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1. The lessee provides false materials, resulting in the lessor's misunderstanding

In order to gain the trust of the lessor and obtain the financing funds, some lessees may provide false qualification certificates, financial data and asset certificates in response to the lessor's investigation, and some lessees may even fabricate projects, provide false contracts and invoices and other materials to defraud the financing funds, while some materials are not easy to distinguish the true from the false. According to the false materials provided by the lessee, the lessor is likely to have a wrong understanding of the project, economic strength or qualification for which it applies for financial leasing, thus passing the project application and issuing financing funds, resulting in a series of subsequent risks.

2. The lessor does not pay enough attention to the risk, resulting in the selected lessee not having appropriate qualifications and capabilities

Some lessors do not pay enough attention to risks, and the unit has not established a sound credit review and risk management mechanism. There are situations where they only pay attention to the number of projects but ignore the quality, do not go deep into the credit review or have "formalism", and ignore the review and judgment of the lessee's financial status and solvency. However, business personnel usually try their best to promote the project transaction in order to pursue sales performance. This neglect of risk has led to the uneven credit status and ability of the lessee engaged in business cooperation, and even some lessees do not have the ability to perform their debts and operate well, increasing the probability of "bad debt" and other financing risks.

3. The lack of elements in the financial lease contract leads to defects in the financial lease relationship [1]

During the conclusion of the financial lease contract, due to the lack of legal knowledge of some lessors or the non-standard internal supervision of the enterprise, there may be only the financial lease contract without the lease sales contract, the lease sales contract has not been performed, the subject matter in the lease sales contract has not been clearly stated in the financial lease contract, and the rent has not been clearly agreed, As a result, the legal relationship of the financial lease contract may be recognized as "the financial lease is actually a loan". Once the financial lease contract is recognized as a loan contract, there will be a relatively obvious adverse impact on the lessor: first, the lessee does not have to pay the rent to the lessor, but only needs to repay the principal and interest of the purchase of the lease item, and the interest may be converted from the originally agreed handling fees, interest, overdue interest, etc. if the interest calculated in a unified way exceeds the legal proportion, the excess will not be protected, The interest calculated in this way is usually less than the income calculated according to the financial leasing business [2]; Secondly, the ownership of the leased property will belong to the lessee and need not be returned to the lessor. At this time, the leasehold can no longer protect the creditor's rights of the lessor; Thirdly, the guarantee measures set up for the financial lease creditor's rights have the risk of being deemed invalid due to the different legal relations of the main contract, and so on. In this way, it will not only violate the original intention of signing the financial leasing contract, but also cause great losses to the lessor.

(picture from the network)

2、 Common risks in the performance of financial lease contracts

1.The lessee fails to pay the rent as agreed in the contract

This is the most common and most influential legal risk in financial leasing projects. As the rent payment cycle of financial leasing projects is usually long, and the establishment and operation of some projects will be affected by national or local policies, it is not uncommon for the lessee to delay or fail to continue to pay the rent due to various reasons during the operation of the project. For example, the income of photovoltaic power generation projects largely depends on state subsidies, but in practice, the subsidies that should be paid are in arrears, resulting in the lessee being unable to pay the corresponding rent in full; Infrastructure projects may be delayed or unable to be completed due to weather, policies and other factors; The income of production projects may be significantly affected by the market, resulting in lower income than expected. All these will lead to the lessee's failure to pay the rent in full and on time as agreed in the financial lease contract, and even difficulties in subsequent operation, which will hinder the progress of the whole project.

In addition, the financial lease contract usually stipulates that if the lessee fails to pay the rent, it needs to bear the overdue interest or penalty interest, and the calculation standard of the overdue interest or penalty interest is usually much higher than the normal performance interest originally agreed. In that case, if the lessee is unable to pay the rent due to the continuous lack of funds, the capital gap may continue to expand and the ability to pay the rent may be further reduced once it is overdue.

2. Damage or loss of the lease item caused by the lessee's failure to keep the lease item properly

In the financial leasing project, although the ownership of the lease item belongs to the lessor, it is the lessee who actually owns and uses the lease item [3], and the lessor has some difficulties in the management of the lease item. If the lessee fails to fulfill the obligation of safe keeping [4], resulting in the damage or loss of the leased property, even though the lessor can still require the lessee to pay the rent [5], this situation will inevitably damage the lessor's ownership of the leased property, so that the Lessor will reduce or lose the protection of its debt through the leased property, which is very likely to cause economic losses. Moreover, the lease item no longer exists, and the determination of whether the financial lease relationship is established in the event of a dispute may also cause some obstacles, which aggravates the risk of the lessor.

