[Direct answer]In the Beijing area, if the buyer breaches the contract in a second-hand housing transaction (such as refusing to pay the balance, refusing to cooperate with the transfer of ownership, or terminating the contract without any justifiable reason), the seller can quickly mitigate losses by demanding the buyer to perform the contract, claiming breach of contract damages, or terminating the contract and seeking compensation. According to Article 577 of the Civil Code of the People's Republic of China (effective January 1, 2021), a party that fails to perform its contractual obligations shall bear such breach of contract liabilities as continuing to perform the contract, taking remedial measures, or compensating for losses; Article 563 stipulates that if the fundamental breach of contract results in the failure to achieve the purpose of the contract, the party in compliance with the contract has the right to terminate the contract. In practice, the seller should promptly send a letter of reminder, fix the evidence of the breach of contract, and choose to continue to perform the contract or terminate the contract and seek compensation according to the situation, and refer to relevant provisions when necessary.Real estate transactions and construction projectsColumn.

I. Problem background and typical scenarios

In second-hand housing transactions, the buyer's breach of contract is one of the most headache risks for sellers. Typical scenarios include: first, the buyer delays or refuses to pay the remaining house price after signing the contract due to fluctuations in housing prices; second, the buyer fails to fulfill the contract because of unapproved loans or unqualified qualifications, but is unwilling to bear the liability for breach of contract; third, the buyer regrets his decision after signing the contract and refuses to transfer the ownership for reasons such as housing defects and household registration; fourth, the buyer loses the eligibility to purchase a house after the upgrading of the policy on purchase restrictions, and the contract is objectively impossible to perform; fifth, in a chain transaction, the buyer's upstream transaction fails, leaving him unable to purchase a house. If the seller fails to handle the situation in time, not only will the house price be lost, but the seller may also bear additional losses due to the decline in housing prices. When handling similar cases in Beijing, the court usually supports the seller who fulfills the contract to choose to continue to perform the contract or to rescind the contract and claim compensation. The relevant transaction risks can be referred to for reference.Property sales and construction projectsColumn.

II. Key points of contention

First, whether the buyer's behavior constitutes a fundamental breach of contract. Generally, a delay of a few days does not constitute a fundamental breach, but long-term refusal to pay or explicit breach of contract may amount to a fundamental breach. Second, the seller's choice of remedies depends on the buyer's ability to perform and the current status of the house. Third, the application of the penalty and the deposit. The contract often stipulates a penalty or a deposit. When claiming, it is necessary to avoid having the amount "excessively higher than the losses" being reduced. Fourth, the procedures of notice and rescission. Before rescission, the seller should fulfill the obligation of giving notice according to law, otherwise the rescission may be invalid. Fifth, the burden of proof for the loss of property value. Sixth, the execution risks when the buyer is uncontactable or insolvent. Specifically, the current effective laws and regulations and judicial rulings shall prevail. For cases where the breaching party cannot perform its obligations and then applies for compulsory execution, reference can be made to the relevant provisions.Creditor's rights and debts, and enforcement casesColumn.

