[Direct answer]In the Beijing area, the calculation method follows the principle of "agreement takes precedence, and if there is no agreement, the loss shall be compensated". Firstly, if there is an agreement, the parties shall abide by the agreement. According to Article 85 of the Civil Code of the People's Republic of China (effective January 1, 2021), the parties may agree that one party shall pay a certain amount of liquidated damages to the other party in the event of a breach of contract, or may agree on the method of calculating the compensation for the losses caused by the breach of contract; common agreements include a percentage of the total house price, or a calculation based on one ten-thousandth to five ten-thousandths of the paid amount per day. Secondly, if there is no agreement or the agreement is unclear, the actual losses shall be compensated. The breach of contract losses of the seller in a house sale typically include the interest on the buyer's paid amount, the difference in price caused by the increase in house prices, the paid agency fees, appraisal fees, taxes, and reasonable expenses incurred in purchasing the house. Thirdly, the party may request an adjustment. According to Article 85, if the agreed liquidated damages are lower than the actual losses, the party may request an increase; if they are excessively high, the party may request a reasonable reduction. In practice, about 30% of the actual losses is often used as a reference standard for excessive amounts. Fourthly, the deposit and liquidated damages cannot be used concurrently. According to Article 588, if the parties have agreed on both liquidated damages and a deposit, the other party may choose to apply either the liquidated damages or the deposit clause in the event of a breach of contract. In addition, the buyer may also claim to continue to perform the contract, terminate the contract, and request compensation for losses according to the circumstances.Real estate transactions and construction projectsYou can view similar questions in this column.

I. Problem background and typical scenarios

Such disputes often occur in several situations: First, after signing the contract, the house price rises, and the seller reneges on the deal for various reasons and refuses to handle online signing, mortgage release, or transfer procedures; Second, the seller demands an additional payment to continue the transaction, but the buyer refuses to agree, and the seller then unilaterally breaches the contract; Third, the contract stipulates a penalty ratio that is much larger than the price difference, and the two parties disagree on whether to apply the agreed penalty or the actual loss; Fourth, the buyer has paid the deposit or down payment and claims to return double the deposit and penalty; Fifth, the contract does not specify the amount of the penalty, only stipulating that the breaching party shall bear all losses. When handling such cases in Beijing, the court usually first reviews the validity of the contract and the performance of the obligations, then examines whether there are conditions for continued performance, and finally determines the scope and amount of compensation. In terms of evidence, online signing records, payment receipts, mortgage release and transfer materials, communication records with the agent, house price evaluations, or similar transaction cases are all important bases for determining the price difference loss. For disputes involving the return of agency fees and intermediary contracts, these can also be referred to simultaneously.Business and contract disputes in enterprisesColumn.

II. Key points of contention

Focus One: Whether the seller constitutes a fundamental breach of contract and refuses to perform its main obligations, which affects the achievement of the contractual purpose. Focus Two: Whether the contract can continue to be performed, and whether the house has been sealed up, mortgaged, or sold to others. Focus Three: The choice between the breach of contract penalty and the deposit, which cannot be used concurrently. Focus Four: The relationship between the agreed breach of contract penalty and the actual losses, whether it is obviously unbalanced and how to adjust it. Focus Five: The calculation basis and evidence collection methods for the loss of the house price difference, and the application of appraisal reports and contemporaneous transaction cases. Focus Six: Whether the intermediary fees, appraisal fees, and tax losses can be included in the scope of compensation. Focus Seven: The choice and connection of claims, and the relationship between continued performance and compensation for contract termination. Specific determinations shall be based on the currently effective laws, regulations, and judicial rulings.

