[Direct answer]After the transfer of a second-hand house, if quality problems are discovered, whether the buyer can withdraw from the contract depends on the severity of the defects: for minor defects, the focus is on repair, price reduction, and compensation for losses; for serious quality issues such as structural problems that make the house uninhabitable, it constitutes a fundamental breach of contract, and the buyer can rescind the contract and withdraw from the purchase according to Article 563 of the Civil Code of the People's Republic of China (effective January 1, 2021); if the seller knowingly concealed major defects, the buyer can also claim to rescind the contract and return the purchase price. According to Article 607 (effective January 1, 2021), if the quality does not meet the contractual requirements, the seller shall bear the breach of contract liability. The statute of limitations is three years. It is recommended to first inspect the house to fix evidence and conduct a professional appraisal before determining the solution. Beijing Henglu Law FirmLegal services for the purchase and sale of real estateIt can assist in the evaluation. For more details, please refer to the following link:Beijing Henglue Law Firm.

I. Legal basis and interpretation of provisions

1. Article 617 of the Civil Code of the People's Republic of China (effective from January 1, 2021)

If the subject matter delivered by the seller does not meet the quality requirements, the buyer may request the seller to bear the liability for breach of contract in accordance with the provisions of Articles 582 to 584. In second-hand housing transactions, the seller bears the liability for warranty of the house quality. If the delivered house has such problems as water leakage, wall cracking, and aging pipelines that do not conform to the agreed standards or the standards of normal use, the buyer may claim for repair costs, reduction of the purchase price, or compensation for losses; if the seller knows about the quality problems but fails to disclose them, it is more likely to be deemed a breach of contract, and the scope of compensation will be even greater.

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

If a party delays in performing its obligations or engages in other breaches of contract that prevent the achievement of the contractual purpose, the other party may terminate the contract. The essence of a withdrawal from the contract is to terminate the contract and return the house and the purchase price to each other. The threshold is a fundamental breach of contract: if there are serious quality problems with the main structure of the house, the house cannot be used normally, or if the seller intentionally conceals major defects and constitutes fraud, the buyer may obtain support for termination or rescission; generally, leakage and decoration defects are difficult to reach this level. The court usually rules to repair and compensate rather than withdraw from the contract. Before making a claim, the buyer should first evaluate the appraisal conclusion.

3. Practical adjudication guidelines

The court distinguishes between apparent defects and hidden defects: if the buyer accepts the property without raising objections during the inspection at the time of transfer, it will be difficult to claim compensation afterwards; if the defects are hidden in walls, underground pipelines, etc. and are difficult to detect during a normal inspection, the success rate of claims will be higher. Whether the quality problems reach the extent that the contractual purpose cannot be achieved usually depends on professional appraisal, and the appraisal opinion directly determines whether the buyer can withdraw from the contract. If the seller is found to have intentionally concealed major information such as haunted houses, serious water leakage, and abnormal deaths, the buyer may claim rescission on the grounds of fraud; at the same time, attention should be paid to the three-year statute of limitations and the obligation to notify the seller of the inspection results. If the buyer discovers any defects, he/she should raise objections in writing and preserve evidence as soon as possible.

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

Review of the case:This case involves a dispute over a housing sales contract, including the determination of the contract's validity and the issue of restoring the registration of the property (returning it to the original owner). In September 2020, Company A, faced with funding shortages at its affiliated company, needed a loan. To obtain the loan, it used employee Zhang *'s name to sign the "Beijing City Second-hand Housing Sales Contract", selling the property located at No. 2003 East Third Ring Road, Chaoyang District, Beijing (with an area of 262.05 square meters) to Zhang * for 7.3374 million yuan. The down payment was 25.774 million yuan, and the remaining 4.4 million yuan was financed by a mortgage loan, which was directly transferred to Company A's account for the affiliated company's use. Later, Zhang * took away the property ownership certificate and refused to cooperate with the transfer of ownership. Company A sued to confirm the invalidity of the contract and to restore the registration of the property. However, the first-instance court dismissed the case due to insufficient evidence. Company A subsequently entrusted Beijing Henglu Law Firm to handle the case.Li YonghuiThe lawyer filed an appeal.

The focus of the controversy:First, whether the house purchase and sale contract truly reflects the parties' true intentions; Second, how to determine the validity of the contract under the circumstances of collusion and false representation; Third, whether the errors identified in the first-instance judgment can be reversed in the second-instance proceedings.

Our position and that of the other party are as follows:Company A claimed that there was no genuine transfer of ownership between the two parties and that it was a loan in the name of others, and requested to confirm the invalidity of the contract and restore the registration; Zhang * argued that he had paid all the housing purchase price, that the house was a genuine sale and purchase, and that the property ownership certificate was held by him.

Attorney's Strategy and Legal Opinion:Attorney Li Yonghui focused on the abnormality of the transaction's nature and the integrity of the evidence chain in the second instance: reconstructing the flow of funds, proving that the 4.4 million yuan loan directly entered the A Company's account and was transferred to the affiliated company, and that B Company used the property as collateral to borrow 7.6 million yuan to settle the loan; proving that the original property certificates and loan contracts were held by A Company, and that the property management fees were paid by B Company; combined with the nominee agreement and receipts, etc., proving that the two parties did not have a genuine purchase and sale agreement, and that the purchase and sale act should be deemed invalid according to Article 146 of the Civil Code.

