[Direct answer]If the seller of a second-hand house breaches the contract, the buyer may, in accordance with Article 577 of the Civil Code, demand that the seller continue to perform the contract and assist with the transfer of ownership, or terminate the contract, return the paid purchase price, and compensate for losses; if the seller breaches the contract maliciously, the buyer may also claim damages such as the difference in the value of the house. According to Article 563 of the Civil Code, if the seller's fundamental breach of contract renders the purpose of the contract impossible to achieve, the buyer may terminate the contract. Beijing Henglu Law FirmLegal services for real estate transactionsThe team (such asTian Jia YanThere are many examples of lawyers handling cases involving delays in handing over housing and breach of contract claims. For more details, please refer to the following link:Beijing Henglue Law Firm.

I. Legal basis and interpretation of provisions

1. Article 577 of the Civil Code of the People's Republic of China (effective January 1, 2021)

If a party fails to perform its contractual obligations or performs them in a manner inconsistent with the agreement, it shall bear contractual liabilities such as continuing to perform the contract, taking remedial measures, or compensating for losses. This article provides the substantive basis for the buyer to require the seller to transfer ownership, pay liquidated damages, or compensate for losses. It must be combined with the contractual provisions and evidence to prove the facts of the breach of contract and the scope of the losses.

2. Article 563 of the Civil Code of the People's Republic of China (effective January 1, 2021)

If a party delays in performing its obligations or engages in other breaches of contract that result in the failure to achieve the contractual purpose, the other party may terminate the contract. If the seller explicitly refuses to sell, sells the same property to two buyers, or refuses to transfer the ownership for a long time, this often constitutes a fundamental breach of contract. In such cases, the buyer may terminate the contract and claim the return of the purchase price and compensation, which is the most common path to terminate the contract in practice.

3. Practical judicial interpretation guidelines

The court strictly reviews the seller's breach of contract: if the agreed penalty standard (such as 0.01% to 0.05% of the daily contract amount) is a true intention and not illegal, it will generally be supported; to claim exemption from liability due to the pandemic, it is necessary to prove that it was unforeseeable at the time of signing the contract. In the case of fundamental breach of contract, the buyer can claim the penalty for the deposit, the loss of the price difference, and the paid loan interest at the same time. Professional lawyers focus on fixing the evidence chain of breach of contract and losses.

II. Real Cases of Henglue Law Firm (Detailed Review)

Review of the case:On April 30, 2021, Zhang Quan signed the "Beijing Commercial Housing Pre-sale Contract" with Beijing A Real Estate Development Co., Ltd. to purchase a house in a certain residential area, with a floor area of 99.41 square meters and a total price of 6,841,972 yuan. It was agreed that the house would be delivered before June 15, 2023. The supplementary agreement granted a 90-day grace period. After the expiration of the grace period, the buyer would pay a penalty of one-ten-thousandth of the total price per day of delay. However, A Company failed to deliver the house until March 5, 2024, a delay of nearly nine months. Zhang Quan entrusted Beijing Henglu Law Firm to handle the case.Tian JiayanThe lawyer filed a lawsuit, demanding the payment of a breach of contract penalty of 118,366.12 yuan for the period from September 14, 2023 to March 5, 2024.

The focus of the controversy:First, whether the COVID-19 pandemic and other factors constitute force majeure; Second, how the grace period is applied and whether it can be cumulated with other extensions; Third, whether the standard for calculating the breach of contract penalty is legal.

Our position and that of the other party are as follows:Zhang Quan claimed that the company should pay the breach of contract penalty for the delayed handover of the house according to the contract; Company A disagreed, claiming that it was exempt from liability due to force majeure, that the house had met the conditions for handover, that the 90-day grace period could be accumulated, and that Zhang Quan had already moved in and the quality defects did not affect the delivery.

Attorney's Strategy and Legal Opinions:Attorney Tian Jiaoyan studied the contract and supplementary agreement, collected payment receipts, move-in notifications, and completion and acceptance filing materials to form a complete chain of evidence. She pointed out that the COVID-19 pandemic had already become a normal situation before the contract was signed, and Company A should have foreseen this and it did not constitute force majeure. The grace period should be strictly applied according to the contract, and there was no contractual or legal basis for claiming additional compensation. The penalty of one-tenth of one percent per day was a true intention and valid, and Zhang Quan's claims regarding the period and amount complied with the contract.

