[Direct answer]In the Beijing area, the legal remedies for sellers of second-hand houses who breach contracts need to be differentiated according to the specific circumstances of the breach. According to Articles 577 and 585 of the Civil Code of the People's Republic of China (effective from January 1, 2021), if a party fails to perform its contractual obligations or performs them in a manner inconsistent with the contract, it shall bear such contractual liabilities as continuing to perform the contract, taking remedial measures, or compensating for losses; the parties may stipulate a penalty for breach of contract. If the stipulated penalty is lower than the actual losses, the party may request an increase; if the stipulated penalty is excessively high compared to the actual losses, the party may request a reasonable reduction. Therefore, in the first case, if the seller refuses to perform the contract without a legitimate reason and the house is still transferable, the buyer can claim continued performance and simultaneously apply for property preservation to prevent the house from being resold; in the second case, if the house has been transferred to a third party, has been sealed up, or has encountered other situations where transfer is impossible, it is advisable to claim the penalty for breach of contract, the penalty for the deposit, and the actual losses; in the third case, if the transaction cannot proceed due to reasons such as loan disapproval or eligibility restrictions, it is necessary to first determine the responsibility attribution. If it is the buyer's own fault, the seller's defense of rescinding the contract may be valid. The first and most crucial step in seeking legal remedies is to verify the current ownership of the house and its sealing-up and mortgage status, as this directly determines whether the claim can be implemented. In addition, it is necessary to simultaneously collect evidence, including the purchase contract, proof of the deposit and down payment, loan materials, and all communication records. The portion of the deposit exceeding 20% of the subject matter of the main contract does not generate the effect of the deposit, and the excess portion can be used to offset the penalty for breach of contract or compensate for losses.Property transactions and construction projectsThe column provides specific explanations on the seller's rights protection strategies in case of breach of contract.

1. Problem background and typical scenarios

Buyers who consult such issues are often in a state where they are informed that the transaction cannot proceed after signing the contract and making the payment. There are three common scenarios: first, the seller breaches the contract or imposes additional conditions after the price of the house has risen; second, the seller delays the transaction on the grounds that his family objects to the sale or that the house is mortgaged and cannot be transferred; third, the seller has already sold the house to others. Common confusions include: whether it is possible to force the transfer of ownership, how much compensation can be claimed, and whether it is necessary to sue immediately. In practice, a key judgment is the enforceability of the house. If the house has been sealed up or transferred to a third party, even if an order is issued to continue the performance of the contract, it may not be possible to achieve this. At this point, the focus should be shifted to monetary compensation. Another common problem is the attribution of responsibility for the failure to obtain a loan. In such cases, it is necessary to determine whether it is due to the buyer's poor credit or changes in the approval policy. The former may constitute a breach of contract by the buyer, while the latter may not necessarily be the case. It is recommended to fix key facts and time points during the negotiation stage to avoid proceeding solely on the basis of verbal promises. For practical issues regarding the verification and registration of property rights, please refer to the relevant materials.Business and contract disputes in enterprisesColumn.

II. Key points of dispute

The first focus is on the current ownership, seizure, and mortgage status of the house. The second focus is on whether the house has the practical possibility of being transferred. The third focus is on the choice between continuing to perform the contract and requesting monetary compensation. The fourth focus is on the attribution of responsibility for the failure to obtain loan approval. The fifth focus is on the application and reduction of the penalty clause for breach of contract. The sixth focus is on the relationship between the application of the deposit penalty and the breach of contract penalty. The seventh focus is on the scope of actual losses and the method of providing evidence. The eighth focus is on the necessity of property preservation, the form of guarantee, and the term. In addition, attention should also be paid to the relationship between the application of the deposit penalty and the breach of contract penalty, the completeness of the evidence of losses, and the impact of the seller's solvency on the actual compensation. The above specific rules are subject to the currently effective laws, regulations, and judicial judgments.

