[Direct answer]If the seller of a second-hand house changes his mind and refuses to sell, this constitutes a breach of contract. According to Article 577 of the Civil Code of the People's Republic of China (effective January 1, 2021), the buyer may request the seller to continue to perform the contract, assist in handling the transfer of ownership, or rescind the contract and claim damages such as the difference in the house price; if the buyer has paid a deposit, he may, in accordance with Article 587, claim the return of the deposit doubled (the portion exceeding 20% of the contract subject matter is not subject to the penalty). The statute of limitations for claiming rights is three years. It is recommended to immediately preserve the sales contract, payment receipts, online signing records, and records of reminders, and to sue and apply for property preservation as soon as possible to prevent the house from being resold to others. Beijing Henglu Law FirmLegal services for the purchase and sale of real estateIt can assist in evaluating the plan. For more details, please refer to the following link:Beijing 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)

When a party fails to perform its contractual obligations or performs them in a manner inconsistent with the contract, it shall bear such contractual liabilities as continuing performance, taking remedial measures, or compensating for losses. This article serves as the general basis for buyers to claim compensation when sellers breach the contract and refuse to sell: the constituting elements include the valid establishment of the contract and the seller's failure to perform the contract. Common forms include explicit withdrawal, refusal to accept the house payment or transfer the ownership, and selling the same house to two different buyers. Buyers can choose between "continuing performance" and "terminating the contract and seeking compensation": if the house meets the conditions for transfer of ownership and has not been resold, the court will generally support continuing performance; if they choose to terminate the contract, they can simultaneously claim losses in the price difference of the house, agency fees, and other actual expenses.

2. Article 587 of the Civil Code of the People's Republic of China (effective January 1, 2021)

If the party receiving the deposit fails to fulfill its obligations and thereby prevents the contract from being fulfilled, it shall return the deposit in double. When applying this rule, three points need to be noted: the depositor can only claim either the deposit or the breach of contract penalty, whichever is higher; if the deposit is insufficient to compensate for the losses, the party can continue to claim the difference; according to Article 586 of the Civil Code, the amount of the deposit shall not exceed 20% of the subject matter of the main contract, and the excess part shall not produce the effect of the deposit. When signing the contract, the nature and amount of the payment specified in the receipt should be checked to avoid mistakenly writing the down payment as a deposit, which may affect the basis for applying the penalty.

3. Practical judicial interpretation

The court's review focuses on the validity of the contract, the seller's breach of contract and the buyer's proof of losses in turn. The reminder records, the online signing status, and whether the seller has sold the property to a bona fide third party are the core evidence for determining breach of contract. If the house has been resold and transferred to a bona fide third party, it is objectively impossible to continue the performance of the contract, and the buyer should switch to claiming compensation for the price difference or the penalty for the deposit. The price difference losses are usually supported by appraisal reports or the transaction prices of similar houses in the same period. If the agreed breach of contract penalty is excessively high compared with the actual losses, the seller may request the court to reduce it. Generally, the losses expanded by the buyer's negligence in taking remedial measures will not be supported.

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

Review of the case:This case involves a breach of contract dispute (late delivery penalty) in a pre-sale contract for commercial housing, which falls under the seller's breach of contract liability. On April 30, 2021, Zhang Quan signed a "Beijing City Commercial Housing Pre-sale Contract" with Beijing A Real Estate Development Co., Ltd. to purchase Unit 302 in a certain residential community with a total price of 6,841,972 yuan, and agreed to deliver the qualified commercial housing before June 15, 2023. On the same day, the supplementary agreement stipulated a 90-day grace period. After the expiration of the grace period, the seller would pay a penalty of 0.01% of the total price per day from the 91st day onwards. Zhang Quan paid the full amount, but A Company did not deliver the property until March 5, 2024, nearly nine months after the due date. Zhang Quan entrusted Beijing Henglu Law Firm to handle the case.Tian JiayanThe lawyer filed a lawsuit, claiming 118,366.12 yuan in breach of contract damages from September 14, 2023 to March 5, 2024.

The focus of the controversy:First, whether factors such as the pandemic constitute a force majeure exemption from liability; second, how the 90-day grace period is applied and whether it can be cumulated with other extensions; third, whether the penalty of one-ten-thousandth of the contract amount per day should be supported.

Our position and the position of the other party are as follows:Zhang Quan demanded that A Company pay the full breach of contract penalty and bear the litigation costs; A Company claimed force majeure exemption due to the pandemic, bad weather, government meetings, etc., and argued that the grace period could be accumulated, and that Zhang Quan's move-in would not affect the delivery assessment.

