[Direct answer]When a seller of a second-hand house breaches the contract, a buyer can effectively recover losses by hiring a lawyer. According to Article 577 of the Civil Code of the People's Republic of China (effective from January 1, 2021), the seller shall bear contractual liabilities such as continued performance and compensation for losses; according to Article 584, the compensation amount includes the benefits that could be obtained after the contract is performed, the difference in the increase of the house price, the interest on the paid house price, and the agency fees, all of which can be claimed. The value of a lawyer lies in: judging whether it is more beneficial to continue performance or to terminate the contract and claim compensation; calculating the base of the difference in losses; fixing the evidence of urging and payment; refuting the seller's defense; and applying for property preservation and seizing the house to prevent the sale of the same house to two buyers at the same time as soon as possible. If a breach of contract is discovered, the buyer should immediately send a written notice of urging and hire a lawyer to intervene. For more details, please refer to the following link:Legal services for the purchase and sale of real estateAndBeijing Henglu 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)

This article is the general basis for the liability for breach of contract: if a party fails to perform its contractual obligations or performs them in a manner that does not conform to the agreement, it shall bear the liability for breach of contract, such as continuing to perform, taking remedial measures, or compensating for losses. In the context of second-hand housing transactions, if the house has not been transferred and there are no obstacles such as mortgages, seizures, or resale restrictions, the buyer can request the court to order the seller to continue to perform, assist with the transfer, and bear the overdue breach of contract penalties. If the house can no longer be delivered, the focus will shift to claiming the rescission of the contract, the return of the paid amount, and compensation for losses. The choice of which path to take depends on the current status of the house, the buyer's payment progress, and the buyer's eligibility to purchase the house. This is the first professional judgment after entrusting a lawyer.

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

This article determines the scope of compensation for losses: the amount of compensation shall be equivalent to the losses caused by the breach of contract, including the benefits that could have been obtained after the performance of the contract, but shall not exceed the losses that the breaching party could have foreseen or should have foreseen at the time of entering into the contract. The difference in the increase in housing prices is the core loss of benefits in second-hand housing breach of contract cases, which is usually calculated as the difference between the market appraisal price at the time of breach of contract and the contract price; in addition, the interest on the paid housing price, agency fees, appraisal fees, and other direct expenses can also be claimed. According to Article 588, if both a breach of contract penalty and a deposit are stipulated, the party in breach of contract may choose to apply one of them. If the deposit is insufficient to compensate for the losses, the party in breach of contract may also request compensation for the excess part.

3. The interpretation of the case by the judge

The court's key points for determining the loss of price difference are as follows: using the time of breach of contract as the reference date for evaluation, and appointing a judicial appraisal expert to determine the price difference; the price difference and the breach of contract penalty, and the deposit cannot be claimed repeatedly. If the higher of the two is chosen, the insufficient part can be supplemented; the continuation of performance must be based on the premise that the house has not been sold to another bona fide buyer, there are no rights defects, and the buyer's conditions are complete. In practice, sellers often use "family opposition" and "purchase restriction policies" as defenses, but these do not constitute exemption from liability. The timing of appointing a lawyer directly affects the outcome: sending a pre-litigation letter to fix evidence and preserving the house at the time of filing a lawsuit can effectively prevent sellers from transferring ownership during the litigation process, and the amount of recovery will be significantly different.

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

Review of the case:In the default claim cases of real estate transactions handled by Henglue Law Firm, the following cases fully demonstrate the entire process of lawyers quantifying losses, refuting defenses, and fully recovering the default penalties, which is in line with the thinking of default claim against second-hand house sellers. 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 total price of 6,841,972 yuan and a delivery date agreed upon before June 15, 2023. The supplementary agreement stipulated a 90-day grace period, after which the default penalty would be paid at a rate of 0.01% per day. However, A Company did not issue the move-in notice until February 27, 2024, and the move-in formalities were completed on March 5, with a delay of nearly nine months. Zhang Quan entrusted Beijing Henglue Law Firm to handle the case.Tian JiayanThe lawyer filed a lawsuit to claim compensation.

The focus of the controversy:First, whether factors such as the pandemic constitute a force majeure exemption from liability; second, whether the 90-day grace period can be cumulated with other extensions; and third, according to what standards and time periods should the breach of contract penalty be calculated.

Attorney's Strategy and Legal Opinions:Attorney Tian Jiaoyan reviewed the core clauses of the contract and supplementary agreement, including delivery time, grace period, and penalty standard, collected payment receipts, move-in notifications, and completion and acceptance filing materials to form a complete chain of evidence. She argued that: the contract was signed in 2021, and the pandemic had already become a normal situation, so A Company should have foreseen it and it did not constitute force majeure; factors such as bad weather and government meetings do not necessarily lead to a full stoppage of work and cannot exempt A Company from liability; the grace period should be strictly applied according to the contract, and cumulative claims have no contractual or legal basis; the penalty of 0.1% per day was a true expression of intention and not illegal, so the full amount of the penalty for the period from September 14, 2023 to March 5, 2024 should be supported.