3. The lessee disposes of the leased property without authorization

In view of the separation of the ownership and use right of the leased property in the financial leasing project, although the lessor enjoys the ownership of the leased property, the possession, use and income of the leased property belong to the lessee, and the management is also the responsibility of the lessee, that is, the leased property is actually under the control of the lessee. Although the law prohibits the lessee from disposing of the lease item without authorization, it is difficult for the lessor to ensure that the lessee will not sell, sublease, mortgage, etc. once the above acts occur, even though the civil code has set up relief methods for the lessor [6], it may still infringe the lessor's ownership of the lease item - especially in the case of the lessee transferring the lease item without authorization, if the lease item is acquired in good faith by a third party, It will cause the lessor to completely lose the ownership of the leased property. Even if it can recover from the lessee, it will also cost a lot of energy and financial resources. In addition, if the lessee is unable to compensate, it will further cause greater losses to the lessor.

4. The lessee fails to deposit the fees charged into the regulatory account as agreed (taking power station projects as an example)

In the financial leasing project where the lessee obtains income by charging, the Lessor will usually agree with the lessee to set up a regulatory account to deposit the financing funds and the fees charged by the lessee, so as to protect the creditor's rights of the lessor. Taking power station projects as an example, the electricity charges collected by the lessee are deposited in the regulatory account. The Lessor will require the lessee to pledge the right to charge electricity charges to the lessor and pay the electricity sales income to the regulatory account. However, in practice, it is not uncommon for the lessee to fail to perform this obligation and take various methods (such as requiring the electricity user to pay the electricity fee to other accounts, paying the electricity fee to the lessee in cash or bills, etc.) to avoid the electricity fee from entering the regulatory account. Even there is no electricity fee income in the regulatory account of some projects, so this pledge method becomes a "dead letter".

In practice, the realization of the property value of the power charge right depends more on the financial ability and willingness of the party who should pay the power charge. In the power supply legal relationship between the power generation enterprise and the grid operation enterprise or the power user, if the power charge is not paid in full on time, due to the relativity of the contract, it is difficult for the lessor to directly make demands on the debtor of the lessee, that is, the actual power purchaser. If the party paying the electricity bill does not pay the electricity bill to the regulatory account, but privately settles with the lessee in other ways, and the lessee does not actively inform and fulfill the agreement to deposit the electricity bill into the regulatory account, it is difficult for the lessor to realize the corresponding rights, or even know about it.

5. The lessee's assets and regulatory accounts are sealed up and frozen by the court for other cases

In the event of a dispute between the lessee and a third party, the court may seize the leased property and the regulatory account under the financial lease as the lessee's assets due to other cases. Although the lessor can apply to the court for reconsideration or execution objection for relief at this time, the time limit and results of the reply of the court accepting the reconsideration or execution objection are unpredictable and there is great uncertainty. Moreover, if the lessor does not know about the seizure and the lessee does not take the initiative to inform, it is likely that the leased property will be disposed and the creditor's rights cannot be guaranteed through the regulatory account.

If the lessor believes that a financial leasing project dispute is suspected of criminal crimes (mostly contract fraud), because most of the criminal cases related to financial leasing are characterized by the intersection of criminal and civil cases, the public security organs tend to inform the victims to provide relief through civil litigation when receiving reports. Even if the clues and evidence that the case constitutes a crime are relatively complete and obvious, the public security organ may refuse to accept the case for various reasons (possibly to prevent erroneous interference in economic activities or other considerations). Therefore, if the contract fraud crime is suspected in the financial leasing project, it is difficult to investigate the lessee's criminal responsibility through the public security organ.

In financial leasing projects, the lessor usually requires the lessee to provide certain guarantees to minimize the losses caused to the lessor due to the lessee's default, such as setting up a guarantor, setting up a mortgage, equity pledge, etc. However, in practice, when the lessee breaches the contract, it often happens that the security measures can not compensate the lessor's losses. For example, the guarantor of a natural person usually has a very weak guarantee ability and can bear very little responsibility; The legal person guarantor is usually associated with the lessee, and the guarantor's guarantee ability is often insufficient when the lessee has risks; The mortgaged property is mostly under the control of the lessee. If the mortgagor refuses to perform his obligations or the mortgaged property is damaged or lost, it is difficult for the lessor to make up for his losses by exercising the mortgage right; Equity pledge usually refers to the pledge of the lessee's equity held by the lessee's shareholders to the lessor. However, when the lessee has difficulties in operation or there is a gap in funds, the value of its equity will decrease or even have no value, and the equity is difficult to realize, which is difficult to make up for the lessor's losses.

