[Direct answer]It is generally invalid. The homestead belongs to the collective of farmers, and the transfer of the right to use the homestead and the houses on it is generally limited to members of the collective economic organization; if it is sold to members outside the village, it is usually deemed invalid for violating the mandatory provisions of laws and administrative regulations. Article 153 of the Civil Code of the People's Republic of China (effective January 1, 2021) stipulates that a civil legal act that violates the mandatory provisions of laws and administrative regulations is invalid; the State Council's "Notice on Strictly Implementing Laws and Policies on Rural Collective Construction Land" (Guo Ban Fa [2007] No. 71) clearly stipulates that urban residents are not allowed to purchase homesteads and farmers' houses in rural areas. After the contract is invalid, the parties usually return the houses and the purchase price to each other, and the losses shall be shared according to the fault. The specific provisions and judicial rulings shall prevail. For more details, please refer to the relevant provisions and judicial rulings currently in force.Legal services for real estate transactions and construction projects.

I. Problem Background and Typical Scenarios

"Does a purchase contract signed for a farmhouse by city dwellers really count?" This is a typical question in rural housing transactions. Common scenarios include: urban residents purchasing farmhouses for retirement or vacation; villagers from other villages purchasing houses from members of different collective economic organizations in their own village; disguising sales as long-term leases; regretting internal family transfers; and houses being transferred to non-members after inheritance or donation and then being unable to be registered. Once such transactions are brought to court, the disputes often focus on three aspects: the identity of the buyer, the validity of the contract, and the consequences of its invalidation. The handling rules can be referred to for reference.Legal services for real estate transactions and construction projects.

II. Key points of contention

The disputes in such cases focus on five points. Firstly, the identity of the buyer: whether they are members of the collective economic organization where the house is located, which is the core of the determination of the contract's validity. Secondly, the violation of mandatory provisions: the acquisition and transfer of the right to use residential plots are subject to restrictions by land management laws and regulations, and the transfer to non-members usually violates these mandatory provisions. Thirdly, the handling after the contract is invalid: the mutual return of the house and the purchase price, how to appraise the residual value and losses of the parts that have been rebuilt, expanded, or renovated, and how to divide the proportion of fault between the two parties. The handling methods vary from region to region. Fourthly, the demolition compensation benefits: when the house is expropriated and demolished, the buyer and seller compete for the ownership of the compensation funds. Fifthly, the burden of proof: the buyer needs to prove their membership status, the ownership of the house, and the actual payment, while the seller claiming the invalidity of the contract needs to prove that the transfer violates the mandatory provisions.

III. Professional analysis by Henglue Law Firm

A second-instance case of a housing sales contract dispute handled by Attorney Li Yonghui fully demonstrates the method of evidence construction for determining the validity of a contract. Company A, due to the need for loans for its affiliated companies, signed a "Beijing City Second-hand Housing Sales Contract" in the name of employee Zhang * who had continuously paid social insurance for five years, and sold a 262.05-square-meter house in Chaoyang District to Zhang * for 7.3374 million yuan. The down payment was 25.774 million yuan, and the remaining 4.4 million yuan was paid by Zhang * through a mortgage and transferred to Company A for use. Later, Zhang * took away the property certificate and refused to cooperate with the transfer. Company A sued to request the invalidation of the contract and the return of the house, but the first-instance court dismissed the case due to insufficient evidence. After Attorney Li Yonghui handled the appeal, the focus of the second-instance trial was on the abnormality of the transaction nature and the completeness of the evidence chain: reconstructing the flow of funds to prove that the 4.4 million yuan loan directly entered Company A and was transferred to its affiliated companies; sorting out the ownership of the property certificate and fees to prove that the original property certificate and loan contract were held by Company A, and the property management fees were paid by the affiliated companies; combining the agency agreement and receipts to prove that the parties did not have a genuine sales agreement. The second-instance court ruled that the sale was a collusive false representation by the parties, and based on Article 146 of the Civil Code of the People's Republic of China (effective January 1, 2021), it reversed the first-instance judgment, ruled that the contract was invalid, and ordered the house to be restored to Company A's name. The case provides important insights into the transaction of rural housing: the validity of a housing sales contract depends on whether the expression of intent is genuine, whether it violates mandatory legal provisions, and whether the subject matter can be legally transferred. In this case, selling the house to a non-local resident violated the restriction on transfer eligibility. The case was handled by Beijing Henglu Law Firm.Li YonghuiThe attorney (practice license number: 11101199611955812, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 146 (false manifestation of intention), Article 153 (invalidity due to violation of mandatory provisions or public order and good customs), and Article 157 (return of property, compensation for depreciation, and fault-based compensation) of the Civil Code of the People's Republic of China (effective January 1, 2021); Article 62 of the Land Administration Law of the People's Republic of China (amended for the third time on August 26, 2019 and effective January 1, 2020) regarding the one-household-one-plot rule and the plot area standards for rural villagers; and the "Notice on Strictly Implementing Laws and Policies Concerning Rural Collective Construction Land" issued by the General Office of the State Council (No. 71 of 2007) prohibiting urban residents from purchasing plots or houses in rural areas. Action list: 1. Verify the nature of the house and land and the buyer's status as a member of the collective economic organization before the transaction. 2. Check the house ownership certificates and construction approval procedures. 3. For signed sales contracts, have a lawyer assess the legal risks and consequences of invalidity as soon as possible. 4. In case of disputes, collect evidence of the contract, payments, possession, and reconstruction investments, and promptly initiate or respond to lawsuits. For more details, please refer to the following document:Legal services for real estate transactions and construction projects.

