ABSTRACT
This chapter examines the relationship between borrowers and lenders. Lenders assume, and perhaps receive informal assurances, that their borrowers have other sources of that cannot be officially verified. Borrowers may pledge the income stream from tenant rentals to their lenders, but lenders have no way to perfect their security interest in this collateral. Cash-flow loans are generally not relevant to the construction of residential buildings, as the developer conveys the residential units upon completion of the building and the individual residential buyers secure their own financing. Bond financing has stimulated Chinese real estate development, although this official indicated that the amount of bond financing is relatively small. In addition, "our own income" has been beneficial, by which he was referring to the frequent use of Build Operate Transfer (BOT) financing. The ultimate sources of these funds include income tax revenues, transfer tax revenues, sales of land use rights, bond financing, and user fees and tolls.