III. Professional analysis by Henglue Law Firm

Based on the real estate sales disputes handled by our firm, it can be seen that the breach-of-contract party can effectively mitigate losses through professional representation. In a pre-sale contract dispute of a commercial housing project handled by Attorney Tian Jiaoyan of our firm, the buyer, Zhang Quan, signed the "Beijing Commercial Housing Pre-sale Contract" with Beijing A Real Estate Company to purchase a house in a certain residential community, with a total price of 6,841,972 yuan. The contract stipulated that the house should be delivered before June 15, 2023, and the supplementary agreement granted a 90-day grace period. After the expiration of the grace period, the developer would pay a daily penalty of 0.01% of the total price. However, the A Company failed to deliver the house until March 5, 2024, nearly nine months after the deadline. Attorney Tian Jiaoyan represented Zhang Quan in the lawsuit and countered the developer's defense that "the pandemic constituted a force majeure," pointing out that the contract was signed in 2021, when the pandemic had already become a normal situation, and the developer should have foreseen this and thus it did not constitute a force majeure. The grace period should be strictly applied according to the contract and not accumulated. The court adopted the lawyer's opinion and ordered the A Company to pay the full overdue delivery penalty of 118,366.12 yuan and the litigation fees. In another pre-sale dispute of a commercial property handled by Attorney Liu Donghua of our firm, the developer, Z Company, failed to deliver the property for years and the project was suspended. Attorney Liu Donghua argued that the pre-sale contract and the loan contract should be terminated based on the fundamental breach of contract. The court ordered the return of the down payment of 267,188 yuan, the principal and interest of the repaid loan of 1,547,83.01 yuan, the public maintenance fund of 5,079 yuan, and the stamp duty of 267.10 yuan, and the payment of a breach of contract penalty of 50,000 yuan, with the sole shareholder bearing joint and several liability. Our firm also handled a dispute over arrears in construction equipment leasing contracts. In the case of the lessor suing Li * against the lessee, the defendant failed to pay the rent and return the leased items for a long time. The court determined that it constituted a fundamental breach of contract and ordered the payment of 659,260 yuan in rental fees, reflecting our firm's ability to recover losses in contract breach cases. In real estate transaction breach disputes handled by our firm's lawyers, we focus on using contract terms and evidence to prove the other party's breach of contract, and strive to achieve the best results for the breach-of-contract party, including continued performance of the contract, termination of the contract, return of the price, and compensation for losses. 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 the buyer shows signs of breaching the contract, immediately urge them in writing and keep the delivery receipt; Second, sort out the contract's provisions on the penalty, deposit, and conditions for termination. For the review of relevant texts, you can refer to the following resources:Special services and other cases1. The first step is to determine the legal nature of the contract. 2. The second step is to clarify the scope of the contract and the obligations of both parties. 3. The third step is to assess the buyer's ability to fulfill the contract obligations. If they can continue to fulfill their obligations, timely initiate legal action to transfer ownership and make payments; if not, decisively terminate the contract and seek compensation. 4. Before terminating the contract, implement the notice procedure to avoid the contract being deemed invalid. 5. The claimed damages should include the interest on the purchase price, the difference in the value of the property, etc., and prepare the necessary evidence. Regarding legal basis, Article 509 of the Civil Code of the People's Republic of China stipulates that parties shall fully perform their obligations as agreed; Article 577 stipulates the forms of liability for breach of contract; Article 563 stipulates the right to terminate the contract in the event of a fundamental breach; Article 585 stipulates the rules for reducing the amount of the penalty; and Article 588 stipulates the application of the choice between the deposit and the penalty for breach of contract. For disputes involving the validity and performance of the contract, reference can be made to the relevant provisions of the Civil Code.Business and contract disputes in enterprisesColumn.

5. Henglu Law Firm's Advice

Risk Warning: Firstly, the seller must not engage in "one house, two sales" on their own due to the buyer's delay, otherwise they may be counter-sued for breach of contract; Secondly, if the penalty for breach of contract is set too high, it is likely to be reduced. It is recommended to set the actual loss as the benchmark; Thirdly, to terminate the contract, the seller must first give a notice of default. Procedural defects may lead to the invalidity of the termination; Fourthly, when the buyer is uncontactable or insolvent, the seller should apply for property preservation and enforcement in a timely manner. For related enforcement matters, please refer to the relevant provisions.Creditor's rights and debts, and enforcement casesColumn. It is recommended to fix the evidence of breach of contract as soon as possible and let professional lawyers formulate a plan for continuing performance or claiming compensation for breach of contract.

VI. Frequently Asked Questions

Q1: If the buyer breaches the contract, can the seller demand that the contract be performed and claim compensation?

