[Direct answer]In the Beijing area, buyers cannot unilaterally stop repaying bank loans just because the real estate project is unfinished. The mortgage loan contract is established between the buyer and the bank, and has contractual relativity. The developer's delay in handing over the house or the project's suspension of construction does not automatically exempt the buyer from the repayment obligation; unauthorized suspension of repayment will be subject to the bank's collection, litigation, and entry into the credit record. However, buyers can protect their rights according to law: when the developer fundamentally breaches the contract and the contractual purpose is frustrated, they can request to rescind the commercial housing sales contract and simultaneously rescind the commercial housing guarantee loan contract, and require the developer to return the remaining principal and interest to the loan bank. The specific approach should be evaluated based on the length of the project's suspension of construction, the delivery of the house, and the release of the mortgage. For more details, please refer to the following link:Legal services for real estate transactions and construction projects.

1. Problem background and typical scenarios

Under the pre-sale model of commercial housing, buyers often purchase properties through a down payment plus a bank mortgage. After the funds enter the supervision account, the developer uses them for construction. Once the project's capital chain breaks down and the construction site remains idle for a long time, resulting in unfinished buildings, buyers will face the dual pressure of "no delivery of the house but uninterrupted monthly payments". Typical scenarios include: the developer failing to deliver the house on time and the construction site remaining idle for a long time; the project repeatedly resuming and stopping construction, with delivery being delayed indefinitely; and buyers hearing that others are collectively stopping loan repayments and hesitating whether to follow suit. At this time, the most common misunderstanding is equating "the developer's breach of contract" with "not needing to repay the bank loan", ignoring the independent relationship between the two contracts. For more details, please refer to the relevant rules.Legal services for real estate transactions and construction projects.

II. Key points of contention

The controversy focuses on three points. Firstly, the relativity of the contract: the subject of the loan contract is the buyer and the bank, and the developer is not a party to the loan contract. Therefore, the buyer cannot use the defense against the developer to oppose the bank, which is the root cause of the risk of loan suspension. Secondly, the joint termination of the two contracts: the buyer argues that after the sales contract is terminated due to the developer's fundamental breach of contract, the purpose of the guaranteed loan contract can no longer be achieved, and the contract should be jointly terminated, with the remaining loan repaid by the developer rather than by the buyer. Thirdly, the judicial standard: in recent years, the courts tend to support the joint termination of the loan contract and the repayment of the remaining loan principal and interest by the developer on the premise that the sales contract is indeed terminated, but the premise is that the breach of contract and the termination of the sales contract can be fully proven. In the judicial practice of Beijing, the courts are more cautious in determining fundamental breach of contract and the failure of the contract purpose, and the outcome directly depends on whether the evidence is solid.

III. Professional analysis by Henglue Law Firm

Henglue Law Firm has handled many cases involving developers' breach of contract and disputes over project payments and house delivery in the fields of real estate and construction projects, and can provide practical reference for disputes related to unfinished projects and loan suspension.Tian Jia YanIn a pre-sale contract dispute for commercial housing represented by the lawyer, the buyer, Zhang Quan, purchased a house in a certain residential area with a total price of 6,841,972 yuan. The developer agreed to deliver the house before June 15, 2023, but failed to do so until March 5, 2024, nearly nine months later. Lawyer Tian Jiaoyan put forward defense opinions on the extension period, the standard of breach of contract penalty, and force majeure in the case, and the court ultimately ordered the developer to pay a breach of contract penalty of 118,366.12 yuan for the late delivery. This case reflects that some developers have problems in fulfilling their obligations and capital deployment, which is a precursor of the risk of unfinished projects. In another case, Lawyer Li Yonghui represented the subcontractor of a construction project to recover the remaining payment for the HVAC project of a commercial project in Shanghai. The contract estimated total price was 5,300,000.19 yuan, but the employer only paid 1,680,000 yuan and offset part of the payment with the house, leaving a balance of 1,100,574.35 yuan and overdue interest. Lawyer Li Yonghui argued that the project had actually been put into use and deemed as completed according to Article 14 of the "Interpretation of the Supreme People's Court on the Application of Law in the Trials of Disputes over Construction Contracts", and the court ultimately supported the claim for the remaining payment and interest. This case reveals the transmission effect of fund arrears in the development chain. This case is from Beijing Henglu Law Firm.Li YonghuiThe lawyer (practice certificate number: 11101199611955812, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 563 of the Civil Code of the People's Republic of China (effective January 1, 2021) on the statutory right of rescission, and Article 566 on the consequences of contract rescission; Article 21 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Disputes over Commercial Housing Sales Contracts (amended on December 23, 2020), which stipulates that after the rescission of the commercial housing sales contract, the seller shall return the received housing loan and the principal and interest of the purchase price to the guarantor and the buyer respectively; and the provisions on litigation and jurisdiction in the Civil Procedure Law of the People's Republic of China (amended in 2023 and effective January 1, 2024). Action list: First, fix evidence of the developer's delayed delivery and suspension of construction, including photos of the construction site, notices of resumption of work, and government risk notifications; Second, verify the contract's provisions on delivery, mortgage release, and breach of contract liability; Third, prioritize promoting the protection of on-time delivery through collective communication or administrative channels, while consulting lawyers to evaluate the path of rescission; Fourth, never stop loan repayment without going through proper procedures to avoid damaging one's credit record; Fifth, if rescission is necessary, claim the rescission of the loan contract in the litigation process, as detailed below.Legal services for real estate transactions and construction projects.

