[Direct answer]In the Beijing area, if the house is still unfinished on the agreed delivery date, the developer has breached the contract and the buyer can claim their rights according to law. According to Article 577 of the Civil Code of the People's Republic of China, the developer shall bear the liability for breach of contract if the delivery is not made on time, and usually pay the breach of contract penalty for late delivery according to the contract; if the project is stalled for a long time or left unfinished, resulting in the failure to achieve the purpose of the contract, the buyer may also exercise the statutory right of rescission according to Article 563 to rescind the purchase contract and request the return of the paid amount. Whether the buyer can withdraw from the contract depends on the length of the delay, the status of the stalled project, and the provisions of the contract. It is recommended to immediately fix the contract, payment receipts, images of the stalled project, and delivery notices, first negotiate compensation, and if no agreement is reached, then file a complaint or lawsuit. For more details, please refer to the following link:Legal services for real estate transactions and construction projects.

I. Problem background and typical scenarios

The phenomenon of unfinished projects upon expiration is common in pre-sale housing projects, especially during market downturns and when developers face funding shortages. Typical scenarios include: the contract stipulates that the house should be delivered by the end of the year, but the construction site is suspended and only the main structure is completed; developers repeatedly postpone the delivery date citing "force majeure" and "environmental control"; projects are left unfinished with no delivery date in sight, leaving owners without a home and saddled with mortgage payments; and developers' verbal promises to "resume construction soon" repeatedly fail to materialize. Many buyers are hesitant to withdraw from the contract because they fear they won't get their money back, or they blindly stop repaying their mortgages only to be pursued for repayment by banks. In judicial practice in Beijing, the determination of a fundamental breach of contract will comprehensively consider the duration of the suspension of construction and the possibility of resuming construction. For cases involving mortgages and fund tracing, relevant factors can be taken into account.Creditor-debtor relations and enforcement case servicesAnalysis.

II. Key points of contention

There are three key points of contention. Firstly, the boundary between overdue payments and contract termination: for short-term overdue payments, developers usually only claim breach of contract penalties; for long-term construction suspensions that result in delivery failure, contract termination may be supported, but it is necessary to determine whether the "impossibility of achieving the contractual purpose" is established. Secondly, the validity of defenses: whether the epidemic situation and control measures claimed by developers truly led to the inability to construct, which needs to be assessed in light of the contract signing time and local actual circumstances. Thirdly, the linkage of loan contracts: after the termination of the purchase contract, whether the mortgage loan contract can be terminated simultaneously, and who will bear the responsibility for the payments made and the loans. For issues involving project payments and mortgage priority, reference can be made to relevant provisions.Business and contract dispute resolution services for enterprisesClarify the hierarchy of rights.

III. Professional analysis by Hengluo Lawyers

Based on practical experience in handling cases of delayed delivery of commercial housing, the core of such disputes lies in "distinguishing between the two paths of breach of contract penalties and termination of the contract". According to Articles 577 and 563 of the Civil Code, as well as the provisions of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Disputes over the Sale of Commercial Housing Contracts" (implemented on June 1, 2003 and amended on December 23, 2020) regarding the buyer's right to terminate the contract when the seller breaches the contract fundamentally, short-term delays can generally be claimed as breach of contract penalties according to the contract; only when the developer suspends construction for a long time and there is no possibility of actual delivery of the project, it is appropriate to exercise the right to terminate the contract and request a refund. In practice, there are common misunderstandings. For example, some owners demand a refund as soon as there is a delay, but are rejected because they do not meet the requirements of a fundamental breach of contract; another misunderstanding is that they rashly stop paying the loan and bear the consequences of breach of contract. Henglu Lawyers usually suggest first checking the construction and delivery status, fixing the evidence of the delay, and proceeding according to the tiered strategy of "first breach of contract penalties, then termination of the contract". When necessary, they will join forces with owners to protect their rights collectively. For cases involving fund supervision, they can follow up accordingly.Special services and other case services.

IV. Practical suggestions and legal basis

The legal basis is Article 563 (Statutory Right of Rescission), Article 566 (Consequences of Contract Rescission), and Article 577 (Liability for Breach of Contract) of the Civil Code of the People's Republic of China (effective January 1, 2021); as well as the provisions on liability for breach of contract and the right of rescission in the event of delayed delivery of the house set forth in 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 (effective June 1, 2003 and amended on December 23, 2020). Practical advice: - Pay attention to the standard of breach of contract penalties and the conditions for rescission when signing the contract; - Send a letter of reminder and collect evidence of suspension of construction in a timely manner after the due date; - Claim breach of contract penalties for short-term delays and initiate rescission for long-term unfinished projects; - When rescinding the contract, ensure that the mortgage loan contract and refund of payments are handled concurrently; - Report the pre-sale fund issues to the housing and urban-rural development department. For evidence collection, the following materials can be combined: - Contracts; - Notices of default; - Evidence of suspension of construction; - Correspondence with the developer; - Evidence of the buyer's claims against the developer; - Evidence of the developer's response to the buyer's claims; - Other relevant materials.Real estate sales and construction project servicesReview and approve.