Yes. If the buyer refuses to pay the balance, refuses to cooperate with the transfer of ownership, or breaches the contract without a valid reason, the seller has the right to seek remedies. According to Article 577 of the Civil Code, the buyer shall bear such breach of contract liabilities as continuing to perform the contract, taking remedial measures, or compensating for losses; if the breach constitutes a fundamental breach that makes the purpose of the contract impossible to achieve, the seller may terminate the contract and claim compensation in accordance with Article 563. In practice, if the buyer still has the ability to perform the contract, the seller may request the buyer to continue to perform the contract, handle the transfer of ownership, and pay the outstanding payments and breach of contract penalties; if the buyer truly lacks the ability to perform the contract, the seller may terminate the contract and claim damages such as the difference in housing prices and interest on the housing payment. The outcome depends on the degree of breach and the evidence, and it's not necessarily a complete victory for the seller.

Q2: What evidence should the seller prepare?

The following are the required preparations: 1. The house sale and purchase contract and supplementary agreements, especially the provisions on penalties, deposits, and conditions for termination. 2. Evidence of the buyer's breach of contract, including collection notices and proof of delivery, chat records showing the buyer's explicit refusal to perform, and notifications of loan rejection by the bank. 3. Evidence of the seller's performance, including proof of fully paid purchase price, certificates confirming the conditions for property transfer, and clear proof of ownership. 4. Evidence of losses, including assessments of the housing price difference, calculations of interest on the purchase price, and the price difference of reselling the property elsewhere. 5. Assets-related clues of the buyer, to facilitate subsequent enforcement. The evidence should form a chain to prove the buyer's fundamental breach of contract and the seller's losses, thereby enhancing the success rate of demanding performance or seeking compensation for breach of contract.

Q3: How much does it cost to litigate a case?

The fees include attorney's fees and litigation fees. The attorney's fees are determined through negotiation based on the value of the property and the complexity of the breach of contract; the litigation fees are charged in stages according to the amount of the litigation request (such as unpaid housing payments, breach of contract penalties, and price differences), and the winning party may share the fees proportionally. If applying for property preservation, it is necessary to provide guarantees and the property preservation fees may be charged. The higher the value of the property, the higher the fees will be, but the proportion of the fees compared to the value of the property is usually manageable. Specifically, it should be combined with the buyer's arrears and the evaluation of the property price. It is recommended to consult about the evidence and claims first before quoting a price, rationally estimate the recovery of funds and costs, and then decide whether to litigate.

Q4: How long does the entire process take?

The negotiation phase can last for several weeks; the first-instance litigation in ordinary procedures generally does not exceed six months, but it may be extended if it involves assessing the price difference of the house or applying for preservation measures. The second-instance litigation usually takes about three months. If the buyer fails to perform after the judgment, applying for enforcement will require additional time, which depends on the buyer's financial situation. The key is to send a reminder letter and file a lawsuit promptly when the breach of contract occurs, so as to avoid the buyer transferring assets or allowing the housing price to fluctuate, which may lead to greater losses. It is recommended to fix the evidence of the breach of contract and apply for preservation measures as soon as possible, in order to shorten the recovery period and improve the enforcement completion rate.

Q5: What should I do if I find that the buyer has breached the contract?

The first step is to immediately urge the buyer to fulfill the contract in writing and retain the proof of delivery, so as to fix the evidence for subsequent termination or claims. The second step is to assess the buyer's ability to perform the contract. If the buyer can continue to perform the contract, promptly sue for the transfer of ownership and payment; if not, decisively terminate the contract. The third step is to fulfill the obligation of urging the buyer to perform before terminating the contract, otherwise the termination may be deemed invalid. The fourth step is to set the penalty for breach of contract based on the actual losses, so as to avoid the penalty being reduced if it is set too high. The fifth step is to apply for property preservation and forced execution in time when the buyer is uncontactable or insolvent. It is recommended that a professional lawyer formulate a plan for continuing to perform the contract or terminating the contract and claiming compensation.

The above Q&A is mainly based on judicial practice in Beijing. There may be differences in the adjudication standards 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 the relevant evidence, so as 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 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 you encounter disputes, please consult a practicing lawyer in time.