As a relatively stable property with clear ownership, real estate is one of the most common properties used for security, and also the most secure secured property. However, there are some problems in practice. The author has encountered the following situations: (1) in order to make the lessor think that the value of the real estate is enough to guarantee the creditor's rights of the financial leasing project, the lessee may provide an appraisal report with high appraisal results as a voucher, In order to gain the trust of the lessor and achieve the purpose of financing, there are many cases where the lessee and the appraisal company collude to raise the appraisal results. As the lessor does not have the professional knowledge of appraisal, it cannot well understand and predict the change law of the house price in the area where the mortgaged real estate is located, so it is difficult to find the problems. It can only rely on the conclusion of the appraisal report. Only in case of disputes can it be found that the value of the mortgaged real estate may be far lower than the debt that the lessee should bear; (2) Some real estate has been leased to a third party before mortgage, and the third party has actually occupied the real estate. When disposing of the real estate, it may not cooperate with or even deliberately hinder the disposal process, resulting in difficult disposal of the real estate; (3) If the real estate can not be realized by auction, and the creditor's rights can only be realized by offsetting the debt with property, the lessor may need to pay the decoration compensation of the legal tenant to dispose of the real estate, and the mortgagor needs to pay taxes in advance to complete the transfer and obtain the ownership of the real estate, especially the taxes on commercial and industrial land are very high, This has added a huge burden to the lessor whose creditor's rights have been unable to be paid off. In addition, in some places, the policy of limited purchase of real estate, if more than one real estate is used to pay debts with goods at the same time, there is also uncertainty whether the lessor can accept the real estate to pay debts.

Ⅱ、 Legal risk prevention suggestions

1、Before signing the financial lease contract

1. Establish a sound project review mechanism, conduct a detailed investigation and assessment of the lessee's basic

information, credit, capacity, debt situation and the legality and feasibility of the proposed financing project, make prudent decisions, and reduce the risks caused by bad projects or bad lessees.

2. Enhance the verification of the authenticity of the materials provided by the lessee, for example, by querying the invoice code, conducting interviews with the lessee's management or partners, and requiring the lessee to issue relevant commitments, so as to ensure the authenticity of the materials as much as possible.

3. Ensure that the financial lease contract has legal elements, and constantly supplement and improve the terms and conditions of the main contract and supporting contract text according to the problems reflected in the existing projects and cases, so as to ensure that the interests of creditors can be safeguarded to the greatest extent according to the contract text in case of disputes.

4. Strengthen the agreement on guarantee measures. For example, if there is a charge right pledge in the project, it is recommended to take effective measures to strengthen the monitoring of the charge right to ensure the smooth realization of the charge right pledge. Taking the power charge right as an example, the pledgor can be required to provide a written commitment issued by the pledgor and the actual power purchaser or sign a tripartite agreement with the lessee (Pledgor) and the power purchaser to reduce the risk of failing to monitor the power charge income at the same time of establishing the pledge of the power charge right. The main contents of the written commitment or the tripartite agreement should at least include: (1) the power purchaser has been aware of the existence of the pledgor of the lessor's power charge right, Know that the electricity revenue should be paid to the designated regulatory account and that the lessor has the priority to be repaid according to law; (2) The power purchaser will comply with the power purchase contract with the seller (i.e. the lessee) and fully perform the power purchase obligations; (3) The power purchaser guarantees to transfer the electricity charge payable to the regulatory account opened by the power seller at the designated bank; (4) When the lessee fails to pay off its debts, it shall, according to the notice of the lessor, directly transfer the electricity fee payable to the account designated by the lessor; (5) If the power purchaser violates the commitment or agreement, it shall bear certain liabilities for breach of contract.

2、In the process of performing the financial lease contract

1. Strengthen the supervision of the leased items, establish a perfect tracking mechanism for the leased items, and ensure that the leased items exist and that the lessor always enjoys the ownership of all the leased items in the financial leasing project

The following methods can be considered: directly participate in all aspects of the purchase and receipt of the leased property in the direct lease project to ensure that the leased property is purchased, received and actually put into use in a timely manner; In the project of sale and leaseback, ensure that the lease item actually exists, that the lessee has the right to dispose of the lease item and timely go through the registration procedures for the change of ownership of the lease item (if necessary), and ensure that the ownership of the lease item is transferred to the lessor.

2. Take effective measures to express the ownership of the leased property and reduce the risk that the leased property is acquired in good faith by a third party

It may be considered to adopt such methods as marking the obvious part of the leased property, requiring the lessee to mortgage the leased property to the lessor, establishing mortgage registration according to law, setting up remote camera monitoring, setting up GPS positioning, etc., so as to ensure that the lessor can effectively master the situation of the leased property during the project operation, improve the difficulty of the lessee disposing of the leased property without authorization, and reduce the risk of the lessor losing the ownership of the leased property.