III. Professional analysis by Henglue Lawyers

Taking the dispute over a pre-sale contract for commercial housing represented by Attorney Tian Jia Yan of our firm as an example, we can see how the penalty clause is applied in practice. On April 30, 2021, Zhang Quan signed a pre-sale contract for commercial housing in Beijing with a real estate development company to purchase Unit 302 of a certain residential complex, with a floor area of 99.41 square meters and a total price of 6,841,972 yuan. The contract stipulated that the developer should deliver the qualified commercial housing before June 15, 2023. The supplementary agreement signed on the same day provided that if the developer failed to deliver on time due to its own reasons, a 90-day grace period would be granted during which the developer would not bear any liability. After the grace period expired, the developer would pay a daily penalty of 0.01% of the total price from the 91st day after the agreed delivery date until the actual delivery date. Zhang Quan paid the full amount, but did not receive a notice of delivery until the developer issued a move-in notice nearly nine months after the delayed delivery. He then entrusted Attorney Tian Jia Yan to sue for the payment of the overdue penalty of 118,366.12 yuan from September 14, 2023 to March 5, 2024. Attorney Tian Jia Yan studied the contract and supplementary agreement, clarified the core provisions such as the delivery time, the grace period, and the penalty standard, and collected payment receipts, move-in notices, and completion and acceptance registration materials to form a complete chain of evidence. In response to the defendant's arguments, she argued that the pandemic was already a normal situation before the contract was signed and did not constitute force majeure; adverse weather conditions and government meetings were also not force majeure; the grace period should be strictly applied according to the contract, and there was no basis for cumulating it with other delays; and the daily 0.01% penalty standard reflected the parties' true intention and was not illegal. The court adopted the lawyer's arguments and ruled in favor of the payment of the overdue penalty of 118,366.12 yuan and the litigation fees. The method used in this case is also applicable to situations where the seller breaches the contract: the calculation basis of the penalty is the contractually agreed method, and the claim should strictly follow the contractual provisions. At the same time, payment receipts and delivery records should be used to lock in the time and amount, avoiding having the amount discounted due to the lack of evidence. This 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: First, when signing the sales contract, clearly stipulate the penalty clause, specify the calculation method and base amount, and make a trade-off arrangement between the deposit clause and the penalty clause. The relevant review ideas can be referred to for reference.Business and contract disputes in enterprisesFirstly, it is to establish a column; secondly, it is to fix the evidence as soon as possible after the seller breaches the contract, including online signing records, payment vouchers, reminder notices, and communication records. For issues involving the verification of house ownership, continuous attention should be paid to themProperty sales and construction projects1. Column; 2. Assess whether the contract can continue to be performed. Where conditions permit, parties may request continued performance and handle the transfer of ownership, and, if necessary, apply for property preservation; 3. For claims for loss of price difference, prepare an appraisal report or transaction cases in the same period and region to form the basis for calculating the loss; 4. Choose between the penalty for breach of contract and the deposit to avoid having both claims rejected simultaneously; 5. Where parties believe that the agreed penalty for breach of contract and the actual loss are grossly imbalanced, they shall promptly submit a request for adjustment and provide evidence of the loss. Legal basis: Articles 563, 577, and 585 of the Civil Code of the People's Republic of China (effective January 1, 2021); the Urban Real Estate Management Law of the People's Republic of China (amended in 2019); specific applications shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Advice

Firstly, the penalty for breach of contract shall be subject to the provisions of the contract. It is more meaningful to specify the calculation method at the time of signing the contract than to argue about it afterwards. Secondly, the deposit and the penalty for breach of contract cannot be claimed simultaneously, and a choice must be made between the two. Thirdly, the loss of the price difference of the house is a common major loss, and the appraisal report and the transaction cases in the same period are important evidence. Fourthly, if the agreed penalty for breach of contract is excessively high or low compared with the actual loss, the court may be requested to adjust it. Fifthly, whether the contract can be continued to be performed depends on whether the house is sealed up, mortgaged, or sold elsewhere. Before making a claim, the ownership status of the house should be checked first. Sixthly, given the large amount of the house purchase and sale and the complexity of the dispute, it is recommended to entrust a professional lawyer to supervise both the signing and the protection of rights stages.

VI. Frequently Asked Questions

Q1: How is the penalty for a seller's breach of contract calculated?

The calculation method shall be subject to the provisions of the contract. Common methods include calculating it as a percentage of the total price of the house, or calculating it on a daily basis at a rate of 0.01% to 0.05% of the paid amount; if the contract does not stipulate or the stipulation is unclear, the calculation shall be based on the actual losses.

Q2: Can I claim both the penalty for breach of contract and the deposit at the same time?

No. According to Article 588 of the Civil Code of the People's Republic of China, if the parties have agreed on both the penalty for breach of contract and the deposit, the other party may choose to apply either the penalty for breach of contract or the deposit clause when one party breaches the contract, and the two cannot be used concurrently.

Q3: If the seller breaches the contract because the house price has risen, can the buyer be compensated for the price difference?

This can be claimed. The loss of the price difference of the house is a common major loss, and it usually requires providing an appraisal report or transaction cases in the same period and the same area as the basis for calculation. The court will determine the amount based on the evidence.

Q4: If the agreed penalty for breach of contract is too high, will it be reduced?

Possibly. According to Article 585 of the Civil Code of the People's Republic of China, if the agreed penalty for breach of contract is excessively higher than the actual losses caused, the party concerned may request to reduce it appropriately. In practice, it is usually determined whether it is excessive by referring to a certain percentage of the actual losses.

Q5: Can I ask the seller to continue selling the house?

This can be claimed, but it requires the conditions for continued performance. If the house has not been sealed up, mortgaged, or sold to others, and the seller still has the ability to perform, you can request continued performance and handle the transfer of ownership; otherwise, it will generally be converted into a termination of the contract and compensation for losses.

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 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 the purchase and sale of real estate·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.