[Direct answer]In the Beijing area, it's not necessarily a breach of contract, but the key is to see who is responsible for the loan being rejected. If the loan is rejected due to the buyer's own reasons such as credit checks and income proof, it constitutes a breach of contract, and the seller can terminate the contract according to the agreement and claim breach of contract damages. If the loan is rejected due to policy adjustments, bank credit quota tightening, or other reasons beyond the parties' control, the buyer can generally terminate the contract without assuming breach of contract liability, and the paid purchase price should be refunded. Whether there are special provisions on loan risks in the contract often determines the final outcome.

I. Problem background and typical scenarios

Common situations include: the buyer's credit history showing overdue payments, which results in the bank refusing to grant a loan; sudden adjustments in down payment ratios or interest rate policies leading to changes in eligibility; an appraisal value lower than the transaction price or insufficient loan amount; the seller's house having a mortgage that hasn't been lifted or being too old to qualify for a loan; and the buyer trusting the agent's promise that "there's no problem with the loan" without undergoing a pre-approval process. After the loan falls through, the buyer has often already paid the deposit or even a portion of the down payment, leaving them in a passive situation.

II. Key points of contention

First, determination of liability. The responsibility for the buyer's own credit issues lies with the buyer; the responsibility for the seller's housing defects leading to the inability to obtain a loan lies with the seller; and policy adjustments are matters that cannot be attributed to either party. Second, interpretation of contract terms. Some contracts stipulate that "the shortage of the loan shall be made up in cash," while others stipulate that "the contract shall be automatically terminated if the loan is not approved." These two formulations have completely different consequences. Third, ability to make up for the shortage and room for negotiation. When the loan cannot be approved, can the parties negotiate to extend the payment period, reduce the total price, or make installment payments? Fourth, return of deposits and payments already made. The handling of deposits and down payments after the contract is terminated requires clear legal basis.

III. Professional analysis by Henglue Lawyers

The core of such disputes lies in the dual review of "terms + liability attribution". At the liability attribution level, the buyer should conduct a self-check of their creditworthiness and apply for a loan pre-approval from the bank before signing the contract, which is a necessary risk control measure based on good faith. If the liability lies with the buyer, there is no ambiguity in determining the breach of contract, and the dispute usually focuses on the amount of the breach of contract penalty. The buyer may request an adjustment based on the seller's actual losses. If the liability lies with both parties, according to the judicial interpretation of the Supreme People's Court on the Application of Law in the Dispute Cases of Commercial Housing Sales Contracts, if the contract cannot be performed due to factors beyond the control of both parties, the contract may be rescinded, and the seller shall return the received purchase price. This principle is also applicable to second-hand housing disputes. At the terms level, the clause "the loan is insufficient to be supplemented by cash" is not necessarily valid. The court will review the buyer's payment ability and the fairness of the terms; the "automatic rescission" clause should be strictly applied according to its literal meaning. We suggest that parties involved in loan deadlocks should not argue first, but obtain the written reasons for the bank's loan rejection – it is both evidence of liability attribution and the starting point for subsequent negotiations or litigation. If the transaction fails due to reasons attributable to the seller, the buyer may also claim the penalty for the deposit or the breach of contract penalty, and choose the higher one to apply. The handling of similar breach of contract situations can be referred to for reference.\nDisputes over breach of contract in housing transactionsTheir agency experience; for those involving changes in loan approval policies, they can also make comparisons.Financial-related servicesInterpret the policies of the field and translate the bank's views into negotiation leverage.

IV. Practical suggestions and legal basis

According to Article 563 (statutory rescission) and Article 590 (partial exemption from liability due to force majeure, effective January 1, 2021) of the Civil Code of the People's Republic of China, as well as the provisions of the aforementioned judicial interpretation on the handling of contracts in the event of loan disapproval in commercial housing sales contracts (issued in 2003 and amended in 2020), the following recommendations are provided: First, obtain a written loan rejection notice from the bank, clarifying the reasons for the rejection. Second, review the original loan terms in the contract to assess the possibility of automatic rescission, cash compensation, or negotiated amendments. Third, if the failure to obtain the loan is not attributable to either party, notify the other party in writing to rescind the contract and demand the return of payments and deposits. Fourth, if no agreement can be reached, promptly initiate legal action and apply for preservation measures to prevent the seller from disposing of the property.

5. Henglue Law Firm's Reminder

The best time to manage loan risks is before signing the contract: conducting a self-check of the credit report, undergoing a pre-approval process with the bank, and clearly stipulating in the contract a "resolution and refund mechanism for unapproved loans due to neither party's fault" as well as "handling procedures for loan failure due to the seller's reasons". If all three provisions are included, most disputes can be avoided afterwards. However, it's difficult and costly to make up for any omissions after signing the contract, which is a classic example of the saying "a single line of clauses difference can lead to millions of dollars in risks" in second-hand housing transactions. If the situation has already reached an impasse, it's crucial not to unilaterally stop fulfilling all obligations. If the responsibility lies with the buyer, passive delay will be deemed as aggravating losses. For subsequent performance issues such as the developer's delay in handing over the property, it's also advisable to verify other breach of contract situations in the purchase contract. In a case of delayed handover of commercial housing we handled, the owner, Zhang Quan, entrusted Beijing Henglue Law Firm to handle the matter.Tian JiayanThe lawyer (practice license number: 11101202111381309, the document issued by the judicial administrative organ shall prevail) sued, and calculated the breach of contract penalty range precisely according to the extension period clause in the supplementary agreement. The court fully supported the breach of contract penalty of more than 118,000 yuan, indicating that every clause in the contract could be a weapon.Beijing Henglue Law FirmIt is recommended to conduct a liability assessment before taking any remedial action. If the procedural order is incorrect, the other party may claim that you have breached the contract instead.

VI. Frequently Asked Questions

Q1: Is there a high chance of success in claiming a refund?

For matters that are not attributable to either party, the refund support rate is high; for matters attributable to the buyer, the focus is on negotiating to reduce losses, and it is difficult to overturn the determination of breach of contract.

Q2: What evidence do I need to prepare?

The purchase contract and loan terms, the bank's written explanation of loan rejection, the credit report, payment receipts, public documents on policy adjustments, and communication records.

Q3: What are the approximate costs of attorney fees and litigation fees?

The fees are charged based on the amount of the dispute. For disputes involving refunds, the subject of the dispute is the amount already paid, and the fees are relatively controllable, subject to the terms of the entrustment contract.

Q4: How long does the process take?

The consultation process for termination can be completed within a few weeks, and the first-instance litigation takes three to six months, with even longer durations involving preservation measures and second-instance litigation.

Q5: What should I do first?

First, obtain the bank's written reasons for rejecting the loan and conduct a blame analysis. Then, decide whether to make up for the shortcomings through negotiation or to terminate the contract and request a refund, in order to avoid breaching the contract prematurely.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

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 Tian Jiayan·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.