Attorney's Strategy and Legal Opinions:Attorney Tian Jiaoyan reviewed the core provisions in the contract and supplementary agreement, including the delivery time, grace period, and standard of breach of contract penalties. She collected payment receipts, move-in notifications, and completion and acceptance filing materials to form a complete chain of evidence, and argued that: the pandemic had already become a normal situation before the contract was signed in 2021, so A Company should have foreseen it and it did not constitute force majeure; adverse weather conditions and meetings did not necessarily lead to a full suspension of work, and A Company could not use them as excuses to evade responsibility; the grace period should be strictly applied according to the contract, and cumulative claims lacked contractual and legal basis; the daily 1% interest rate was a true expression of the parties' intent and was not illegal, so it should be fully 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 pandemic was normal and foreseeable before the signing of the contract, and did not constitute force majeure; bad weather and other factors also did not constitute force majeure; and the grace period should be strictly applied in accordance with the contract. The judgment ordered Company A to pay the overdue breach of contract penalty of 118,366.12 yuan and bear the litigation costs. This case shows that it is a basic principle for the seller to bear responsibility according to the contract after breaching the contract, and for the buyer to fix the contract and payment evidence and accurately refute the defense of exemption from liability, which is the key to obtaining full compensation.

This case is handled by Beijing Henglu Law Firm.Tian 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 the seller breaches the contract and refuses to sell, can we sue him to force him to proceed with the transfer of ownership?

Yes. If the contract is valid and there are no obstacles to the transfer of ownership such as the house being resold or sealed off, according to Article 577 of the Civil Code, the buyer may request the seller to continue to perform the contract and assist in the transfer of ownership; if the seller refuses to cooperate after the judgment takes effect, the buyer may apply for forced execution and the court will handle the transfer of ownership unilaterally. If the house has been resold and registered to a bona fide third party, it is objectively impossible to continue to perform the contract, and the buyer should instead request to rescind the contract, claim compensation for the price difference of the house, or apply the penalty clause for the deposit. The choice of solution should be determined by a lawyer based on an assessment of the current status of the house.

Q2: What evidence do I need to prepare to report a seller's breach of contract?

The core evidence includes: the house purchase and sale contract and supplementary agreement, the deposit receipt and payment voucher, online signing information, the intermediary agency contract, WeChat or SMS records urging performance, and the chat and call recordings showing that the seller clearly reneged on the deal; for those claiming compensation for the price difference, an appraisal report or transaction cases in the same neighborhood during the same period are also required. The evidence should form a complete chain of "contract formation - party's performance - the other party's breach of contract - amount of loss", and special attention should be paid to fixing the seller's written statement refusing to perform during the negotiation stage to prevent the other party from denying it afterwards.

Q3: How much does it cost to file a lawsuit against a breach of contract in the second-hand housing market?

The case acceptance fee is calculated based on the amount of the litigation request in stages: for a claim of 200,000 yuan, the fee is approximately 4,300 yuan; for a claim of 1 million yuan, the fee is approximately 13,800 yuan, and the fee is halved when applying the summary procedure; the appraisal fee, preservation fee, and preservation guarantee fee are calculated based on the actual expenses incurred; and the attorney's fee is generally borne by the client (unless otherwise agreed in the contract). When suing, the plaintiff can include the loss of price difference and intermediary fees in the claim. It is advisable to comprehensively estimate the expenses and the expected recovery before suing to avoid an obviously inflated claim amount pushing up the acceptance fee but making it difficult to obtain full support for the claim.

Q4: How long does it take to litigate against a breach of contract in the second-hand housing market?

Cases subject to simplified procedures are generally concluded within three months, and those subject to ordinary procedures within six months. Cases involving appraisals, expert evaluations, or public notifications for service will take longer; if either party appeals, the second-instance trial will add about three months. For those claiming to continue performance, they can simultaneously apply for property preservation to freeze the houses involved in the case to prevent the seller from reselling them. Property preservation is often completed within a few days before or during the litigation. The overall cycle is estimated to be six months to one year. The earlier you sue, the sooner you can secure the house or compensation for the price difference. Delaying will only increase the uncertainties.

Q5: Can the deposit and the breach of contract penalty be claimed at the same time?

No. According to Article 588 of the Civil Code, if one party breaches the contract, the other party may choose to apply either the penalty clause or the deposit clause, and only one of the two can be selected; if the amount chosen is still insufficient to compensate for the actual losses, the party may claim compensation for the insufficient part separately. In practice, the buyer should compare the amount of the double return of the deposit, the agreed penalty, and the actual loss of the price difference, and claim the higher one; if the contract does not stipulate a penalty clause, the buyer can directly claim compensation for the actual losses, and the amount of the losses shall be determined by evidence and evaluation.

IV. Suggestions for Protecting Your Rights

  • If the seller reneges on the deal, immediately send a written reminder via WeChat, SMS, or a lawyer's letter to secure evidence of the breach of contract and interrupt the statute of limitations.
  • Check the status of the house, including whether it has been signed online, sealed up, or sold to another party. If the conditions permit, file a lawsuit and apply for property preservation as soon as possible.
  • Check the nature and amount of the deposit receipt. Only the portion that does not exceed 20% of the contract price can be fully subject to double refund.
  • For those who claim the loss of price difference, they should simultaneously commission an appraisal or collect transaction records of the same apartment type before filing a lawsuit, so as to quantify the basis for claiming compensation.
  • Under the assistance of a lawyer, determine whether to proceed with "continuing performance" or "termination and claim for compensation", to avoid choosing the wrong path and increasing the timeframe and costs.

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