[Direct answer]It's possible to withdraw from the contract, but the situation must be considered on a case-by-case basis. If the contract stipulates that the contract can be terminated if the delay exceeds a certain number of days (such as 120 days), the condition can be fulfilled and the right to terminate the contract can be exercised; if there is no such stipulation, according to Article 15 of the Judicial Interpretation of the Contract for the Sale of Commercial Houses, if the seller fails to deliver the house within three months after being notified in writing, the buyer may request to terminate the contract; if the project is suspended and the delay for many years results in the failure to achieve the purpose of the contract, it constitutes a fundamental breach of contract according to Article 563 of the Civil Code, and the contract can be terminated directly. When withdrawing from the contract, the buyer can also claim the return of the purchase price, interest, and breach of contract damages. The mortgage loan will be terminated simultaneously, and the remaining balance will be repaid by the developer. There is a time limit for exercising the right to terminate the contract. It is advisable to send a written notice first and preserve the evidence. For more details, please refer to the following link:Legal services for real estate purchase and sale disputesOrBeijing Henglu Law Firm.

I. Legal basis and interpretation of provisions

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

The article stipulates five types of statutory grounds for termination. Those directly related to the delay in handing over the house are the third item "delay in performing the main obligation and failure to perform within a reasonable period after being urged" and the fourth item "delay in performing the obligation or other breach of contract that results in the failure to achieve the purpose of the contract". The prerequisite for application are that the breach of contract reaches the level of termination: for general short-term delays, the court usually only supports the payment of the breach of contract penalty; for long-term failure to complete and deliver the house or the project being halted and left unfinished, it is determined that the purpose of the contract has failed. For evidence, the contract and supplementary agreements, written urging records, and evidence of the project being halted or unable to be delivered (government letters, suspension notices, on-site images, etc.) should be prepared. In practice, the "reasonable period" is often taken as a reference of three months, and it is judged based on the agreement and the performance status.

2. Article 15 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 29, 2020 and implemented on January 1, 2021)

According to this article, if the seller delays in delivering the house and fails to perform within a reasonable period of three months after the buyer's reminder, and the right of rescission is exercised by the right holder, it shall be supported, unless otherwise agreed by the parties. At the same time, the article sets a time limit for the exercise of the right of rescission: it shall be exercised within three months after the reminder; if no reminder is given, it shall be exercised within one year from the date when the right holder knows or should have known the grounds for rescission. If the right of rescission is exercised beyond the time limit, it shall be extinguished. The most easily overlooked is the one-year exclusionary period: if neither a reminder nor a lawsuit is initiated, the right of rescission may be lost, and the right holder can only claim for breach of contract instead. It should also be noted that if the house has been determined as impossible to deliver or the contract is objectively unperformable, it will no longer be subject to this time limit in practice.

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

The court generally adopts a strict approach to handling requests for termination of contracts: First, if the agreed upon conditions for termination are met (such as a delay of more than 120 days), the court will support the termination of the contract in accordance with the contract; Second, the statutory termination focuses on "fundamental breach of contract". Based on the length of the delay, whether the house can be delivered, and whether the project has been suspended, if the delay lasts for several months and the house can be delivered, the court will generally only award the buyer breach-of-contract damages (commonly calculated at 0.01% to 0.05% of the total payment amount); Third, if the court supports the termination of the contract, it will usually terminate the mortgage loan contract simultaneously, order the developer to return the funds already received to the buyer, and repay the remaining loan to the bank. The principal and interest already paid will be included in the scope of repayment; Fourth, if a sole-member company's shareholder cannot prove the independence of the company's assets, he/she shall bear joint and several liability for repayment and compensation. At the same time, if the court awards both breach-of-contract damages and termination compensation, it will make a comprehensive determination and avoid double counting.

