[Direct answer]The owners of unfinished buildings sue the developers, and the court will support them if they meet the conditions: if the developer fails to deliver the house within a reasonable period after being reminded in writing, or if the construction is halted and the building remains unfinished, rendering the contractual purpose impossible to achieve, the contract may be terminated in accordance with Article 563 of the Civil Code of the People's Republic of China (effective from January 1, 2021), and the owners may claim the return of the paid purchase price and interest and compensation for losses; in accordance with Articles 2 and 3 of the "Reply of the Supreme People's Court on the Protection of the Rights of Commodity Housing Consumers" (effective from April 20, 2023), for purchasers who have paid the full purchase price for residential purposes, their right to request delivery and their right to request a refund of the purchase price when delivery is impossible shall take precedence over the right to priority compensation of the construction project price and the right of mortgage. The prerequisite for winning the lawsuit are solid evidence of the construction suspension and the reminder, and the recovery of the payment depends on the developer's assets. It is recommended to collect evidence as soon as possible, assess the possibility of enforcement, and sue as soon as possible. For more details, please refer to the relevant provisions of the Civil Code of the People's Republic of China and the "Reply of the Supreme People's Court on the Protection of the Rights of Commodity Housing Consumers". 烂尾楼业主起诉开发商，具备条件时法院会支持：逾期交房经书面催告后合理期限仍不交付，或停工烂尾致合同目的不能实现的，可依《中华人民共和国民法典》第五百六十三条（2021年1月1日施行）解除合同，诉请返还已付购房款及利息并赔偿损失；依《最高人民法院关于商品房消费者权利保护问题的批复》第二条、第三条（2023年4月20日施行），居住自用且已付全部价款的购房人，交付请求权与不能交付时的价款返还请求权优先于建设工程价款优先受偿权和抵押权。胜诉的前提是停工与催告证据扎实，回款取决于开发商资产，建议尽快归集证据、评估执行可能性后尽早起诉。详见Legal services for the purchase and sale of real estateAndBeijing 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 as of January 1, 2021)

This article is the core basis for the statutory rescission of contracts: If the purpose of the contract cannot be achieved due to force majeure, if one party explicitly states or demonstrates by its own actions that it will not perform its main obligations, if the performance of the main obligations is delayed and still not performed within a reasonable period after being reminded, or if the delay in performance of the obligations or other breaches of contract result in the purpose of the contract cannot be achieved, the parties may rescind the contract. In the case of unfinished buildings, if the developer suspends construction for a long time, has no hope of resuming construction, or explicitly states that it cannot deliver the property, this constitutes a fundamental breach of contract, and the owners can directly rescind the contract; if it is just a simple delay in delivery without other aggravating circumstances, the court usually requires a written reminder and a reasonable period of time. The key evidence includes the reminder letter and the delivery record, the images of the suspension of construction, and the government announcements. The dispute focuses on the standard of judgment of whether the purpose of the contract can be achieved.

2. Articles 2 and 3 of the "Reply of the Supreme People's Court on the Protection of Consumers' Rights in Commercial Housing" (effective April 20, 2023)

This reply directly addresses the dilemma of executing the distribution of unfinished buildings: Where a commercial housing consumer purchases a house for the purpose of living and has paid the full price, and claims that the right to request delivery of the house takes precedence over the right to priority compensation for the construction project price, the right of mortgage and other creditor's rights, the people's court shall support it. Where the buyer pays the balance before the conclusion of the debate in the first-instance court, it can also be applied; where the house cannot be delivered and there is no possibility of actual delivery, the right to request repayment of the paid price also takes precedence. This means that even if the developer is insolvent, the owner's priority in compensation is significantly higher than that of the constructor and the mortgage bank. The prerequisite for application are the "purpose of living" and the fact of payment. Whether investors who purchase houses and those who only pay the down payment can make the same claim is controversial and needs to be demonstrated on a case-by-case basis.

3. The interpretation of the case by the court

The court determines whether the plaintiff will win the case in two steps: first, it examines whether the right to rescind the contract has been exercised, taking into account factors such as the duration of the suspension of construction, the possibility of resuming construction, the developer's repayment ability, and the developer's breach of contract; second, it assesses the recovery of the execution proceeds and the restitution and compensation ordered by the court, which ultimately depends on the developer's assets, the balance of the pre-sale fund supervision account, and the disposition of the construction projects in progress. In practice, when owners file a batch of lawsuits and simultaneously preserve the land and construction projects, the recovery of the execution proceeds is significantly more effective; if the developer enters bankruptcy proceedings, the plaintiff should instead file a claim for creditor's rights and assert priority rights. In some cases, it may be more advantageous to wait for the delivery of the project after its resumption rather than seeking immediate compensation. The choice of the litigation timing directly affects the final outcome.

II. Henglue Lawyer's Practical Experience

Based on Henglue's practical observations of handling similar cases, there are three typical forms of protecting rights against unfinished buildings: First, when the developer suspends construction for a long time and explicitly states that it is unable to deliver the project, the proportion of owners' requests for rescission of the contract being supported is relatively high; Second, when the project is in a semi-suspended state and the developer repeatedly promises to resume construction, the court tends to be conservative in determining that the "contractual purpose cannot be achieved", which requires continuous reminders and complete evidence of construction suspension to break through; Third, after the developer enters bankruptcy proceedings, individual lawsuits may be dismissed and converted into creditor's claims, so the choice of legal procedure is more crucial than the lawsuit itself.