3. Improve the post lease management mechanism, adopt the method of on-site inspection, and timely and intuitively understand, verify and feed back the status of the lessee, the guarantor and the lease / collateral

Leasing projects are generally medium - and long-term projects, so it is very important to timely grasp the status of the project and the lessee. Good post lease management can effectively early warning risks, improve the quality of leased assets and ensure the safety of leased assets. The lessor may conduct on-site inspection on the lessee on a regular or irregular basis, focusing on the lessee's business and financial conditions, the use of the leased property, the guarantor's business and financial conditions, as well as the collateral and pledged property, and keep detailed records of the contents of the inspection and the conditions found during the inspection, which shall be signed by the inspectors (preferably the inspected party can also sign and seal), Finally, the inspection results will be summarized and analyzed. In this way, it can not only timely evaluate whether the lessee has a breach of contract or the possibility of breach of contract, but also retain favorable evidence for possible disputes in the future.

Ⅲ、 Relief measures after risk occurrence

1. Communicate with the lessee and the guarantor as soon as possible and send written documents to claim rights

   
   

After finding out that the lessee owes or may owe the rent, in order to avoid further loss, the lessor shall communicate with the lessee as soon as possible, confirm the actual situation and the subsequent payment plan, and decide the subsequent action according to the actual situation. At the same time of communication, it is suggested to send written documents (company's letter of reminder or lawyer's letter, etc., and pay attention to keeping the sending and delivery vouchers) to the lessee and the guarantor to formally claim the realization of the creditor's rights, and remind and warn the lessee, which can also be used as the basis for claiming rights in the future.

2.Comprehensive collection of favorable evidence and information

After the lessee breaches the contract, regardless of whether the breach is caused by the shortage of temporary funds or the rupture of the long-term capital chain, the lessor shall make full preparations, sort and analyze the materials related to the project, and continuously collect evidence and information in favor of itself in the later communication with the lessee and the guarantor, so as to be ready to file a lawsuit at any time.

3.Determination of claims

Financial leasing projects usually use the format contract provided by the lessor. Sometimes it is agreed in the contract that if the lessee defaults, the lessor has the right to require the lessee to immediately pay all the rent, terminate the contract and take back the lease item. However, according to the first paragraph of Article 10 of the interpretation of the Supreme People's Court on the application of law in the trial of disputes over financial leasing contracts (revised in 2020), "if the lessor requests to both pay all the unpaid rent agreed in the contract and terminate the financial leasing contract, the people's court shall inform it to make a choice in accordance with the provisions of article 752 [7] of the civil code", when the lessor files a lawsuit, It is necessary to choose one of "terminate the contract and take back the lease" and "require the lessee to pay all rent". Therefore, the lessor needs to comprehensively weigh the advantages and disadvantages of the two options of "rescinding the contract and taking back the lease" and "requiring the lessee to pay all the rent" and choose the scheme that is most conducive to the realization of its rights.

4.Determination of jurisdiction

The financial lease contract usually stipulates that the court of jurisdiction is the people's Court of the lessor's domicile. Therefore, after determining the claim, the corresponding court of jurisdiction can be determined according to the subject amount of the claim.

5.Timely file a lawsuit and apply for property preservation

Most financial lease disputes are caused by the lessee's financial difficulties, resulting in the inability to pay the rent. Therefore, before the lessor files a lawsuit, the lessee has already defaulted on the rent, and the lessee may have other debts, or even the property has been taken preservation measures due to other cases. Therefore, in order to ensure the enforceability of the judgment documents obtained by the lessor after taking judicial procedures to the greatest extent, it is necessary to take judicial procedures and apply for property preservation in a timely manner, and take necessary measures to seal up and freeze the leased property, the property of the lessee and the guarantor in the first order. However, when applying for preservation, it shall carefully provide preservation clues, measure risks, and avoid erroneous application for preservation.

6.Once the leasehold / mortgage is found to have been preserved or enforced due to other cases, effective legal means shall be taken to remedy the right in time

1. If the lessor finds that the lease item has been wrongly preserved due to other cases, it may take the following remedies according to the different stages of preservation:

(1) If the leased property is sealed up or frozen by other creditors in the pre litigation or preservation stage of the lawsuit, you can safeguard your rights by applying for reconsideration in accordance with Article 111 [8] of the civil procedure law and article 172 [9] of the interpretation of the Supreme People's Court on the application of the Civil Procedure Law of the people's Republic of China;

(2) If the lease item is wrongly executed during the execution stage of the case, you may, according to the actual situation and in accordance with the provisions of articles 232 [10] and 234 [11] of the civil procedure law, defend your rights by raising a written objection to the court.

2. If the lessor finds that the collateral has been preserved or enforced in advance due to other cases, it may take the following remedies:

(1) Coordinate the first seal court to transfer the collateral to the enforcement court of the lessor's case for disposal through the enforcement judge of the lessor's case;

(2) Apply to the first seal court for Priority Repayment of the property obtained from the disposal of the mortgaged property [12].

The above are the legal risks that the author needs to pay attention to in the financial leasing project and their prevention and relief suggestions based on the relevant theories of financial leasing and the actual cases of relevant financial leasing projects. I hope to provide some valuable ideas and suggestions to the relevant people in the industry.