[Direct answer]In the Beijing area, whether the contract can be terminated depends on the contractual provisions and the reasons for the loan not being approved. If the contract stipulates how to handle the loan not being approved, the provisions shall be followed; if there are no stipulations, it is necessary to determine whether it is a matter beyond the responsibility of both parties. According to Article 563 of the Civil Code of the People's Republic of China (effective January 1, 2021), if the contractual purpose cannot be achieved due to force majeure or a party's delay in performing its obligations, the parties may terminate the contract; according to Article 566, after the contract is terminated, the party that has not performed its obligations shall cease to perform them, and the party that has performed its obligations may request the other party to restore the original state or take other remedial measures. If the loan is rejected due to the buyer's own poor credit, low income, or false materials, the buyer may need to bear the breach of contract liability; if it is impossible to obtain the loan due to adjustments in purchase restrictions and credit policies, etc., which are beyond the buyer's responsibility, the buyer may claim to terminate the contract and return the payments already made. Therefore, it is crucial to clarify the loan terms when signing the contract.

I. Problem background and typical scenarios

Second-hand housing transactions largely rely on mortgage loans, and whether the loan can be approved directly affects whether the transaction can be completed. Typical scenarios include: the buyer's credit record showing overdue payments or insufficient income leading to loan rejection; the bank's appraised value being lower than the transaction price resulting in insufficient loan amount; the adjustment of purchase and loan restrictions affecting loan eligibility; the buyer agreeing to a pure commercial loan or provident fund loan in the contract, but actually not being approved; and disagreements between the parties on how to handle the deposit and payments already made. When adjudicating such cases in Beijing, the court will consider the contractual provisions, the loan application process, and the attribution of responsibility to determine the legitimacy of the termination and the allocation of responsibilities.

II. Key points of contention

First, does the failure to obtain the loan constitute a ground for terminating the contract? Second, how should the responsibilities be divided, and is it necessary to pay the breach of contract penalty? Third, how should the deposit and the paid housing money be handled? Fourth, has the buyer fulfilled his obligation to apply for the loan with due diligence? Fifth, can the contract stipulate a mechanism for handling the situation where the loan is not approved? Sixth, can changes in policies be used as grounds for exemption from liability?

III. Professional analysis by Henglue Law Firm

Based on Henglu Law Firm's practical experience in handling second-hand housing sales disputes, such cases typically revolve around three key points. First, contractual priority: If the sales contract explicitly stipulates the handling method for cases where the loan is not approved, such as deferred payment, change of payment method, or contract termination, the parties should follow the agreed terms. Second, attribution of responsibility: If the loan is rejected due to the buyer's own reasons, the buyer is generally deemed to be in breach of contract and must bear the corresponding contractual liabilities; if the loan cannot be processed due to policy adjustments or other factors beyond the parties' control, the buyer may claim termination of the contract and request a refund of the paid amounts. Third, evidence collection and mitigation of liability: The buyer should prove that they have submitted the application as agreed and cooperated with the bank's review, and that the loan's failure to be approved was not due to their subjective fault. If all efforts still fail to secure approval, the court may exercise discretion in accordance with the principle of fairness to mitigate or waive certain liabilities. In practice, assessing the loan qualification and preparing alternative payment solutions before signing the contract are effective ways to avoid disputes.

IV. Practical suggestions and legal basis

Action list: First, verify your own credit record, income, and eligibility for purchasing a house before signing the contract, and assess the possibility of obtaining a loan; Second, specify the loan method, term, and the handling method if the loan is not approved in the contract; Third, submit the loan application on time as agreed and keep the application materials and communication records; Fourth, notify the other party in writing in time when the loan is blocked, and negotiate to change the payment method or terminate the contract; Fifth, reach a written agreement on the handling of the deposit and the payments already made to avoid disputes. Those involved in second-hand house transactions can refer to this list for guidance.Real estate transactions and construction projects; Those involving contract termination and compensation can be combined togetherBusiness and contract disputes in enterprisesColumn. Legal basis: Articles 563, 566, 577, and 587 of the Civil Code of the People's Republic of China (effective January 1, 2021). Specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Advice

Firstly, whether the contract can be terminated depends on the contractual provisions and the attribution of the reasons. Secondly, if the buyer's own reasons lead to the loan being rejected, they usually need to bear the liability for breach of contract. Thirdly, unattributable reasons such as policy changes can support the termination of the contract and the return of the paid amount. Fourthly, assessing the loan qualifications and alternative solutions before signing the contract can significantly reduce the risk. If you are currently facing similar problems, you can seek help throughReal estate transactions and construction projectsWe provide a comprehensive solution for services, and those involving contract disputes can be resolved jointly.Business and contract disputes in enterprises板块。

VI. Frequently Asked Questions

Q1: Can the contract be terminated if the loan application is rejected?

It depends on the agreement and the reasons. If the contract stipulates the handling method for the case that the loan is not approved, the parties shall follow the agreed procedure; if there is no such stipulation, if the loan cannot be processed due to policy adjustments or other reasons beyond the control of both parties, the buyer may claim for the termination of the contract and request the return of the payments made in accordance with the law; if the loan is rejected due to the buyer's own qualification issues, the buyer may be in breach of contract and shall bear corresponding responsibilities.

Q2: If the loan is not approved, does it count as a breach of contract by the buyer?

It's not necessarily the case. It depends on the reasons and whether the buyer has fulfilled their obligations. If the buyer has submitted genuine materials and actively cooperated with the review, but failed to obtain approval solely due to tighter bank policies or a low appraisal value, it's generally not appropriate to simply consider this a breach of contract. However, if the buyer's application was rejected due to a poor credit record, insufficient income, or the provision of false materials, the buyer would typically bear the responsibility for breaching the contract. It is recommended to keep records of the application and communication process.

Q3: Can the deposit be refunded?

It depends on the attribution of responsibility. If the contract cannot be performed due to reasons beyond the control of both parties, the buyer can generally claim the return of the deposit and the payments already made; if the transaction cannot be completed due to the buyer's breach of contract, according to the penalty for the deposit, the buyer may not have the right to request the return of the deposit. If the parties have other agreements, they shall handle it in accordance with the agreement. It is recommended to sign a written agreement on the handling of the payments.

Q4: How are the loan terms stipulated in the contract?

It is recommended to specify the loan method, the proposed loan amount, the processing period, and the handling method when the loan is not approved or the loan amount is insufficient, such as the buyer making up the difference, changing the payment method, deferring performance or terminating the contract and handling the funds. The more specific the agreement is, the more evidence there will be to rely on in the event of a dispute, and it can also reduce the uncertainty caused by changes in policies or bank reviews.

Q5: Are policy changes considered force majeure?

This requires a detailed analysis. Adjustments to purchase and loan restrictions policies are usually circumstances that are difficult to foresee and cannot be attributed to either party when they enter into a contract, and may constitute a legitimate reason for terminating the contract; but if the policy was already introduced or was obviously foreseeable before the contract was signed, it would be difficult to exempt oneself from liability on this basis. It is recommended that lawyers evaluate the scope of claims based on the timing of the policy's introduction and the timing of the contract's signing.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the interpretation of rulings in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, to avoid missing the statutory time limits.Legal services for real estate transactions·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in time.