A new regulation that helps clarify the rights and responsibilities of real estate developers and property management companies is expected to come into force in September.

The property management regulation, issued by the State Council, will help the landlord solve business disputes and legal problems when the quality of a residential asset is questioned.

"The regulation marks a great breakthrough in property management,'' said Xie Jiajin, a division chief with the Ministry of Construction.

"The regulation stipulates constructors of residential buildings have to select a qualified property management company through public bidding before the owners of the estate can select their own property management company.''

Xie said other constructors must stick to the principle of separating real estate development from property management and also choose a property management company through bidding.

Providing a property management service at an early stage (before selling) must be included in the contract between the proprietor and the constructor.

To plug loopholes in property management caused by the poor quality of construction, the regulation said the property management company must make a thorough examination of public facilities before taking control of the property.

It must also ask for relevant documents when completing formalities.

According to the regulation, any behaviour that runs counter to the interests of the residents will be harshly punished. Either the proprietor or the property management company has the right to change the function of public construction and facilities.

The agreed content of the property management service must be written in the contract between the proprietor and the property management company. Anyone who defaults on service payment will be sued by the property management company.

The new regulation has further strengthened the supervision right of the proprietor by stating that at least two thirds of the proprietors can decide to employ or dismiss a property management company.

The regulation also declared that proprietors should set up a special fund for maintaining and upgrading public facilities. The fund cannot be used for any other purposes.

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