[Direct answer]After the house is sealed up by the court, the registration department refuses to handle the transfer of ownership. According to Article 38 of the Urban Real Estate Management Law of the People's Republic of China (implemented on January 1, 1995), the real estate sealed up by the judicial organ shall not be transferred during the period of sealing up. The buyer should handle the matter in three steps: First, ascertain the situation of the sealing up - the sealing-up court, case number, creditor's amount, and waiting order; Second, evaluate two paths - if the contract was signed before the sealing up, and the buyer has paid the full price and legally possessed the property, but failed to transfer the ownership due to reasons beyond his/her control, he/she may, in accordance with Article 28 of the "Regulations of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objections and Reconsideration Cases by the People's Courts" (implemented on May 5, 2015), file an enforcement objection to exclude the enforcement; If the seller is unable to lift the sealing up and constitutes a fundamental breach of contract, the buyer may, in accordance with Article 563 of the Civil Code, rescind the contract, demand the return of the paid purchase price and compensation for losses. The transaction funds must go through the supervision account. For specific cases, please consult for advice.Legal services for real estate transactions and construction projectsThe team andBeijing Henglu Law Firm.

1. Problem background and typical scenarios

From the signing and payment of the contract to the transfer of ownership of a second-hand house, there is often a gap of several weeks or even months. The risk of seizure due to the seller's worsening debt is hard to prevent. Typical scenarios include: the buyer has paid the deposit and down payment, but on the day of the transfer, they find that the house has been sealed by the court, and the seller denies it or goes missing; after online signing and filing, the house is seized by litigation preservation due to the seller's other debts; when buying a marital or inherited property, the buyer only discovers after the transfer that the seller's hidden debts affect the property; or even knowing that the house is sealed, they still sign the contract at a low price, losing both the house and the money. The associated consequences include the house entering judicial auction, the need to recover the paid purchase price through enforcement procedures, and the possibility of being required to vacate the house after decoration and moving in. The pace and path of handling the matter directly determine whether the losses can be recovered.

II. Key points of contention

  • The distinction between the validity of the contract and the obstacles to its performance: The seizure does not affect the validity of the contract, but results in the inability to transfer the property rights; the buyer may claim the validity of the contract in accordance with Article 215 of the Civil Code, and then, in accordance with Article 563, rescind the contract and claim compensation on the grounds that the seller's breach of contract has rendered the contractual purpose unattainable.
  • Can the house be saved by raising an objection to the execution? According to Article 28 of the Regulations on Review of Objections to Execution, the following four conditions must be met simultaneously: signing the contract before the seizure, lawfully possessing the house before the seizure, having paid the full amount (or paying according to the agreement and delivering the remaining balance to the execution), and not transferring the ownership for reasons beyond one's own control. All of these conditions are indispensable.
  • Recovery of the paid housing price and losses: The return of the housing price after the contract is terminated depends on the seller's ability to repay the money. The design of the penalty for the deposit, the claim for breach of contract and compensation for losses, and whether to preserve the seller's other property all affect the final recovery ratio.

III. Professional analysis by Henglue Law Firm

When unexpected ownership obstacles arise during the transfer process, the first step is to clarify ownership and contract validity, after which there is room for restitution and registration restoration. A second-instance judgment case handled by Henglu Law Firm exemplifies this approach: In September 2020, Company A, due to funding shortages for its affiliated companies B and C, needed a loan. Since the company required full payment for property purchases, it borrowed the name of employee Zhang * to sign the "Beijing City Second-hand Housing Sales Contract" for a property located at No. 2003 East Third Ring Road, Chaoyang District, Beijing (262.05 square meters), "selling" the property to Zhang * for 7.3374 million yuan. The down payment was 2.5774 million yuan, and the remaining 4.4 million yuan was financed by a mortgage. After the funds arrived, they were transferred to Company A's account for use by its affiliated companies. Subsequently, Zhang * withdrew the property ownership certificate and refused to cooperate with the transfer process. Company A sued to confirm the contract's invalidity and demand the return of the property, but the first-instance court dismissed the case due to insufficient evidence. Company A then appointed attorney Li Yonghui from Beijing Henglu Law Firm to file an appeal. Attorney Li Yonghui focused the appeal on the transaction's abnormalities and the completeness of the evidence chain: - Reconstructing the fund flow: The 4.4 million yuan loan directly went to Company A, then to Company C, and Company B used the property as collateral to borrow 7.6 million yuan to repay the loan. - Confirming the fact of certificate possession: The original property ownership certificate and loan contract were held by Company A, and the property management fees were paid by Company B. - Supplemented with a nominee agreement and receipts to prove the parties' lack of genuine sales intent from the outset. The second-instance court ruled that the "sale" constituted a collusive sham transaction and, in accordance with Article 146 of the Civil Code, revoked the first-instance judgment, confirmed the contract's invalidity, and restored the property registration to Company A's name. While this case focuses on the seller's perspective of property rights confirmation, it also provides valuable lessons for second-hand home buyers: The property registration status may deviate from the actual ownership, and ownership verification cannot rely solely on a quick glance at the property ownership certificate. Once the transfer process is obstructed, evidence should be immediately organized around the fund flow, contract validity, and current possession to secure one's prior rights - whether claiming continued performance, excluding enforcement, or seeking contractual damages, all require comprehensive evidence support. For properties subject to auction disposal, additional legal strategies may also be necessary.Creditor-debtor relations and enforcement case servicesEvaluate the path of objection and compensation.

