Illegal construction, also known as an illegal building or illegal housing, is construction work or the result of such, without a valid construction permit. If a building is constructed without building permit, according to the Taiwan Building Act, Article 86, Item 1, construction can be stopped by administrative authority during the process of construction. The building can be ordered to be demolished if the construction is completed. That is to say, an illegal building can be demolished anytime. Also, Taiwan Building Act prohibits the construction or use of illegal units. For decades, the government has been, in fact, tolerating illegal items, dealing only with violations that pose a risk to public safety. Throughout Taiwan, homeowners have been building illegal additions to their property. Some turn balconies into enclosed rooms. Others take over violence between buildings. Almost everyone with top-level flats finds a way to build one or more units up on the roof. What's driving this practice is the scarcity of space in the cities, and high property prices. Many cities have even exempted illegal units built in previous decades from being demolished. Illegal units have become an integral part of Taiwan's housing. The ownership of real estate is evidenced by the registration thereof with the land office. A building, as well as a land, is a real estate in Taiwan. In terms of the ownership of a building, the original constructor acquires the ownership. After that, if the owner intends to sell the building to another person, that is, to transfer the ownership to the buyer, according to the Article 758 of the Civil Code, the seller needs to complete the change of title at the land office. In other words, a buyer will not become the legal owner of a real estate until the registration with the land office is completed. In terms of illegal buildings, due to the illegalness, they are not allowed to be registered in the real estate book. It does not mean that the ownership does not exist. Following the basic rule of the ownership that we mentioned, the original constructor can still acquire the ownership of the illegal construction, despite the fact that initial registration of ownership cannot be completed. This makes the transaction of the illegal construction a problem. Since the transfer of ownership of a real estate needs to complete title change in the land office, and illegal buildings have no record of registration, it is impossible. Theoretically, the transaction of an illegal building is impossible because the seller has no way to transfer the title of the building to the buyer, and therefore, the seller's obligation of the contract cannot be fulfilled. Illegal construction is not only prohibited from being subject of transaction, but it should also be prohibited from acquisition since it can be ordered to be demolished anytime. Illegal construction is supposed to be prohibited goods. Despite illegal constructions inability to be registered and the nature of prohibited goods, in reality, it is still the subject of trade. Firstly, due to the administrative authorities' lack of human labor to demolish, illegal construction in Taiwan has a large chance to avoid being demolished. Its property value is widely accepted among citizens. In addition to the administrative authoritie's indulgence, another factor that makes the transaction of illegal buildings possible, is the tolerance and recognition from the Supreme Court. As a result, illegal buildings have become legally prohibited from ownership, but practically permitted to obtain ownership. The Supreme Court in Taiwan created a new legal term de facto right of disposal to maintain the effect of the sales contract of illegal buildings. Why are illegal buildings on one way prohibited from being built under the administrative laws in Taiwan? On the other hand, acknowledged as property and entitled the status of so-called "de facto right of disposal" by our Supreme Court. How the legal relations between the parties of sales contract of illegal building are formed? The rights of the buyers become the core issue in terms of Civil Law. We will take a closer look at some famous cases regarding illegal buildings. Actually, de facto right of disposal is first established in judgment made in 1978 by Supreme Court the 2nd civil department, in which is further elaborated that although the ownership transfer of illegal building cannot be effected, because registration cannot be done. It should be convinced that de facto right of disposal has been transferred to the buyer. In this case, Supreme Court mentioned its precedent, which is the 1961 judgment. In the 61 judgment, it says that while illegal construction cannot be registered by the property registration authority. That does not mean illegal structure cannot be the subject of a transaction. Therefore, the court denied illegal structure as untradeable goods or prohibited goods. A more detailed rationale can be seen in the next Taiwan High Court judgment in 2003. It says that, "We concluded that the rooftop addition of the building in question is not in compliance with the construction regulations, thus initial registration cannot be completed." Moreover, the rooftop addition was built without consent from other co-owners of the condominium. However, it is tradable, which is different from gun, drug, or other prohibited goods. Also, it was announced in the auction notice that the rooftop addition had no initial registration of ownership, which offered the potential buyer the knowledge that they could only acquire the de facto right of disposal instead of complete ownership. Given the breach of construction regulations or lack of consent from other owners, the illegal building is exposed to the risk of being demolished at anytime, which derives from the nature of illegal building's de facto right of disposal. The common sense of our society is that buyers of such illegal building are aware of the above mentioned risk, yet decided to purchase the illegal building anyway after assessing the possibility of demolition and the value of the illegal building before demolition. The appellant thus cannot argue about having no knowledge of the foregoing as the appellant is considered to possess certain level of knowledge. The court practice has been following the 1978 Supreme Court's opinion ever since. But another question arises, what is the difference between the de facto right of disposal and ownership? The recent judgments of the Supreme Court in 2017 seems to acknowledge de facto right of disposal as a customary right in rem. It stated that the right stipulated in Taiwan's Civil Code Article 184, Section 1, former paragraph, refers to the right recognized in the legal system. The legal system includes the statutes, customary law, custom, legal principles, theories, and precedents. Since the initial registration of an illegal building cannot be done, the acquirer of the illegal building cannot complete transfer registration and can only obtain de facto right of disposal. However, such de facto right of disposal enables the right holders to possess, use, collect proceeds from, dispose off, and trade such illegal item, which has long been recognized by the court practice and by the society. Accordingly, such de facto right of disposal shall be regarded as the right specified in Taiwan's Civil Code Article 184 Section 1 former paragraph. The judgment of the lower court did not air in granting the holder of the entitlement to claim damage from infringement against de facto right of disposal. So the former paragraph of the Section 1 of the Article 184 of the Civil Code is the basic rule of torts, which protects a legally admitted right from being invaded. A typical right protected by this provision is ownership, right in rem. As we mentioned in the previous case. This judgment entitled the de facto owner of an illegal building, the right to claim for damages, according to this Article 184, meaning that the de facto right of disposal of an illegal building has the same power as the ownership, that's Right in Rem. However, our another issue, the restitution or return of the property, the Supreme Court took a different position. The former paragraph of the Section 1 of the Articles 767 stipulates that the owner has the right to demand it's return from anyone who possess it without authority or who seizes it. Is this rule applicable to an illegal building? In another words, does the de facto right of disposal has the same power as the ownership to ask the return of a thing? The Supreme Court has made it clear in its judgment in 2006. It says that "We acknowledge de facto right of disposal for the convenience of transaction, yet de facto rights of disposal does not equate to right of ownership." As required under Taiwan Civil Code Article 758 section 1, the acquisition, creation, loss and alternation of Rights in Rem of real property through act in law, will not become valid until registration has been completed. The buyer of the illegal building, which the initial registration is not completed acquires de facto right of disposal only. However, according to the above rule, right of ownership and de facto right of disposal are different by nature. Taiwan Civil Code Article 767 regarding owners right to demand from return does not apply no matter directly or analogously. Therefore, in terms of return of a thing, de facto right of disposal does not have the same effect as the ownership. The minimum protection offered by the law will be the right to demand for return of the thing possessed under Taiwan Civil Code Article 962, which is in fact weaker than the previous Article 767. Although the administration law prohibits the construction of illegal buildings, the number of illegal buildings in Taiwan is large enough to receive some kind of legal protection from the court. As the de facto right of disposal does not have four powers as the ownership. The nature of de facto right of disposal is described as incomplete right or deficient right made by judicial authorities. The creation of the de facto right of disposal and formation of its content in Taiwan is very unique and also a good example of local development from the perspective of comparative legal studies.