II. Henglue Lawyer's Real Cases (Detailed Review)

Review of the case:In June 2018, Ms. D signed a "Commercial Housing Sale and Purchase Contract (Pre-sale)" with Z Company to purchase a shop in X Project in B City, with an agreed delivery date of December 31, 2018. After paying the down payment, she signed a mortgage loan contract with H Credit Cooperative to pay the balance. However, Z Company failed to deliver the property on time for many years and the project was suspended. Despite its promises, the company still failed to fulfill its obligations. Ms. D entrusted Beijing Henglu Law Firm to handle the case.Liu DonghuaThe lawyer filed a lawsuit, requesting to rescind the purchase contract and the loan contract, return all the payments made, and compensate for the breach of contract losses, demanding that C, the sole shareholder of Z Company, bear joint and several liability.

The focus of the controversy:First, whether the long-term delay in handing over the house and the suspension of the project constitute a fundamental breach of contract and whether the contract should be terminated; Second, whether the mortgage loan contract should be terminated simultaneously after the purchase contract is terminated, and who should repay the remaining loan; Third, whether C, the sole shareholder of Z Company, should bear joint and several liability for the company's debts.

Our position and that of the other party are as follows:We maintain that Z Company has seriously breached the contract, rendering the contractual purpose impossible to achieve. Therefore, the two contracts should be terminated, all payments already made should be refunded, and damages for breach of contract should be compensated. Shareholder C, who fails to prove the independence of his property, should bear joint and several liability. Z Company argues that it has partially performed the contract and does not agree to the termination of the contract. Shareholder C and H Credit Cooperative raise objections to the joint and several liability.

Attorney's Strategy and Legal Opinions:Attorney Liu Donghua put forward four legal opinions: First, the long-term overdue payments combined with the suspension of the project have rendered the contractual purpose unattainable, constituting a fundamental breach of contract, which should be rescinded in accordance with Article 563 of the Civil Code; Second, according to Articles 20 and 21 of the Judicial Interpretation of the Contract for the Sale of Commercial Housing, the loan contract rescinded with the purchase contract should be rescinded simultaneously, and the developer shall return the paid amount to the purchaser and repay the remaining loan to the bank; Third, item by item calculation of the loss of funds occupied and the advance payment of public maintenance funds, stamp duty, etc., and put forward reasonable claims for breach of contract compensation; Fourth, it is claimed that Z Company is a one-person company, and shareholder C cannot prove the independence of the company's property, so he should bear joint and several liability in accordance with the relevant provisions of the Company Law.

The court's reasoning and the outcome of the case:The court ruled that Z Company's failure to deliver the housing units on time for many years and the suspension of the project constituted a fundamental breach of contract. The court decided to rescind the "Commercial Housing Sales Contract (Pre-sale)" and the "Individual Purchase and Construction Guarantee Loan Contract" with H Credit Cooperative; Z Company shall return the down payment of 267,188 yuan, the principal and interest of the loan already repaid of 1,547,83.01 yuan, the public maintenance fund of 5,079 yuan, and the stamp duty of 267.10 yuan; pay the breach of contract compensation of 50,000 yuan; and the remaining principal and interest of the loan shall be repaid by Z Company to H Credit Cooperative. The shareholder C shall bear joint and several liability for the above-mentioned debts. The purchase price was fully refunded, and the loan was transferred to the developer for repayment, which provided a typical reference for protecting rights against the delayed delivery of housing units.

This case is handled by Beijing Henglu Law Firm.Liu DonghuaThe attorney (practice certificate number: 11101199911363364, subject to the certificate issued by the judicial administrative organ) acts as the agent.

III. Frequently Asked Questions

Q1: How long can a buyer withdraw from the purchase of a house if the developer fails to deliver the house on time?

First, let's look at the contract: If it stipulates that the contract can be terminated if the delay exceeds a certain number of days (such as 120 days), the condition will be satisfied once a written notice of termination is issued. If there is no such stipulation, the buyer can file a lawsuit to terminate the contract if the seller fails to deliver the house within three months after being reminded; if the project has been suspended and cannot be delivered for a long time, it constitutes a fundamental breach of contract, and the buyer can directly sue to terminate the contract. In Henglue's case, the contract stipulated that the contract could be terminated if the delay exceeded 120 days, and the court ruled to terminate the contract and return the down payment of 483,638 yuan.Xue Suhua(Represented by Attorney Wang Dong). Additionally, it should be noted that the right to rescind the contract without notice must be exercised within one year from the date when the party becomes aware of the grounds for rescission, and the right will be extinguished if it is not exercised within the time limit.