IV. Practical suggestions and legal basis

At the legal basis level: Article 38 of the Urban Real Estate Management Law of the People's Republic of China stipulates that real estate sealed up by judicial or administrative authorities in accordance with the law shall not be transferred; Article 215 of the Civil Code (effective from January 1, 2021) distinguishes the validity of contracts from the registration of property rights; Article 563 stipulates that if a party breaches the contract and fails to achieve the contractual purpose, the parties may terminate the contract; Article 566 stipulates that after termination, the party may request restoration of the status quo and compensation for losses; Article 577 stipulates the liability for breach of contract; Article 28 of the Implementing Regulations on Objections to and Review of Enforcement clearly specifies the four conditions for non-faulty real estate buyers to exclude enforcement. At the practical advice level: Before signing the contract, check the real estate registration book to verify the ownership and the status of the sealed-up mortgages, and require the seller to provide a statement of marital status and debts; shorten the time gap between "payment and transfer of ownership", and insist on using the fund supervision account for large sums of money, and never release the supervision in advance; immediately identify the sealing-up court and case number after discovering the sealing-up, and determine whether it is a prior sealing-up or a queued sealing-up, and accordingly choose to file an objection to enforcement or terminate the contract; if it is decided to terminate the contract, apply for preservation and sealing-up of the seller's other properties simultaneously to prevent winning the lawsuit but not getting the money.

5. Henglue Law Firm's Advice

All the risks of the foreclosed house transaction point to one thing: the money is paid, but the house cannot be obtained. Fund supervision is the lifeline of buyers, and any argument of "supervision is troublesome and it's better to release the funds first" should be vigilant against. If you find that the house has been foreclosed, don't handle it emotionally: don't continue to pay to the seller's personal account, don't renovate and move in to resist the execution rashly, and don't believe in the verbal promise of "unblocking it immediately". The correct approach is to immediately check the foreclosure information, evaluate the two paths of raising objections and terminating the contract, and take action within the time limit and preservation window. If you meet the conditions of Article 28, firmly raise execution objections to strive to get the house; if not, terminate the contract, preserve the property, and initiate recovery as soon as possible to minimize the loss. The above contractual validity and restoration of registration cases are handled by Beijing Henglue Law Firm.Li YonghuiThe lawyer (practice license number: 11101199611955812, subject to the document issued by the judicial administrative organ) acted on behalf of the client and achieved a reversal in the case, despite the extremely low rate of overturning verdicts in the second instance. If you have encountered problems with title transfer or seizure disputes, it is recommended that you entrust a lawyer to intervene as soon as possible.

Q1: If I discover that the second-hand house I bought has been sealed up on the day of the transfer, is the sales contract still valid?

