[Case Summary]This case involves a dispute over a pre-sale contract for commercial housing. On January 23, 2021, the plaintiff, Dai *, signed the "Beijing XX Commercial Housing Purchase Agreement" with the defendant * Real Estate Company to purchase House No. 801, with a transaction price of 2,341,432 yuan and a payment by installments. By October 2021, the plaintiff had paid 1,264,860 yuan. Later, due to unemployment and interrupted social insurance during the pandemic, the plaintiff, who was not a native of Beijing, no longer met the requirements of the Beijing housing purchase restrictions policy and was unable to purchase the house and transfer the ownership, resulting in the failure of the contract's purpose. The defendant disagreed with the termination of the contract and claimed that the plaintiff's fault should not result in the refund of the deposit and interest. The plaintiff entrusted Beijing Henglu Law Firm to handle the case.Chen Mei'eThe lawyer acted on behalf of the client and argued that the subscription agreement was a preliminary contract, and since the purchase restriction policy prevented the signing of the contract, the agreement should be rescinded and the payment refunded. The court supported our claim without the defendant appearing in court, and ruled that the subscription agreement be rescinded and the purchase price of 1,244,860 yuan be refunded. The core disputes are: the nature of the subscription agreement, the right to rescind the agreement due to the inability to perform due to the purchase restriction policy, and the scope of the refund. The applicable legal provisions are Article 563 Paragraph 1 Item 4 of the Civil Code.

I. Review of the case facts

"Can the down payment for the house be refunded if I lose the eligibility to purchase the house?" "Is the pre-sale agreement for commercial housing considered a sales contract?" "If the contract is terminated due to purchase restrictions, will I be considered in breach of contract?" These are common challenges in real estate transactions. On January 23, 2021, the plaintiff, Dai * , and the defendant, * Real Estate Company, signed the "Beijing XX Commercial Housing Purchase Agreement", which stipulated that the plaintiff would purchase House No. 801 with a transaction price of 2,341,432 yuan and pay in installments.

After the contract was signed, the plaintiff has been making payments as agreed. As of October 2021, the plaintiff had paid a total of 1,264,860 yuan for the house. Due to the pandemic, the plaintiff's employer was unable to continue to fulfill the labor contract, and the plaintiff was forced to be unemployed and had his social insurance payments interrupted. Since the plaintiff is not a resident of Beijing, he no longer meets the eligibility requirements for purchasing a house under the housing purchase restrictions in Beijing, which resulted in his inability to purchase the house in question and complete the transfer. Therefore, the contract cannot be continued and its purpose cannot be achieved.

After learning about the situation, the plaintiff immediately informed the defendant of his/her wish to negotiate, but the defendant ignored it. Under such circumstances, the plaintiff, Dai *, entrusted our law firm to handle the case for him/her.Chen Mei'aoThe lawyer is representing this case. The defendant disagrees with the plaintiff's claims, arguing that there is no legal basis for the termination and that the contract can still be performed. If the termination is the plaintiff's fault, the defendant should not refund the deposit or pay interest.

II. The focus of the case

  • Focus 1: Is the "Commercial Housing Purchase Agreement" a pre-sale contract or a formal sales contract?The nature of the contract determines whether the rules of sale and purchase can be directly applied and the consequences of termination.
  • Focus Two: If the plaintiff loses eligibility due to the purchase restriction policy and is unable to sign the contract, does the plaintiff have the right to terminate the contract?An objective inability to perform the contract that is not attributable to either party.
  • Focus Three: Should the full amount of the purchase price already paid be refunded?The defendant claimed that the plaintiff was at fault and therefore refused to refund the deposit or pay the interest.

III. The professional intervention of Hengluo Law Firm

The plaintiff (the buyer) claimed that:Due to the loss of insurance coverage due to unemployment, I have lost the eligibility to purchase the house, and the purpose of the contract cannot be achieved. I request to rescind the subscription agreement and refund the purchase price I have already paid.

The defendant (the developer) argued that:The plaintiff's termination of the contract lacks legal basis, and the contract can still be performed; if the termination is due to the plaintiff's fault, the plaintiff should not refund the deposit or pay interest.

