[Direct answer]There are four key differences between the Purchase Agreement and the formal purchase contract. First, the nature of the two documents is different. The Purchase Agreement is typically signed by both parties but has not yet completed the online signing and filing of the pre-sale contract for commercial housing. It is a document of a reservation nature. In contrast, the formal purchase contract, such as the "Beijing City Commercial Housing Pre-sale Contract", is a legally binding contract with complete provisions and completed filing. Second, the completeness of the content differs. The Purchase Agreement generally only stipulates the location of the house, area, price, payment method, deposit, and the deadline for signing the formal contract. In contrast, the formal contract makes detailed provisions on delivery time, delivery standards, ownership registration, breach of contract liability, property and public facilities, etc. Third, the handling of the deposit differs. The deposit stipulated in the Purchase Agreement applies to the rules of the penalty for the deposit, but it should be noted that the part of the deposit exceeding 20% of the subject matter of the main contract does not produce the effect of the deposit. In contrast, the deposit in the formal contract is handled directly according to the contract provisions. Fourth, the legal consequences differ. If a party fails to perform its obligations during the purchase agreement stage, it can generally only claim breach of contract liability or return of the deposit, and it is difficult to directly demand the delivery of the house. After the formal contract is established, it may claim continued performance, but it is also subject to objective conditions such as the ownership of the house and the status of the house being sealed off. According to Articles 465, 502, and 586 of the Civil Code of the People's Republic of China (effective January 1, 2021), a legally established contract is binding on the parties, and the parties shall fully perform their obligations in accordance with the contract provisions.Real estate transactions and construction projectsThe column provides specific instructions on risk prevention during the subscription and contract signing stages.

I. Problem Background and Typical Scenarios

Buyers who consult such issues are often in a wait-and-see phase between signing the purchase agreement and signing the contract. There are four common concerns: whether signing the purchase agreement counts as a formal contract, whether they can get a refund on the deposit if they don't sign a formal contract, whether they can secure the property during the purchase agreement stage, and whether it will be convenient to protect their rights in the future. In practice, a common risk is that the purchase agreement terms are omitted: many purchase agreements only list the area and total price, but not the delivery time and standards. Once the developer delays delivery or fails to meet quality standards, buyers have very limited room for evidence. Another common problem is the confusion between the purchase deposit and the down payment. If the terms of the purchase agreement are unclear, disputes may arise over the scope of refunds and breach of contract responsibilities. Therefore, it is recommended to pay attention to four key points before signing the purchase agreement: the specific location and area of the house, the price and payment schedule, the amount of the deposit and the conditions for its refund, and the clear deadline for signing the formal contract and the consequences of a delay. For practical details on online registration and contract management of commercial housing, please refer to the relevant materials.Business and contract disputes in enterprisesColumn.

II. Key points of contention

The first focus is on the legal nature and binding scope of the subscription agreement. The second focus is on whether the amount of the deposit exceeds the statutory limit. The third focus is on the determination of breach of contract when the terms of the subscription agreement are incomplete. The fourth focus is on the consequences of failing to sign a formal contract on time. The fifth focus is on the continued validity of the subscription agreement after the formal contract is signed. The sixth focus is on the impact of uncompleted online signing and registration. The seventh focus is on the developer's responsibility for late or failed certificate issuance. The eighth focus is on the quality commitment and promotional effectiveness during the subscription phase. In addition, attention should also be paid to the handling methods when online signing and registration exceed the time limit or fail, how to resolve conflicts between the terms of the subscription agreement and the supplementary agreement, and whether promotional materials can be used as independent grounds for breach of contract.