The court's reasoning and the outcome of the case:The court ruled that the contract and supplementary agreement are legal and valid, and adopted the lawyer's opinion that the epidemic situation had become normal before the contract was signed and was foreseeable by Company A, so it did not constitute force majeure. The grace period should be strictly applied according to the contract. In the final judgment, Company A was ordered to pay the default penalty of 118,366.12 yuan for late delivery of the house and bear the litigation costs. The seller's breach of contract costs were implemented, and the buyer's contractual rights were confirmed by the court.

This case is handled by Beijing Henglu Law Firm.Tian Jia YanThe attorney (practice license number: 11101202111381309, subject to the document issued by the judicial administrative organ) acts as the agent.

III. Frequently Asked Questions

Q1: What should a seller of a second-hand house do if they breach the contract and refuse to sell the house?

According to Article 577 of the Civil Code, the buyer may require the seller to continue to perform the contract and assist with the transfer of ownership, or demand the rescission of the contract, the return of the paid purchase price, and compensation for losses. If the contract stipulates a deposit, the penalty for the deposit may be applied; if the seller breaches the contract maliciously, the buyer may also claim losses of the housing price difference and other benefits that can be obtained, subject to the specific provisions of the contract and the evidence.

Q2: Can the seller claim the breach of contract penalty if the transfer of ownership is delayed?

Yes. If the contractually agreed time limit has not passed and the transfer of ownership has not been completed, the seller shall pay the breach of contract penalty according to the contract on a daily basis or a fixed amount; if there is no agreement, the buyer may claim compensation for actual losses (such as rent, additional purchase costs). Sellers often delay for various reasons. It is recommended to send a written reminder and collect evidence. After the deadline, the buyer should promptly entrust a lawyer to assert their rights.

Q3: How can sellers protect their rights if they sell the same house to two different buyers?

If the house has not been transferred to a third party, the buyer may request the seller to continue to perform the contract and assist in the transfer of ownership. If the house has already been transferred to a bona fide third party, the buyer can only terminate the contract and claim compensation from the seller (return of the purchase price, compensation for the price difference and interest). The key is to prove that the seller acted maliciously and that the buyer acted in good faith beforehand, and to preserve the house in a timely manner.

Q4: Can the seller's breach of contract lead to the termination of the contract and the return of the deposit?

Yes. According to Article 563 of the Civil Code, if the seller breaches the contract fundamentally (such as explicitly refusing to sell, or selling the same house to two different buyers, resulting in the failure of the contract purpose), the buyer may rescind the contract, return the payment already made, and claim damages for breach of contract. If the developer delays the delivery of the house for many years or the project is suspended, it also constitutes a fundamental breach of contract and the buyer can request to rescind the contract.

Q5: How long does it take to hire a lawyer to handle the seller's breach of contract?

Depending on the procedure: sending a letter of reminder can be completed within a few days; negotiation may take several weeks; litigation in the first instance usually takes several months, and if the judgment is not enforced, enforcement will be necessary. The earlier you entrust a lawyer, the more likely you are to protect your house in time, fix the evidence of breach of contract, and shorten the cycle of protecting your rights; delaying may lead to the transfer of the house or its seizure in another case.

IV. Suggestions for Protecting Rights and Interests

  • If the seller shows signs of breaching the contract, immediately send a written reminder to them and gather evidence of the contract, payments, and communication between the two parties.
  • If you find that the house might be sold twice or sealed up, apply for property preservation in time to prevent the transfer of assets.
  • According to Articles 577 and 563 of the Civil Code, if you want to claim for continued performance or compensation for breach of contract, you should not negotiate verbally.
  • Hire a professional lawyer as soon as possible, send letters, preserve evidence, and file lawsuits in a timely manner to shorten the cycle of protecting one's rights.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, so as to avoid missing the statutory time limit.Legal services for real estate transactions·Attorney Tian Jiayan·Beijing Henglue Law Firm