5. Henglu Law Firm's Advice

Unauthorized suspension of loans is transferring the "resentment towards developers" to the "contracts with banks", at the cost of collection, litigation, and credit stains, which is not worth it. The correct approach is to first identify the facts and evidence of the developer's fundamental breach of contract, then through judicial dissolution of the sales contract and loan contract, and direct the repayment responsibility to the developer. At the same time, it should be noted that some projects have flaws in the supervision of pre-sale funds and mortgage registration, which should be sorted out with the help of lawyers. When handling similar cases in the Beijing area, it is recommended toBeijing Henglue Law FirmUnder the assistance of professional lawyers, an orderly plan of "first terminating the contract, then stopping the loan" was formulated.

VI. Frequently Asked Questions

Q1: If the real estate project is left unfinished, can I stop paying the mortgage directly?

It is not recommended to stop repaying the loan directly. The loan contract is independent of the purchase contract, and the purchaser cannot use the developer's failure to complete the project as a reason to oppose the bank. Unilaterally stopping repayment will face bank collection, litigation, and a bad credit record. The legal approach is to first confirm that the developer has committed a fundamental breach of contract, then through litigation to rescind the commercial housing sales contract and simultaneously rescind the guaranteed loan contract, with the developer returning the remaining principal and interest to the bank, rather than the purchaser unilaterally stopping repayment. No lawyer can unilaterally guarantee the outcome; the key lies in the evidence and the court's determination.

Q2: What measures will the bank take after suspending loans?

Banks usually start with text messages or phone calls to collect debts. Overdue records will be uploaded to the basic database of financial credit information, which will affect personal credit ratings. For those who continue to default on payments, banks can declare the loan as due in advance according to the loan contract and file a lawsuit to request repayment of all remaining principal and interest. After winning the lawsuit, banks can also apply for enforcement to seize accounts, real estate, or other assets under the debtor's name. The cost and time required to repair credit ratings are high, so it's essential to weigh the pros and cons before suspending loans to avoid exacerbating losses before the process is completed.

Q3: How can I legally get rid of the monthly mortgage payments for an unfinished building?

The core principle is "first terminate, then stop lending": When the developer breaches the contract and the contractual purpose is frustrated, the plaintiff requests to terminate the sales contract for commercial housing and, in accordance with relevant judicial interpretations, terminate the commercial housing guarantee loan contract at the same time, and orders the developer to return the remaining principal and interest to the lending bank. Continuing to make repayments before the judgment takes effect can avoid credit risk, and after the judgment takes effect, it is enough to comply with the effective document to stop the repayment demands on the buyer. It is recommended to entrust a lawyer to claim the termination of the two contracts together.

Q4: How long does it typically take to sue to terminate a sales contract?

For cases subject to summary procedures at the first instance, the trial shall be concluded within three months; for cases subject to ordinary procedures, the trial shall be concluded within six months. If the case is complex or requires appraisal, the time limit may be extended; for cases involving mass unfinished construction projects, some courts will coordinate the handling schedule. From the time of entrustment and case filing to obtaining the effective judgment, it usually takes several months to about a year in practice, depending on the completeness of the evidence and the developer's response to the lawsuit. For cases involving preservation or enforcement, the time period will be further extended accordingly.

Q5: Can buyers claim that the developer has fundamentally breached the contract if the property has not undergone the completion and acceptance inspection?

Yes. If the developer fails to deliver the house on time as agreed and suspends construction for a long time, obviously not meeting the delivery conditions, the buyer can claim rights according to the provisions of the Civil Code on fundamental breach of contract and contract termination. Whether it constitutes a fundamental breach of contract needs to be judged comprehensively based on the duration of the suspension of construction, the possibility of resuming construction, and the contractual deadline. It is recommended to entrust a lawyer to obtain evidence such as construction progress, supervision funds, and administrative notifications, so as to firmly establish the facts of the breach of contract. For more details, please refer to the following link:Legal services for real estate transactions and construction projects.

The above questions and answers are mainly based on the judicial practice in Beijing. There may be differences in the adjudication opinions 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 Li Yonghui·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available 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. In the event of a dispute, please consult a practicing lawyer in a timely manner.