5. Henglu Law Firm's Advice

If the construction of the project hasn't been completed on schedule, don't rush to move out or stop making mortgage payments. First, determine whether it's a short-term delay or a fundamental breach of contract: in the former case, it's safer to claim the breach of contract penalty according to the contract; in the latter case, you can consider terminating the contract and moving out. All contracts, payment receipts, photos of the construction site, and official announcements should be systematically preserved. Don't easily believe the developer's verbal promise of "resuming construction soon". For mortgages, stopping payments requires legal termination procedures. Unilaterally stopping payments may lead to credit risks and being subject to enforcement. Don't miss the statute of limitations for reminders and litigation. If you need professional support, you can seek assistance from relevant institutions or professionals.Special services and other case servicesDevelop a plan.

VI. Frequently Asked Questions

Q1: If the house hasn't been built by the delivery date, can I demand a breach of contract penalty or withdraw from the contract?

Whether it is possible to demand a breach of contract penalty or to withdraw from the contract depends on the nature of the delay. If the developer fails to complete the construction on time in the short term, it constitutes a breach of contract for late delivery, and the buyer can claim a breach of contract penalty according to the contract without waiting for the project to be "completed". If the project is suspended for a long time and there is no possibility of actual delivery, which results in the failure of the contractual purpose, the buyer can exercise the right of rescission under the Civil Code to rescind the purchase contract and withdraw from the contract and get a refund. However, the threshold for withdrawing from the contract is higher than that for claiming a breach of contract penalty. It requires proof that there is a fundamental breach of contract, not that withdrawal is possible just because there is a delay. It is recommended to first check the status of the suspension and resumption of construction, and then choose between a breach of contract penalty or a rescission path. Maintain a rational judgment towards unrealistic promises of "must withdraw".

Q2: To protect my rights in the event of a delayed handover of the property, what evidence do I need to prepare?

The core evidence includes: the sales contract for commercial housing and the supplementary agreement (to prove the delivery deadline and the liability for breach of contract), the proof of down payment and mortgage repayment (to prove the performance of the contract and the amount paid), photos and videos of the project being suspended and official announcements (to prove the failure to complete the project on schedule), responses from the housing and urban-rural development department or letters from the people's petition office (to prove the intervention of supervision), notices or announcements from the developer regarding the delayed delivery of the house, and construction progress records jointly collected by the owners. The organization of the evidence revolves around "the contractual deadline - the actual delay - (if necessary) the fundamental breach of contract - the losses". The more systematic the materials are, the higher the success rate of claiming breach of contract penalties or rescission of the contract. It is recommended to establish a shared evidence database.

Q3: How much will it cost in attorney's fees and litigation fees to sue for late delivery of the house?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Costs", based on the amount of the litigation request (such as the breach of contract penalty or the paid purchase price), and shall be borne by the losing party. Where the party partially wins and partially loses, the litigation fees shall be shared proportionally. The attorney's fees are related to the complexity of the case, the amount of the subject matter, and the attorney's qualifications. They may be charged on a per-case, hourly, or percentage basis, subject to the terms of the power of attorney. There is no uniform standard for this. For collective litigation cases, the cost can often be shared among multiple plaintiffs, which can help reduce the cost per case. It is recommended to first calculate the amount that can be claimed and the cost-benefit ratio. For simple disputes over breach of contract penalties, negotiation should be prioritized, and for litigation involving the termination of unfinished projects, the decision to proceed with litigation should be considered after careful consideration of the potential costs and benefits.

Q4: How long does it usually take for a lawsuit over delayed handover of a property to reach a conclusion?

The first-instance ordinary procedure generally concludes within six months, and the summary procedure within three months; breach of contract cases with clear facts are often subject to the summary procedure, with a shorter timeframe. If they involve unfinished projects, developer bankruptcies, or appeals, the timeframe will be significantly extended, possibly spanning years. After the judgment takes effect, the enforcement phase begins, and the recovery of funds depends on the developer's remaining assets. Overall, it often takes several months to more than a year from case filing to fund recovery. It is recommended to apply for property preservation during litigation, seize the developer's accounts and unsold assets, and increase the likelihood of actual fund recovery.

Q5: If the house is not completed on time, what should I do first?

Here are the four steps recommended: 1. Check the contract and supplementary agreement regarding the delivery deadline, grace period, and penalty clauses to confirm whether the deadline has indeed been exceeded. 2. Gather comprehensive evidence, including construction site photos, official notifications, and delivery notices, to document the developer's failure to complete the project on schedule. 3. Send a formal letter of notice demanding payment of the late penalty and stating that you will not accept unfounded requests for prolonged extensions. 4. If negotiations fail, file a lawsuit to claim the penalty for short-term delays or initiate litigation to exercise the right of rescission and seek a refund for long-term unfinished projects. For mortgaged properties, it is crucial not to unilaterally stop loan payments. If necessary, consult a lawyer to devise a legal path for contract termination.

The above Q&A is mainly based on judicial practice in the Beijing area. 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 materials to avoid missing the statutory time limit.Legal services for real estate transactions·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 you encounter disputes, please consult a practicing lawyer in time.