The contract is still valid. According to Article 215 of the Civil Code, the failure to register the property rights does not affect the validity of the contract. If the seizure occurs after the signing of the contract, the sales contract is still binding on both parties, but the house cannot be transferred and the property rights cannot be changed. The buyer has two main options: if there is still a possibility of performance of the contract (for example, the seller can raise funds to lift the seizure or the amount of the seizure is relatively small), he/she can urge the seller to lift the seizure and continue to perform the contract within a reasonable period of time; if the seller is unable to lift the seizure or explicitly refuses to do so, it constitutes a delay in performance that makes the purpose of the contract impossible to achieve. In this case, the buyer can rescind the contract according to Article 563 and require the seller to return the paid purchase price, bear the breach of contract liability, and compensate for the losses. Regardless of which path is chosen, it is recommended to apply for preservation measures simultaneously to prevent the seller's other assets from being seized by other creditors first.

Q2: Under what conditions can one file an objection to enforcement and retrieve the house from the auction list?

According to Article 28 of the "Regulations of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objections and Review Cases by the People's Courts" (implemented on May 5, 2015), in the execution of monetary claims, the buyer must meet four conditions to exclude the execution: First, a legally valid written sales contract must have been signed before the seizure; Second, the buyer must have lawfully possessed the real estate before the seizure, such as the delivery note and the property occupancy record; Third, the buyer must have paid the full price or paid part of the price according to the agreement and delivered the remaining price to the court as required; Fourth, the buyer must not have failed to handle the transfer registration due to his own reasons. All four conditions are indispensable, and the burden of proof lies with the buyer. If the conditions are met, the buyer may file a lawsuit against the enforcement objection after the objection is rejected; if the conditions are not met, the buyer should promptly take the path of rescinding the contract and recovering the purchase price to avoid losing out on both fronts.

Q3: After terminating the contract, can I get back the down payment I've already paid and the losses incurred during the renovation?

There is legal basis for this. The actual compensation depends on the seller's solvency and preservation actions. According to Article 566 of the Civil Code, after the contract is rescinded, the party who has performed the contract may request the restoration of the original state and have the right to claim compensation for losses; Article 577 stipulates that the defaulting party shall bear the liability for breach of contract, including compensation for losses. The scope of claims generally includes: the deposit paid shall be dealt with in accordance with the penalty for the deposit; the down payment and interest paid; the loss of intermediary fees; reasonable losses of decoration and additions; and the breach of contract penalty agreed upon shall be claimed in accordance with the agreement. The key action is to apply for property preservation when suing, and to seize other real estate and accounts under the seller's name. Otherwise, even if a judgment of victory is obtained, the seller will have no enforceable property, and the return of the housing payment will still fail. If the seller transfers property, it can also apply to list him/her on the list of dishonest individuals.

Q4: If you know that the house is being sealed off but still buy it at a low price, is the contract valid? What are the risks involved?

Contracts are generally not invalidated by seizure: the prohibition of transfer is a regulatory norm. Sales contracts signed during the seizure period are generally valid, but they cannot be actually performed due to the inability to transfer ownership. The risks focus on three aspects: First, at the level of property rights, the house may be auctioned by the court at any time, and the buyer may pay the purchase price but not obtain ownership. Those who sign the contract after the seizure do not meet the requirement of "signing the contract before the seizure" for raising objections to the execution; Second, at the level of funds, the paid amount can only be recovered as an ordinary creditor's claim, and the order and proportion of repayment are uncertain; Third, if the buyer colludes with the seller to acquire the property at a low price, the contract may be deemed invalid due to harming the rights and interests of others (Article 154). It is recommended not to purchase houses that are known to be seized. Those who are truly interested should sign the contract after the seizure is lifted and implement full-process fund supervision throughout the process.

Q5: How to avoid buying a foreclosed property or falling into a transfer trap before purchasing a house?

Four lines of defense are implemented in turn: 1. Before signing the contract, jointly check the real estate registration book to verify the ownership, co-owners, and the status of mortgages and seizures. If necessary, require the seller to provide a credit report and a debt statement; 2. Specify in the contract that the seller guarantees that the house is free from seizures and mortgages, and that the seller will bear the breach of contract liability and the withdrawal and compensation mechanism if the transfer cannot be completed due to the seller's debts. Also, stipulate a short transfer deadline; 3. Use bank fund supervision for payments, releasing funds according to the transfer milestones to prevent private early disbursement; 4. After online signing, pay taxes and transfer ownership as soon as possible to shorten the exposure period from payment to transfer. Before transfer, check again to confirm that there are no new seizures. If the seller delays the transfer or demands to release the supervision first, consult a lawyer immediately to verify the ownership status of the house.

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 Li Yonghui·Beijing Henglu Law Firm