“the
partofthetrespassedland”and“theoddlotcausedbythetrespass”ata
“reasonableprice,”orrequestpaymentforherlosses.Asa“safetyvalve,”ifthe
trespassisunintentional,thecourt,aftertakingintoaccountpublicinterestsand
bothparties’interests,mayswitchfromthepropertyruletotheliabilityrule.The
boundaryencroachmentdoctrinesapplytoresidentialbuildingsandapply
mutatismutandistoothertypesofbuildingsthatare“similarlyvaluable.”
InChang(2013d),Iarguedthatthenewboundaryencroachmentdoctrine
canbetterincreasesocialwelfareiftheaforementionedstipulationscanbe
interpretedinthefollowingways:First,nomattertheconstructioniscompleted
ornot,thepromptprotestruleapplies.Second,undertheliabilityrule,the
encroachershouldpayrent,ratherthantortsdamages,totheneighbor.Third,
thereasonablepriceshouldbefairmarketvalue,nottheunderassessedofficial
landvaluecurrentlyusedbythecourt.Fourth,thepreconditionforthecourtto
usethesafetyvalveisthattheencroachingpartofthebuildingismorevaluable
thanthepartofthetrespassedland.The“publicinterest”thatthecourtshould
takeintoaccountisthesocialbenefitsexternaltobothparties’interests.Fifth,
propertyownersusuallyattachsubjectivevaluetotheirresidence.The
“similarly‐valuablebuildings”thatcanbeprotectedbyArticle796shouldhave
positivesubjectivevalue,too,whereasthe“similarly‐valuablebuildings”thatcan
beprotectedbyArticle796‐1needtobevaluable(withorwithoutapositive
subjectivevalue).
Itisworthnotingthatunderthenewdoctrine,thepromptprotestruledoes
notapplywhenthetrespasserisbad‐faith.Thisisanapplicationoftheexante
viewpoint(Bebchuk2001;BrooksandSchwartz2005;Smith2009b),whichis
emphasizedbylawandeconomicstoincreaselong‐termefficiency.Onecan
reasonablyagreeordisagreeastowhethertheexceptionshouldalsoapplyto
negligentlygood‐faithtrespassers,giventhefactthatnowadayscheckingoutreal
Yun‐chienChang
28
estateinformation(includingboundaries)intheregistrybecomesextremely
easyinTaiwan(Chang2013c),andofficialsurvey,whichisgenerallyrequired
beforeabuilderappliesforabuildingpermit,isinexpensive(lessthan$150for
mostlandowners)anddefinitiveinsettinglandboundaries.Asimilarconcern
emergesastowhetherthesafetyvalve(ajudicialtakingoftheneighbor’srightto
exclude)isdesirablewhenthetrespasserisinnocentbutnotgood‐faith.
Althoughexpostanalysisusuallytakesthebackseatinlawandeconomics,
inaworldofpositivetransactioncosts,ill‐advisedentitlementallocationby
courtscanstilldecreaseefficiency.Withthebroadandgenerallanguageof
Article796‐1oftheCivilCodeofTaiwan,courtsinTaiwanessentiallyholda
blankcheckindeterminingwhethertoteardowntheencroachingfixture.Did
courtsexertthispowersoastoincreasesocialwelfare?Chang(2014c)observed
thattheydid.Thatempiricalstudyusesauniquedatasetthatincludethe
populationofallcasesrenderedpursuanttoArticle796‐1sinceitbecame
effectivein2009(until2012);thereare157observations.Usingdescriptive
statisticsandlogisticregressionmodel,Chang(2014c)findsthatwhenthearea
ofencroachmentandtheencroachmentratioislow,andtheencroacherisnot
grosslynegligent,courtstendtopreservethebuildings.35
V. CONCLUSION
TheTaiwanstory,particularlythepartonamendmentsoftheTaiwanCivil
Codein2007–2010,contributestothelawandeconomicsliteratureinthe
followingways:legalscholarsandjudgescanbeeffectiveinchangingstatutory
laws.Theycanbeconsideredasanatypicalinterestgroup.Asmembersofthe
taskforce,scholarsandjudgeshavesemi‐officialcapacity.Ontheotherhand,
theirproposalinnowaybindsthelegislature.Indeed,whenanothergroupof
35 Inasisterarticle,Chang(2014f)findsthatin2002–2011,theencroachingconstructionsaremostlyresidentialandnon‐residentialbuildings,ratherthanfixtureslikefencesorextensionslikegarages.Duringthattimeframe,courtsinTaiwandeterminedboundaryencroachmentcasesinthefollowingpattern:Ifpartofthebuildingsencroachesthelandboundary,buttearingitdownwouldnotaffect“theeconomicvalueofthewholebuilding,”courtswouldordertheencroachingpartremoved.Courtsrarelyexplicitlyconsiderwhetherthetrespasserisintentional,(grossly)negligent,orno‐fault.Itisdifficultfortheencroacherstopersuadethecourtthattheneighboringlandownersfailtoprotestpromptly.Courtsconsistentlyusetheproductofofficiallandvalueandanadhocyieldrateascompensationtothelandowners.Theofficialvalue,however,ismuchlowerthanmarketvalue,andtheyieldrates(from1%to10%,with5%and8%asthemodes)donotappeartocorrelatewithanylegitimateindexorstandard(Changetal.(2014)findsthatcourtssufferedfromtheanchoringeffectindeterminingyieldrates,theanchorbeingplaintiffs’requests).Landownersseldomaskthetrespasserstopurchasetheencroachedland.
Yun‐chienChang
29
scholarsproposedabilloftheirown,thelegislaturemadeitsonlyamendments
tothetask‐forceversionofthebill.Hence,scholarsandjudges,particularlythe
former,couldbeconsideredasaninterestgroup.Onecouldalsotakethe
frequentreferencestoacademicwritingsasevidencethatthetaskforcebehaves
likeaninterestgroup.
Tomost,theterminterestgroupconnotesnegativemeaning,butinterest
groupsdonotalwayspursuenarrowself‐interests.Withlittlepersonalstakesin
thesubstantivecontentsoftheBookofThings,thetaskforceclearsaway
anomalousdoctrines,updatesanoft‐difficult‐to‐usecode,andmodernizes
variousstipulations.Asaresultoftheirefforts,thestatutoryamendment
generallyincreasesefficiency(yes,statutescanbeefficient!).Ironically,inthe
fewinstanceswherethenewlawprobablydecreasessocialwelfare,thetask
forcedrewonSupremeCourtprecedentsastherationales,andcourtprecedents
arethesourceofcommonlawintheAnglo‐Americansystem.Thisbookchapter
doesnotarguethatanexceptionincomparativelawrefutestherule.Yetthis
studyshouldatleastbecountedasacautionarytaleandaddnewfuelstothe
debateontherelativeefficiencyofcourt‐madelawandlegislature‐madelaw.
Yun‐chienChang
30
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