[Direct answer]When the developer fails to deliver the house on time, the lawyer's fees shall, in principle, be borne by the party who hired the lawyer, unless the "Commercial House Sale and Purchase Contract" or the supplementary agreement explicitly stipulates that the party in breach shall bear the reasonable expenses (including lawyer's fees) incurred by the party in performance of the contract for protecting its rights. In this case, Zhang Quen entrusted Beijing Henglu Law Firm to handle the case for him/her.Legal services for real estate transactionsThe team sued, and the court ordered the developer to pay a penalty of 118,366.12 yuan for failing to deliver the house on time, and according to Article 29 of the "Measures for the Payment of Litigation Costs", the losing party should bear the litigation costs. It is recommended that buyers strive to include a clause on the payment of attorney's fees in the contract when signing, and promptly hire a lawyer after the deadlineBeijing Henglu Law FirmProfessional lawyers fix the evidence and claim the breach of contract penalties.

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)

The provision stipulates that if a party fails to perform its contractual obligations or performs them in a manner inconsistent with the agreement, it shall bear such breach of contract liabilities as continuing to perform, taking remedial measures, or compensating for losses. Delayed delivery of the house is a typical breach of contract, and the developer shall compensate the buyer for the losses suffered thereby, but the scope of compensation shall be limited to the losses that can be determined in accordance with the law and the contract. Legal fees are not necessarily included, and the key lies in whether there is an agreement on this matter.

2. Article 854 of the Civil Code of the People's Republic of China (effective from January 1, 2021)

The amount of compensation for losses should be equivalent to the losses caused by the breach of contract, including the benefits that could be obtained after the performance of the contract, but it shall not exceed the losses that the breaching party could or should have foreseen when entering into the contract. If there is no agreement on attorney's fees, the court usually considers that attorney's fees are not within the foreseeable and inevitable losses that the breaching party could have foreseen when entering into the contract, so it will not support them; if there is an agreement, it belongs to the reasonable expenses of the party in compliance with the contract for protecting its rights, and can be included in the claim.

3. The interpretation of the case by the judge in practice

When the court handles cases of delayed delivery of housing, the breach of contract penalty is generally supported according to the contract agreement; it is normal for the losing party to bear the litigation fees according to Article 29 of the "Measures for the Payment of Litigation Fees". As for the attorney's fees, the "contract-first" principle is adhered to: if the contract clearly stipulates that the breaching party shall bear the reasonable expenses of protecting rights, the buyer can claim them with receipts; if no such stipulation is made, even if the buyer wins the lawsuit, they will generally bear the fees themselves. Some judgments will review the validity of the agreement in light of the obligations to provide standard terms, so buyers should pay attention to keeping the entrustment contracts and invoices.

II. Real cases of Henglue Law Firm (detailed review)

Review of the case:On April 30, 2021, Zhang Quan signed a "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 A Company should deliver the qualified commercial housing before June 15, 2023. On the same day, a supplementary agreement was signed, stipulating that if A Company delays the delivery due to its own reasons, a 90-day grace period will be granted, and A Company will not be held liable during the grace period. After the expiration of the grace period, from the 91st day after the agreed delivery date to the actual delivery, a penalty of one-ten-thousandth of the total price paid daily will be charged. Zhang Quan paid the full amount, but did not receive the delivery notice until February 27, 2024. A Company sent a move-in notice on that day, requiring him to move in on March 5. The house was delivered nearly nine months later than the agreed date. Zhang Quan entrusted Beijing Henglu Law Firm to handle the case.Tian Jia YanThe lawyer filed a lawsuit demanding the payment of 118,366.12 yuan in breach of contract penalties for the delayed handover of the house from September 14, 2023 to March 5, 2024, as well as the litigation fees.

The focus of the controversy:First, whether the COVID-19 pandemic and other factors constitute force majeure; Second, how the 90-day grace period is applied and whether it can be cumulated with other extensions; Third, the calculation standard and amount of the breach of contract penalty; Fourth, the final responsibility for the attorney's fees and litigation costs in this case.

Our position and that of the other party are as follows:Zhang Quan claimed that A Company should pay the breach of contract penalty of 118,366.12 yuan and bear the litigation costs according to the contract, as the delay in delivery exceeded nearly nine months. A Company disagreed, claiming that the pandemic and other factors constituted force majeure exemptions, that the house had met the delivery conditions, that the 90-day grace period could be accumulated, and that Zhang Quan had moved in and the quality defects did not affect the delivery. A Company attempted to exempt itself from the breach of contract penalty and related expenses.