5. Henglu Law Firm's Reminder

The risks of rural housing transactions mostly stem from the neglect of membership and transfer restrictions. Transfers in disguised forms such as long-term leases, cooperative development, and entrusted holding are often difficult to break through the restriction that the right to use residential land can only be transferred among members of the same collective economic organization. Even so-called notarized sales contracts may still be deemed invalid. Once the contract is invalid, both parties will face the consequences of restitution and discounted compensation. The seller may not be the only party to suffer losses, and the buyer may lose both the house and the money. In disputes involving rural housing ownership in Beijing, the court also strictly reviews the membership status and transfer restrictions, and handles each case in accordance with the current effective regulations and judicial rulings. When encountering such transactions or disputes, it is recommended to seek legal assistance as soon as possible.Beijing Henglu Law FirmProfessional lawyers assess the risks.

VI. Frequently Asked Questions

Q1: If a house on a residential plot is sold to people from another village, what will be the verdict if they are sued?

Generally, the contract is deemed invalid, and both parties return the house and the purchase price to each other. For the residual value formed by the reconstruction, expansion, or decoration of the house, compensation is usually determined based on the contribution and fault of each party; the losses of appreciation or depreciation are shared according to the proportion of fault of both parties. The seller's fault of selling the house despite knowing it was subject to a sales restriction is usually greater, but the specific proportion varies from region to region. If it involves demolition compensation, it is necessary to distinguish between the original value and the compensation benefits and handle them separately. The conclusions of individual cases shall be based on evidence and effective judgments.

Q2: What evidence do I need to prepare for such disputes?

Prepare in two categories. Buyers usually need: sales contracts and supplementary agreements, payment receipts and bank transaction records, evidence of house delivery and possession and use, household registration books and proof of membership in collective economic organizations, and invoices for reconstruction, expansion, and renovation. Sellers usually need: certificates of land use rights for residential plots or building approval procedures, household registration materials proving that the buyer is not a member of the organization, and images of the current state of the house. For cases involving demolition, additional documents are required, including compensation agreements, appraisal reports, and settlement documents.

Q3: How much does it cost to litigate such cases, and how long does it take?

The litigation fees shall be paid in stages according to the amount of the litigation request, and shall be borne by the losing party. In the case of partial victory, the fees shall be shared proportionally. For cases concluded through summary procedures or mediation, the fees shall be collected at half the normal rate. The attorney's fees shall be determined through consultation between the law firm and the client, and there is no unified government pricing. In terms of timeframes, the ordinary first-instance proceedings shall be concluded within six months, and the summary proceedings shall be concluded within three months. For cases involving the evaluation of the residual value of decoration or the appraisal of construction costs, the appraisal period shall not be included in the time limit for trial, and the overall process may span over multiple years. Such disputes do not fall within the scope of labor arbitration, and the parties shall directly file a lawsuit with the people's court having jurisdiction over the case.

Q4: Urban residents have already bought rural houses. What should they do now?

First of all, we need to be aware that the transaction risks are relatively high: the contract may be deemed invalid, the transfer of ownership may not be completed, it may be difficult to obtain mortgage financing, and there may also be disputes over the ownership of compensation in the event of expropriation and demolition. It is recommended to immediately organize contracts, payment receipts, and evidence of possession and reconstruction investments, and evaluate the validity of the contract and the consequences of its invalidation. Do not casually use "leasing instead of selling" or long-term contracts to evade restrictions. For those who really need to continue to possess and use the property, they can confirm the boundaries of rights through negotiation, supplementary agreements, or litigation, and consult professional lawyers as soon as possible to develop a plan.

Q5: If I want to buy or sell a rural house, what should I do first?

There are four preliminary steps: First, verify the nature of the house land, confirm whether it is a residential plot or farmland, and whether there are any unauthorized buildings; Second, verify the seller's ownership certificate and building approval procedures, and confirm whether there are co-owners; Third, verify whether the buyer belongs to the members of the collective economic organization. Transactions involving non-members are generally invalid; Fourth, have a professional lawyer review the effectiveness risks and consequences before signing the contract. For existing disputes, sort out the contract, payment, and possession evidence, and evaluate the litigation strategy as soon as possible.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific situations.

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