Q2: What money can I get back when I check out?

After the contract is terminated, the party concerned may claim the return of the down payment, the principal and interest of the loan already repaid, the public maintenance fund, stamp duty, and other advance payments, and may also claim interest on the occupied funds or breach of contract damages. In the store cancellation case handled by Attorney Liu Donghua, the court ordered the developer to return the down payment of 267,188 yuan, the principal and interest of the loan already repaid of 154,783.01 yuan, the public maintenance fund of 5,079 yuan, and the stamp duty of 267.10 yuan in one go, and to pay an additional breach of contract damages of 50,000 yuan. The parties concerned should claim each item of the above-mentioned expenses with payment receipts. If the receipts are missing, they may be excluded. It is necessary to keep the payment receipts intact.

Q3: Who will pay the remaining mortgage after check-out?

If the purchase contract is rescinded, according to Articles 20 and 21 of the Judicial Interpretation of the Contract for the Sale of Commercial Housing, the mortgage loan contract shall be rescinded simultaneously. The remaining principal and interest of the loan shall be repaid to the bank by the developer, and the purchaser need not continue to make monthly payments. The principal and interest already paid shall be included in the scope of refund. Banks are often listed as co-defendants, and the court orders the developer to directly repay the bank, avoiding the situation of "losing both the house and the money while still having to repay the loan". Before suing, it is necessary to clarify the scope of claims with a lawyer to avoid omissions.

Q4: If I don't want to check out, can I just pay the penalty fee instead?

Yes. If the house can still be delivered and the developer is willing to continue to fulfill its obligations, the buyer can claim daily breach-of-contract penalties until the actual delivery date. The common standard is one-tenth to five-tenths of the total amount of the house payment per day. In another case of delayed delivery of housing by Henglue, the developer claimed force majeure due to the pandemic, but the court rejected the claim and ordered the developer to pay breach-of-contract penalties of 118,366.12 yuan and bear the litigation costs.Tian Jiayan(Represented by a lawyer). Developers often use the pandemic and weather as defenses. If the contract is signed after the pandemic has become normal, the court generally does not recognize it as force majeure.

Q5: How long does it take to settle a check-out lawsuit, and who pays the litigation fees?

The first-instance ordinary procedure generally concludes within six months, and the simplified procedure takes about three months. Adding steps such as preservation of evidence and appraisal, the overall process typically takes three to nine months. The case acceptance fee is calculated based on the amount of the claim and is borne by the losing party. In the above-mentioned case of eviction, the developer will bear the responsibility. It is recommended to consult a lawyer as soon as possible to assess whether the right of rescission is within the exercise period and whether the evidence is conclusive, in order to avoid the right of rescission being rendered futile.

IV. Suggestions for Protecting Rights and Interests

  • After the deadline, first check the grace period, termination clauses, and penalty standards in the contract and supplementary agreement. Settle all accounts before taking any action.
  • Sending a written reminder in a timely manner and keeping the delivery receipt are crucial evidence for claiming statutory rescission and breach of contract penalties.
  • During the period of the right to rescind the contract: If there is no reminder, the right to rescind the contract should be exercised within one year from the date of knowing the reason for the rescission. Otherwise, the right to check out of the hotel will be lost due to delay.
  • Full preservation of contracts, payment receipts, move-in notifications, photos of the construction site, and government documents to form a closed chain of evidence.
  • If the other party raises defenses such as the pandemic, refute them by referring to the time of signing the contract; if necessary, apply for property preservation.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence, to avoid missing the statutory time limit. →Legal services for real estate transactions·Attorney Liu Donghua·Beijing Henglu Law Firm