Judges generally focus on three facts: the starting point and duration of the delay in delivery, whether the owner has fulfilled his duty of notification, and whether the developer still has the ability to deliver. There are three pitfalls that parties are most likely to fall into: only focusing on the developer and ignoring other responsibilities such as the supervision of pre-sale funds; failing to apply for property preservation, resulting in the failure of the judgment to be executed; and rashly terminating the contract during the coordination by the government's special team, thereby losing the opportunity to deliver when the project is revived and resumed. It is recommended to fully evaluate the developer's assets and the possibility of reviving the project before suing.Implement the repayment planIncorporate strategic coordination; for complex issues involving the termination of contracts and the connection with bankruptcy, we can combine them together for consideration.Contract disputesAndSpecial services\nChannel case analysis and judgment.

III. Frequently Asked Questions

Q1: Can the owners of unfinished buildings win their lawsuits against developers?

For those who meet the conditions for contract termination, there's a higher chance of winning the lawsuit to terminate the contract and recover the purchase price: If the developer fails to deliver the property after being reminded, or if the project is halted and left unfinished, making it impossible to fulfill the contractual purpose, the court will generally support the termination. However, winning the lawsuit is just the first step. Whether you can actually recover the money still depends on the developer's assets and enforcement efforts. After the implementation of the 2023 approval, the rights of residential buyers to receive delivery and refunds will take precedence over construction liens and mortgages, significantly improving their prospects of receiving compensation. Before suing, you should first investigate the developer's litigation status, enforcement records, and project progress. Then, you can decide whether to sue immediately, join forces for protection, or wait for the developer to resume construction and ensure on-time delivery.

Q2: What evidence do I need to prepare to sue a developer for an unfinished building project?

The core evidence includes: the commercial housing sales contract and supplementary agreement, the down payment invoice and loan disbursement certificate, the reminder letter and service record, the images of the sales office and the construction site being shut down, the notifications from the government or the housing and urban-rural development department regarding the project's suspension and resumption of work, the developer's litigation and enforcement information, and the payment flow. The evidence should be organized along two lines: one is the fact of the delay and suspension of work, and the other is the continuous state of the contract's failure to achieve its purpose, such as long-term suspension of work and repeated failure to fulfill the promise of resuming work. By forming a complete timeline of the evidence, the chances of winning the lawsuit will be greatly increased.

Q3: How much does it cost to sue for a problematic unfinished building?

There are three main parts: the case acceptance fee is calculated progressively according to the amount of the refunded housing money. For those claiming a refund of over one million yuan, the first-instance acceptance fee is more than 13,000 yuan, which will ultimately be borne by the losing party; the property preservation fee and guarantee fee are determined according to the amount of the preserved property; and the attorney's fee is negotiated according to the stage and workload. If multiple homeowners jointly entrust the same lawyer team, it can significantly reduce the cost of protecting their rights for each family, and also unify the evidence standards and litigation pace. For specific budget advice, please bring the contract and payment receipts for a consultation and estimate before making a final decision.

Q4: How long will it take to receive a refund after the judgment is made?

The first-instance ordinary procedure is generally concluded within six months, and the second-instance procedure takes three months, totaling about a year. After the judgment takes effect, the enforcement phase begins, the duration of which depends on the developer's asset situation. For unfinished projects, the period is typically one to three years. If the project has been taken over by a government task force or entered bankruptcy reorganization, the creditor may file a claim and receive compensation according to the reorganization plan, with the duration to be determined separately. It is recommended to file a lawsuit and apply for property preservation at the same time, seizing the construction projects or unsold housing units to prevent the assets from being disposed of by other creditors first, which is a key step to shorten the repayment cycle.

Q5: Can a developer still sue if they are on the verge of bankruptcy?

The court has accepted the developer's bankruptcy case, and individual lawsuits against the developer may be dismissed. Instead, the plaintiffs should declare their claims to the administrator and assert the priority rights of consumers who purchase houses; if a valid judgment has been obtained before the bankruptcy case is accepted, they can simply declare their claims in the bankruptcy proceedings. If the bankruptcy case has not yet been accepted, it is advisable to sue and obtain preservation orders as soon as possible to secure the creditor's rights and priority status. During the reorganization period, if the project is injected with funds for continued construction, plaintiffs can weigh the options of maintaining the contract and waiting for delivery or terminating the claim to choose the path with better compensation and avoid making the wrong decision at the wrong time.

IV. Suggestions for Protecting Your Rights

  • Collaborate with other owners to establish a database of evidence: contracts, payment receipts, records of reminders, and images of the construction site suspension. Archive all these materials in a unified manner, share the cost of protecting rights, and coordinate the legal arguments in litigation.
  • First check and then sue: Before suing, check the developer's litigation, enforcement, bankruptcy, and presale fund supervision situations to evaluate the possibility of recovering the payment and then determine the strategy.
  • Make full use of the priority rights granted by the approval: claim priority compensation for the right to request delivery or the right to request the return of the price, and timely declare the creditor's rights when entering the bankruptcy procedure.
  • Follow the progress of the housing delivery: For projects where the government's special team is involved, they will first evaluate the pros and cons of "waiting for delivery" and "terminating the contract and claiming compensation", and then decide the timing of terminating the contract.
  • For those projects that are likely to remain idle for a long time without resuming work, it is necessary to terminate the contract and release the creditor's rights as soon as possible to avoid delays that may lead to the developer's assets being executed by other creditors first.

If you are 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·Beijing Henglu Law Firm