Attorney's Strategy and Legal Opinions:Attorney Tian Jiaoyan studied the contract and supplementary agreement, sorted out the core provisions such as the delivery time, the grace period, and the standard of the breach of contract penalty, and collected payment receipts, move-in notifications, and completion and acceptance filing materials to form a complete chain of evidence. In response to the defense, she argued that the COVID-19 pandemic had already become a normal situation before the contract was signed, and A Company should have foreseen it, so it did not constitute force majeure. Adverse weather, government meetings, and exams were not necessarily comprehensive shutdowns and were foreseeable, so they could not be exempted from liability. The grace period should be strictly applied according to the contract, and there was no contractual or legal basis for the claim of cumulative application. The breach of contract penalty of one-tenth of one percent per day was a true expression of the parties' intention and was valid. The period and amount claimed by Zhang Quan were in accordance with the contract, and they should be fully supported.

The court's reasoning and the outcome of the case:After trial, the court found that the contract and the supplementary agreement were legal and valid, and adopted the lawyer Tian Jiayan's opinion: the epidemic situation had become normal before the contract was signed, and A Company could foresee it, so it did not constitute force majeure; factors such as bad weather and government meetings also did not belong to force majeure; the grace period should be strictly applied according to the contract. In the final judgment, the court supported the plaintiff's claims, and A Company was required to pay the default penalty of 118,366.12 yuan for the late delivery of the house to Zhang Quan, and to bear the litigation costs of this case. The judgment did not support the attorney's fees not stipulated in the contract, confirming the practical rule that "attorney's fees are subject to agreement, and the litigation costs shall be borne by the losing party".

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

III. Frequently Asked Questions

Q1: Can I ask for the lawyer's fees even though there's no clause about them in the contract?

Generally, this is not possible. Lawyers' fees are subject to the "contract-first" principle. If the contract does not stipulate that the defaulting party shall bear the reasonable costs of safeguarding rights, even if the buyer wins the lawsuit, the court usually only orders the developer to bear the litigation costs, and the lawyer's fees shall be borne by the party who hired the lawyer. It is recommended to actively strive to include a clause on the bearing of lawyers' fees in the contract when signing, and to keep the entrustment contract and invoices as evidence for future claims.

Q2: Are the litigation fees for late delivery of housing really paid by the developers?

Yes. According to Article 29 of the "Measures for the Payment of Litigation Fees", the litigation fees shall be borne by the losing party. In this case, Company A was ordered to pay the breach of contract damages and bear the litigation fees, which is an example. However, the nature of litigation fees and attorney's fees is different. The former is legally borne by the losing party, while the latter still requires a contractual agreement as a prerequisite. The two cannot be confused with each other.

Q3: Does the grace period in the supplementary agreement affect the attorney's fees?

The grace period itself does not directly affect the attorney's fees, but it does affect the calculation of the penalty. If a 90-day grace period is agreed upon and strictly applied, there will be no liability during the grace period, and the penalty will only be calculated after the grace period expires. The burden of attorney's fees still depends on whether there is an agreement, and it is not directly related to the length of the grace period. Buyers should review the two types of clauses separately.

Q4: Can the pandemic exempt developers from paying penalties and fees?

Look at the time of signing the contract. If the epidemic situation had already become normal at the time of signing the contract, and the developer should have foreseen it, it generally does not constitute force majeure and cannot be exempted from liability. This is the judgment in this case. Even if the epidemic situation constitutes force majeure, it mainly prevents the breach of contract penalty, and does not necessarily change the agreed effect of the lawyer's fee being borne according to the contract.

Q5: How can I reduce the cost and risk before hiring a lawyer?

When signing a purchase contract, strive to include a clause stating that "the defaulting party shall bear the reasonable fees incurred by the performing party in safeguarding their rights"; when entrusting a lawyer, clarify the billing method, payment milestones, and authorizations, and request a formal invoice. In this way, even if a lawsuit arises due to delayed delivery of the house, the lawyer's fees can also be claimed based on the contract, reducing the risk of having to bear the costs yourself.

IV. Suggestions for Protecting Your Rights

  • When signing the purchase contract, actively strive to include clauses stipulating that the lawyer's fees and reasonable fees for protecting rights shall be borne by the party in breach of contract, and clearly specify the calculation standard for the breach of contract penalty.
  • If there is a delay in the delivery of the house, immediately collect materials such as the contract, payment receipts, move-in notices, and completion and acceptance certificates, and use them as evidence to claim breach of contract penalties and other expenses.
  • When the developer uses the pandemic and the grace period as a defense, the court will verify the signing date of the contract and the original provisions to determine whether the developer's claim of exemption from liability is valid.
  • Before hiring a professional lawyer, please confirm the billing method and invoice. If there are provisions on bearing attorney's fees in the agreement, you can claim that the developer should bear them. For more details, please refer to the following document.Attorney Tian JiaoyanRelated practices.

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·Attorney Tian Jiayan·Beijing Henglu Law Firm