III. Professional analysis by Henglue Lawyers

From the perspective of second-hand housing disputes in practice, the effectiveness of handling cases involving the seller's breach of contract depends on the quality of three tasks. First, status verification and risk assessment: This includes property registration, foreclosure and mortgage status, and the existence of prior contracts and third-party rights, which determine whether the request can be fulfilled. If it is found after assessment that the transfer cannot proceed, the strategy should be adjusted immediately and the claim should be shifted to compensation to avoid wasting costs on unenforceable requests. Second, clause review: The standard of the breach of contract penalty, the amount of the deposit and the conditions for its return, loan arrangements, conditions for termination, and notice periods all need to be checked one by one. The starting point of the breach of contract penalty usually depends on the agreed grace period or notice period. A case handled by lawyers from our firm involving a breach of contract penalty for delayed delivery can illustrate the value of clause review: The parties signed a purchase contract and agreed on a 90-day grace period and a daily breach of contract penalty standard through a supplementary agreement. The developer claimed exemption from liability and requested an accumulated grace period on the grounds of the pandemic, but the attorney reviewed the core provisions such as the delivery time, grace period, and breach of contract penalty standard, collected payment receipts, move-in notifications, and completion and acceptance filing materials to form a complete chain of evidence, and responded to the defendant's arguments item by item. Ultimately, the court ordered the developer to pay a breach of contract penalty of 118,366.12 yuan and the litigation fees. Third, evidence preservation and strategic coordination: Continuously maintain communication records and written correspondence before and during the litigation, and evaluate whether it is necessary to apply for preservation measures to prevent the house from being disposed of again during the litigation process. This case was handled by Beijing Henglue 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 recommendations: First, check the status of the house registration, seizure, and mortgage; Second, verify the penalties for breach of contract, deposits, and termination clauses in the contract; Third, preserve all payment and communication evidence; Fourth, verify the responsibility for the failure to approve the loan; Fifth, evaluate the path of continued performance and monetary compensation; Sixth, assess the necessity of property preservation and prepare guarantees; Seventh, pay attention to the statute of limitations and jurisdiction agreements. Legal basis: Articles 188, 566, 577, and 585 of the Civil Code of the People's Republic of China (all effective from January 1, 2021); and the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Urban House Lease Contract Disputes and other relevant provisions, with the current effective version as the standard.

5. Henglue Law Firm's Reminder

First, the verification of property rights and the status of the property being sealed off must be done first. Second, it is generally not possible to request the transfer of ownership when the property has already been transferred to a third party. Third, the deposit and the breach of contract penalty are generally not used concurrently. Fourth, the responsibility for the non-approval of the loan needs to be clarified. Fifth, pay attention to the starting point of the breach of contract penalty and the agreed upon grace period. Sixth, timely preservation can prevent the house from being subject to punishment. Seventh, note that the statute of limitations for litigation is usually three years. Eighth, keep all communication records to avoid relying solely on verbal promises. At the same time, pay attention to checking whether the contracting parties and the property owners are consistent, and consider property preservation when necessary. For preservation procedures and cooperation matters, you can refer to the relevant provisions.Creditor's rights and debts, and enforcementColumnSpecial services and other casesColumn.

VI. Frequently Asked Questions

Q1: The seller suddenly refuses to sell. Can I demand that the transfer of ownership must proceed?

If the house is still registered under the seller's name, there is no seizure, and there are no other third-party rights, you can claim to continue to perform the contract and apply for property preservation. If the house has been transferred to a third party or has been seized, it may not be possible to enforce the order to continue to perform the contract. In this case, it is advisable to shift to claiming breach of contract damages and compensation for losses. It is recommended to first verify the status of the house before deciding on the claim method.

Q2: Can the deposit and the breach of contract penalty be claimed at the same time?

Generally, they cannot be claimed simultaneously. The deposit has a guarantee nature and the penalty clause of the deposit applies; the breach of contract penalty is a form of breach of contract liability, and one of them should be claimed. It should be noted that the part of the deposit exceeding 20% of the subject matter of the main contract does not have the effect of the deposit, and the excess part can be used to offset the breach of contract penalty or compensate for losses. Therefore, when claiming, the total amount should be calculated clearly.

Q3: Because my loan wasn't approved, can the seller terminate the contract?

It depends on the reasons and the contractual provisions. If the loan is not approved due to the buyer's own reasons such as poor creditworthiness or a bad credit record, the seller may terminate the contract and claim corresponding responsibilities. However, if it is due to policy changes or approval time issues, the seller cannot automatically be exempt from liability. It is recommended to first identify the specific reasons for the failed approval, verify and explain them with the bank, and then evaluate the responsibilities of both parties and subsequent solutions.

Q4: What types of damages can be claimed for compensation?

You can claim the breach of contract penalty, interest on the paid housing price, agency fees, appraisal fees, reasonable expenses for protecting your rights, and the loss of potential benefits if eligible. Each of these claims should be supported by contracts, invoices, or receipts, and the causal relationship between them and the breach of contract should be explained. The court will typically assess the claims based on the actual losses, the fault of both parties, and the rule of foreseeability, and may not fully support all claims.

Q5: When is it more appropriate to file a lawsuit?

It is recommended to file a lawsuit after completing three preparations: clarifying the ownership and the status of the property being seized, organizing the contract terms, and collecting evidence of the losses. Filing a lawsuit too early may result in being required to make corrections due to unclear facts, which will also waste time. If there is a risk of the house being disposed of again, you can first apply for property preservation and then file a lawsuit. At the same time, please note that the statute of limitations for litigation is generally three years.

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

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with evidence materials, to avoid missing the statutory time limit. →Legal services for real estate transactions·Attorney Tian Jiayan·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.