The court's reasoning and case handling results:The second-instance court upheld A Company's appeal, revoked the first-instance judgment, and ruled that the "Beijing City Second-hand Housing Sales Contract" was invalid, and ordered that the house be restored to A Company's name. The court determined that the sale was a collusive sham between the parties, and the hidden loan-under-another-name relationship did not change the conclusion that the sale was invalid. This case achieved a reversal in the second-instance procedure, where the rate of judgment reversal is relatively low, which also shows that the evidence chain such as the flow of funds and the holding of title certificates plays a decisive role in the validity of the house sales contract and the issue of house return.

This case is handled by Beijing Henglu Law Firm.Li YonghuiThe attorney (practice certificate number: 11101199611955812, subject to the certificate issued by the judicial administrative organ) acts as the agent.

III. Frequently Asked Questions

Q1: If problems such as water leaks are discovered after the transfer of ownership, can I request to cancel the deal and get a refund?

It depends on the severity of the problem. For general defects such as leaks and cracks, the court usually orders the seller to bear the repair costs, reduce the purchase price, or compensate for losses, rather than allowing the buyer to withdraw from the contract. If the defects are identified as serious quality issues with the main structure of the house, rendering it unfit for normal living and use, this constitutes a fundamental breach of contract, and the buyer can sue to rescind the contract, recover the purchase price, and claim compensation for decoration losses. However, the threshold for withdrawing from the contract is high. Before suing, it is advisable to first commission a professional agency to conduct an appraisal. Based on the appraisal opinion, the buyer can decide whether to request withdrawal from the contract or claim compensation for repairs, thereby avoiding making improper requests that increase costs and prolong the litigation process.

Q2: What evidence should be prepared to claim a breach of contract regarding quality?

Including: the house purchase and sale contract and its annexes, the handover and acceptance records, the chat records of the purchase and sale process and the house inspection process, on-site photos and videos, professional house inspection reports; for hidden defects, a judicial appraisal opinion is required (the causes of leakage and seepage, the repair costs, and whether it affects the living safety); if the seller conceals information, it is also necessary to collect evidence that he/she is aware of the defects, such as communication records with neighbors and property management, historical maintenance records, and litigation-related situations. The evidence needs to form a chain of "the existence of defects—the seller's attributable responsibility—the amount of losses", and the application for appraisal should be raised in a timely manner during the litigation process.

Q3: How much does it cost to protect one's rights in a quality dispute?

Pay the case acceptance fee based on the amount of the claim. For a claim of 200,000 yuan, the fee is approximately 4,300 yuan, and the fee for a summary procedure is halved. The judicial appraisal fee for housing quality usually ranges from a few thousand yuan to tens of thousands of yuan. The applicant pays the fee in advance, and the final fee is shared according to the proportion of responsibility. The appraisal fee and preservation fee are calculated based on the actual costs. If the appraisal finds that the defects are minor and the request for returning the house is rejected, the applicant may have to bear higher litigation fees and appraisal fees. It is recommended to conduct a commercial house inspection to assess the range of losses before suing, and then determine the request plan and budget for fees, so as to choose the path of returning the house or claiming compensation based on their financial capacity.

Q4: How long do such lawsuits usually take?

For cases that do not involve appraisal, the applicable simplified procedure generally concludes within three months; for those requiring quality appraisal, the appraisal period is usually two to four months, plus the six-month ordinary first-instance procedure, making the overall period more than half a year, with an additional three months for appeals. The first step in identifying quality issues is to notify the seller in writing and keep records. While negotiating repairs, initiate evidence collection and arrange appraisal and litigation in parallel to shorten the cycle. For those claiming to withdraw from the purchase, they should also pay attention to changes in the status of the house, such as being re-mortgaged or rented out, and apply for property preservation when necessary.

Q5: What should I do if the seller conceals the history of a haunted house or water leakage?

If the seller intentionally conceals significant information that could affect the buyer's purchasing decision, it constitutes fraud, and the buyer may request the rescission of the contract, the return of the purchase price, and compensation for losses in accordance with Article 148 of the Civil Code. Even if the contract is not rescinded, the buyer may claim repair and compensation for breach of contract. In practice, the buyer needs to provide evidence that the seller knew about the information but failed to disclose it. The intermediary's intermediary records, the testimonies of owners in the same community, and the property maintenance files are all key evidence. After discovering the concealment, the buyer should promptly assert their rights. The right of rescission must be exercised within one year from the date the buyer becomes aware of the grounds for rescission, and the right will be extinguished if not exercised within the time limit.

IV. Suggestions for Protecting Your Rights

  • After receiving the house, conduct a comprehensive inspection immediately. If any problems such as leakage or cracking are found, notify the seller in writing and take photos as evidence as soon as possible.
  • For hidden defects, commission a professional house inspection agency to issue a report, and evaluate whether to apply for a judicial appraisal before filing a lawsuit.
  • Verify whether the seller is aware of the situation: Retrieve the property maintenance files, visit neighboring properties, and secure evidence of intentional concealment.
  • First calculate the costs and then decide on a solution: Generally, minor defects are dealt with through repairs, compensation, or price reductions, while serious defects or fraudulent behavior warrant the right to request a refund or cancel the booking.
  • Please note the three-year statute of limitations and the one-year exclusionary period for the right of revocation. It is advisable to file a lawsuit and apply for property preservation as soon as possible.

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