The court's reasoning and the outcome of the case:The court found that the contract and supplementary agreement were legal and valid, and adopted the lawyer's opinion that: the epidemic situation had become normal before the signing of the contract, and A Company could have foreseen it, so it did not constitute force majeure; bad weather, government meetings, etc. were also not grounds for exemption from liability; and the grace period was strictly applied according to the contract. In the end, the court ruled that A Company should pay a breach of contract penalty of 118,366.12 yuan for the late delivery of the house and bear the litigation costs. This case shows that the core of breach of contract claims is to calculate the starting point, ending point, and calculation standard accurately, and to refute the defense of exemption from liability with a complete chain of evidence. Calculating the losses clearly is the value of lawyers in recovering losses.

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

III. Frequently Asked Questions

Q1: If a second-hand house seller breaches the contract and refuses to sell, how much can be recovered through litigation?

The compensable losses include: the paid housing price and interest, the price difference of the house (determined by the appraisal at the time of breach of contract), the deposit or agreed penalty (if the price difference is significantly higher than the penalty, the claimant may demand to make up the difference), and direct expenses such as agency fees. If the conditions for the continuation of the contract are met, the claimant may also request forced transfer of ownership and additional late penalty. The more detailed the list of losses and the more solid the appraisal, the higher the proportion supported by the court; and matching each loss with evidence is the reason why the amount of compensation usually increases significantly after the lawyer's involvement.

Q2: Under what circumstances can one request to continue with the transfer of ownership?

The following conditions must be met simultaneously: the sales contract must be legal and valid, the buyer must have paid in accordance with the agreement or fulfilled the payment conditions, the buyer must have the qualification to purchase the house and the ability to pay, the house must not have been sold to another party or transferred to another owner, and there must be no obstacles such as mortgages or seizures. If the house has been sold to a third party in good faith and the transfer has been completed, it is impossible to continue the performance in fact, and the party should instead request to rescind the contract and claim compensation for the price difference. If the party requests to continue the performance, it is recommended to apply for the seizure of the house simultaneously to prevent it from being disposed of by others during the litigation. If the other party still does not cooperate after the judgment, the party may apply for the forced execution of the transfer of ownership.

Q3: What should a seller do if they sell the same house to two different buyers?

When the subsequent buyer has acted in good faith and completed the transfer of ownership, the original buyer cannot reclaim the property. They should immediately terminate the contract and claim compensation for the price difference, interest paid, deposit, or breach of contract from the seller. At this point, the loss assessment serves as the basis for the claim. If there is malicious collusion in the subsequent transaction (such as an obviously low price or a relationship of dependency), the buyer can sue to confirm the invalidity of the subsequent contract, reclaim the property, and continue to perform the original contract. When detecting signs that the seller intends to sell the property to another party, applying for property preservation as soon as possible is a crucial step to prevent losing both the money and the property. Any delay could put the buyer at a disadvantageous position.

Q4: Will the house be sold again by the seller during the litigation process?

There are risks involved. When sellers breach the contract, they often sell the property at a higher price elsewhere. During the litigation period, the house remains registered under their name, and there's a possibility of it being disposed of. The countermeasure is to apply for property preservation simultaneously when suing, seize the involved house and freeze the transfer registration. The preservation fee and guarantee cost are relatively controllable; even if the seller signs a new contract after the preservation, the transfer of ownership will still be impossible. It's advisable to file the application for preservation at the same time as filing the lawsuit and keep it confidential as much as possible. By taking advantage of the information gap, the seizure can be completed before the seller disposes of the property, and in the enforcement stage, the compensation can be directly obtained from the seized property.

Q5: How much does it cost to hire a lawyer, and is it worth it?

The attorney's fees are negotiated based on the case's subject matter and workload, and are typically charged in stages and written into a written power of attorney contract. Compared to the loss of hundreds of thousands or even millions of yuan in housing price differences, this is a low-cost, high-leverage expenditure. In addition to litigation representation, lawyers can significantly improve the efficiency of recovering payments in pre-litigation stages such as sending pressure letters, estimating losses, organizing evidence, and advancing preservation measures. Many sellers return to the negotiation table after receiving the lawyer's letter and the preservation ruling. Before entrusting a lawyer, you can request the lawyer to provide an estimate of the losses and a comparison with the proposed solutions, and then decide whether to file a lawsuit.

IV. Suggestions for Protecting Rights

  • It was found that the seller breached the contract by "locking the house" first. We immediately applied for property preservation and seizure of the involved house to prevent the situation of "selling the same house to two different buyers and ending up with neither money nor the house".
  • Written fixed evidence: Keep all the reminder letters, WeChat records, and call recordings. Even if the seller verbally breaches the contract, you should also leave written evidence of it.
  • Calculate the losses before making a decision: Ask a lawyer to calculate the difference in price, interest, and loss of fees, and compare the benefits and risks of "continuing to perform the contract" with "terminating the contract and seeking compensation".
  • Verify your own eligibility to purchase a house and payment arrangements: If the buyer insists on continuing the performance of the contract, the buyer's conditions must first meet the requirements, otherwise the claim will be difficult to gain support.
  • Hire a real estate lawyer with experience in similar cases, conduct an assessment, and send a letter to apply pressure as soon as possible. The pre-litigation stage is often a window for settlement.

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 Jiaoyan·Beijing Henglu Law Firm