III. Professional analysis by Henglue Law Firm

From the perspective of housing sales practice, risk control during the subscription stage mainly relies on three aspects. First, strengthening contract terms: Incorporate core elements such as delivery time and standards, certificate issuance deadlines, and decoration standards and public facility commitments into the subscription agreement or its annexes, and clarify the responsibilities to be assumed in the absence of a formal contract. In practice, many disputes arise precisely from omissions during the subscription phase, leading to claims based on weaker contract terms later on. Second, defining the difference between deposits and down payments: Clarify which payments qualify as deposits, their amounts, and the conditions for refunds, to avoid confusion over whether a payment is actually a deposit or a prepayment. Any portion of the deposit exceeding 20% of the main contract amount does not generate deposit effects, and this should be verified at the time of signing. Third, managing time deadlines: The deadline for signing a formal contract in the subscription agreement is of great significance. Failure to sign within the deadline may result in the deposit not being refunded, so buyers should actively track the filing progress and retain records of notifications and reminders. In handling a case involving default penalties for late delivery, our firm demonstrated the value of combining contract terms with evidence. The client signed a purchase agreement and agreed on a 90-day grace period and daily penalty rates through a supplementary agreement. The developer claimed exemptions from liability due to the pandemic and inclement weather and requested an extension of the grace period. The attorney reviewed key provisions such as the delivery deadline, grace period, and penalty rates, collected payment receipts, move-in notifications, and completion and acceptance filing materials to form a complete chain of evidence, and refuted the defendant's arguments point by point. Ultimately, the court ordered the developer to pay default penalties of 118,366.12 yuan. This case highlights that, whether during the subscription or formal signing stages, comprehensive contract terms and complete evidence determine the initiative in subsequent rights protection. The case was handled by Beijing Henglu Law Firm.Tian JiayanThe attorney (practice certificate number: 11101202111381309, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action suggestions: 1. Carefully review all the terms of the subscription agreement, especially the provisions on the deposit and refund; 2. Check whether the amount of the deposit exceeds 20% of the main contract's subject matter; 3. Confirm whether the subscription agreement includes delivery standards and the time limit for obtaining the certificate; 4. Verify the deadline for signing the formal contract and actively track the progress of the filing; 5. Keep all payment receipts and communication records; 6. Verify the written basis of the developer's promotional promises. Legal basis: Articles 465, 466, and 502 of the Civil Code of the People's Republic of China (all effective from January 1, 2021); Related provisions of the "Measures for the Sale of Commercial Housing" (Ministry of Construction Decree No. 88, promulgated and implemented on June 30, 2000).

5. Henglu Law Firm's Reminder

Firstly, the simpler the terms of the subscription agreement are, the more passive the subsequent protection of rights will be. Secondly, attention should be paid to the upper limit of the deposit amount, as the excess part will not produce the effect of a deposit. Thirdly, it is necessary to clearly define the conditions for the return of the deposit to avoid difficulties in obtaining a refund. Fourthly, it is essential to verify the written basis of the promotional promises, as it is difficult to prove verbal promises. Fifthly, actively track the progress of the filing and keep records of the reminders. Sixthly, pay attention to the consistency of the terms of the subscription agreement with those of the formal contract, and in the event of a conflict, the formal contract shall prevail. Seventhly, avoid paying a large deposit before fully understanding the terms. Eighthly, if the developer delays, it is recommended to consult a professional lawyer as soon as possible. For a general method of reviewing contract terms, please refer to the relevant materials.Special services and other casesColumn.

VI. Frequently Asked Questions

Q1: Does the subscription agreement have legal effect?

Yes. A subscription agreement established in accordance with the law is legally binding on the parties, and if one party fails to fulfill its obligations, it shall bear corresponding responsibilities. However, its binding force is weaker than that of a formal commercial housing sales contract completed with online signing and registration. Usually, the party can only claim the return of the deposit or breach of contract liability, and it is difficult to directly demand the delivery of the house.

Q2: What is the difference between the subscription deposit and the down payment?

The deposit has a guarantee nature and is subject to the penalty clause. If one party breaches the contract, the penalty clause will be applied to deal with it; the down payment is of the nature of an advance payment, and the liability for breach of contract is usually handled in accordance with the contract agreement. In practice, it is necessary to clarify the nature of the payment and the conditions for its return to avoid confusion. The part of the deposit exceeding 20% of the subject matter of the main contract does not have the effect of a deposit.

Q3: How should the deposit amount be set in the subscription agreement to be legally compliant?

The amount of the deposit shall be agreed upon by both parties, but it shall not exceed 20% of the subject matter of the main contract. The excess part shall not have the effect of a deposit. For example, if the total price of the house is agreed to be 5 million yuan, the maximum amount of the deposit shall be 1 million yuan. The excess part can only be treated as a prepayment or used to offset the breach of contract damages and compensation for losses. In addition, it is necessary to note that the total amount of the deposit and the down payment, the refund conditions, and the breach of contract clauses should be consistent and clear to avoid any ambiguity.

Q4: What are the consequences of signing a subscription agreement but not signing a formal contract?

It shall be handled in accordance with the provisions of the subscription agreement. If the subscription agreement stipulates a clear deadline for signing the formal contract, the buyer's failure to sign it within the time limit may constitute a breach of contract, and the deposit will not be refunded and the buyer shall bear corresponding responsibilities; if the seller fails to sign it within the time limit, it may constitute a breach of contract, and the buyer may claim the return of the deposit or the breach of contract liability. It is recommended to actively track the progress of the filing and keep the records of urging it.

Q5: Do the developers' verbal promises count during the subscription process?

It's very difficult to prove verbal promises. In practice, it's best to require that core commitments such as delivery standards, decoration standards, public facilities, and the time limit for obtaining certificates be included in the subscription agreement or its annexes, and to keep brochures, photos of the model apartment, and written confirmation materials from sales staff. If there are only verbal explanations, it's usually difficult to obtain support when seeking legal protection.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

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 limit. →Legal services for real estate transactions·Attorney Tian Jiaoyan·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open 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.