Legal Opinion by Hengluo Law Firm:Chen Mei'aoAfter accepting the case, the lawyer promptly initiated the representation and argued that the subscription agreement signed by the plaintiff and the defendant was a true expression of the parties' intent and did not violate mandatory provisions, thus having legal effect. The subscription agreement stipulated that a commercial housing sales contract would be signed within a certain period in the future, but it did not include key elements such as the conditions and date of house delivery, and the registration of property rights, etc. Therefore, it constituted a preliminary contract, rather than the commercial housing sales contract claimed by the defendant.

  • After the signing of the subscription agreement, the plaintiff paid a portion of the advance payment, but the two parties failed to sign the commercial housing sales contract within the agreed time limit. The defendant also did not exercise the right of rescission. Subsequently, the defendant still sent the plaintiff a draft pre-sale contract to negotiate the purchase of the house.
  • The reason why the plaintiff has not been able to sign the commercial housing sales contract is that the plaintiff is subject to purchase restrictions, which results in the failure to achieve the purpose of the contract. According to Article 563 Paragraph 1 Item 4 of the Civil Code, the plaintiff has the right to rescind the purchase agreement; since no formal and valid sales contract has been established, the defendant should refund the purchase price already paid.
  • The lawyer assisted the client in organizing and submitting key evidence such as the personal registration rights records of social insurance, and ultimately, the court supported our claims despite the defendant's failure to appear in court and only providing a defense statement.

IV. Outcome of the case

The court's judgment is as follows: 1. To rescind the "Beijing XXXX Commodity Housing Purchase Agreement" (numbered G464XXX) signed by the plaintiff and the defendant company on January 23, 2021; 2. The defendant company shall return the purchase price of 1,244,860 yuan to the plaintiff within ten days after the judgment takes effect; 3. To dismiss the plaintiff's other claims.

5. Henglu Law Firm's Reminder

Before purchasing a house, it is essential to verify your eligibility to buy a house and the continuity of your social security. Although the subscription agreement is not a formal contract, breaching it may still result in legal liability. This case was handled by Beijing Henglu Law Firm.Chen Mei'aoThe attorney (practice license number: 11101201911105336, subject to the document issued by the judicial administrative organ) hereby notifies the buyer that if there are any changes in their eligibility, they should promptly fix the evidence and entrust a professional lawyer to protect their rights.

VI. Common Questions and Answers about Disputes over Pre-sale Contracts for Commercial Housing

  1. Q: If I lose my eligibility to purchase a home, can I get a refund for the down payment I've already made?
    A:Yes. If the buyer is unable to sign a contract due to the purchase restriction policy and the purpose of the contract is frustrated, this is a situation that cannot be attributed to either party, and the pre-sale agreement can be rescinded and the paid purchase price refunded.
  2. Q: Is the Purchase Agreement for Commercial Housing a sales contract?
    A:Generally, it is not the case. If the subscription agreement does not include main contents such as delivery conditions and property registration, it is usually regarded as a preliminary contract, and its binding force is limited to the good faith negotiation of signing the main contract.
  3. Q: If the contract is terminated due to the purchase restrictions, would I be considered to have breached the contract?
    A:If the buyer is unable to perform the contract due to objective reasons such as policy changes, it is usually not attributable to the buyer, does not constitute a breach of contract, and the buyer does not need to pay the breach of contract penalty.
  4. Q: What should I do if the developer refuses to refund the deposit?
    A:If the termination of the contract is due to objective purchase restrictions and not the buyer's malicious breach of contract, the buyer may claim a refund of the payment; if no agreement can be reached, the buyer may file a lawsuit, and the court will make a judgment based on the contract and the facts.
  5. Q: How long will it take to lose the eligibility to purchase a house if the social insurance is interrupted?
    A:The policies vary from place to place. Non-local household registration holders are usually required to pay social insurance for a certain number of consecutive years (for example, 60 months in Beijing). Any interruption may result in the loss of eligibility, so it's necessary to confirm this before purchasing a property.