[Direct answer]It is not recommended to stop repaying the loan without authorization. The relationship between the buyer and the bank is an independent loan contract. In principle, the developer's delay in handing over the house does not constitute a defense against the bank. Unilaterally stopping repayment will be deemed a breach of contract, and the bank can collect debts, sue, and apply for enforcement. The borrower will also have a late payment record and affect their credit rating. The correct approach is: to claim the breach of contract penalty from the developer for the delay in handing over the house; if the delay is long and the project is suspended, resulting in the failure to achieve the purpose of the contract, the buyer can request to rescind the commercial housing sales contract and, in accordance with the judicial interpretation, request to rescind the guarantee loan contract at the same time. The developer shall return the remaining loan to the bank, and the borrower shall return the principal and interest of the loan already repaid to the buyer.

1. Problem background and typical scenarios

After the delay in the delivery of the property, the most common discussion in the homeowners' group is about suspending mortgage payments. The homeowners' logic is very simple: since they haven't received the house, why should they still pay the monthly mortgage? As a result, some people jointly issued a notice of suspending mortgage payments, while others simply stopped making payments. However, a few months later, they received bank collection notices or even court summonses, and their credit records were left with overdue records. What was originally the developer's breach of contract eventually became their own responsibility. The core problem reflected in such situations is that the sales relationship and the loan relationship belong to two different contracts and cannot be offset against each other.

II. Key points of contention

First, the independence of the two contracts. The contract for the sale of commercial housing and the guaranteed loan contract are two mutually independent legal relationships. If the developer breaches the contract, it does not necessarily exempt the borrower from the obligation to repay the loan. Second, whether the delay in delivery of the house can be used to oppose the bank. If the borrower refuses to repay the loan on the grounds that the developer breached the contract, this is usually not supported. The bank only needs to prove that it has disbursed the loan in accordance with the contract to assert its creditor's rights. Third, the ownership of the loan after the contract is rescinded. If the rescission of the purchase contract results in the inability to fulfill the purpose of the loan contract, the borrower may request the rescission of the loan contract simultaneously. The developer shall return the remaining principal and interest of the loan to the bank, and the borrower may request the developer to return the repaid portion. Fourth, the impact on credit records. Overdue records will be kept for a certain period of time, affecting subsequent loans, credit card applications, and even some employment and travel activities. Fifth, the legal effect of the notice of suspension of loan disbursement. The collective notice of suspension of loan disbursement is an expression of asserting rights, which cannot exempt the borrower from the obligation to repay the loan itself, but can serve as a basis for negotiation with the bank and the developer.

III. Professional analysis by Henglue Lawyers

A dispute over a pre-sale contract for commercial housing handled by Henglue Law Firm illustrates the correct path to protect one's rights. On April 30, 2021, Zhang Quan signed a "Beijing City Commercial Housing Pre-sale Contract" with a real estate company to purchase Unit 302 in a certain residential community with a total price of 6,841,972 yuan, with delivery scheduled for June 15, 2023. The supplementary agreement stipulated that if the company delayed delivery due to its own reasons, it would be granted a 90-day grace period. After the grace period expired, the company would pay a breach of contract penalty of 0.01% of the total price per day. However, the company did not issue a move-in notice until February 27, 2024, resulting in a delay of nearly nine months in actual delivery. The owner sued for a breach of contract penalty of 118,366.12 yuan from September 14, 2023 to March 5, 2024. The company defended that factors such as the pandemic, meetings, bad weather, and exams constituted force majeure delays of 187 days, and argued that the grace period could be cumulated with other delays. Henglue Law Firm reviewed the contract and supplementary agreement, clarified the delivery time, grace period, and breach of contract penalty standards, and collected payment receipts, move-in notices, and completion and acceptance records. The firm pointed out that the contract was signed in 2021, when the pandemic had already become a normal situation, so the company should have foreseen the delays and they did not constitute force majeure. Similarly, bad weather and government meetings did not necessarily lead to a full suspension of work, so the company could not evade responsibility. The grace period should be strictly applied according to the contract. The court adopted these arguments and ruled that the company should pay a breach of contract penalty of 118,366.12 yuan and bear the litigation costs. This case was handled by Beijing Henglue Law Firm.Tian Jia YanThe lawyer (practice license number: 11101202111381309, subject to the document issued by the judicial administrative organ) acts as the agent. Rather than voluntarily defaulting on the payment and bearing the consequences of breach of contract, it is better to sue the developer for breach of contract and choose to rescind the contract and withdraw from the house when the project has actually been suspended and the contractual purpose cannot be achieved.

IV. Practical suggestions and legal basis

According to Article 577 of the Civil Code of the People's Republic of China (effective January 1, 2021), the breaching party shall bear such breach-of-contract liabilities as continuing performance, taking remedial measures, or compensating for losses; Article 563 stipulates the statutory circumstances for rescission, and Article 566 stipulates the consequences of rescission. Article 20 and Article 21 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Disputes over Commercial Housing Sales Contracts (Legal Interpretation [2020] No. 17, effective January 1, 2021) provide that where the purpose of the guarantee loan contract cannot be achieved due to the rescission of the commercial housing sales contract, the party may request the rescission of the guarantee loan contract and clarify the developer's responsibility for returning the principal and interest of the purchased housing loan already received. Article 16 of the Regulations on the Administration of the Credit Information Industry (State Council Decree No. 631, effective March 15, 2013) stipulates that the credit information agency shall keep the personal bad information for five years from the date when the bad behavior or event ends. Suggestions: First, do not unilaterally stop the loan. If there are indeed repayment difficulties, you can communicate with the bank to extend the repayment period or adjust the repayment arrangements; Second, fix the evidence of late delivery and promptly claim the breach-of-contract damages from the developer in writing; Third, if the project has been stalled for a long time and there is no hope of delivery, timely evaluate the plan of rescinding the purchase contract and the loan contract together; Fourth, the request for returning the principal and interest, taxes, and maintenance funds should be raised together; Fifth, after the case enters the enforcement stage, pay attention to the developer's property and the order of seizure, and you can refer to it for reference.\nEnforcement of the caseAndFinancial and loan disputesThe processing approach of the issue mentioned above.

5. Henglu Law Firm's Reminder

Suspending the loan is an emotionally charged decision, but the consequences must be borne by the borrower themselves. Here are a few special reminders: First, even if a notice of loan suspension has been sent to the bank, as long as no written amendment or extension agreement has been reached with the bank, the fact of overdue payment still stands. Second, once the bank wins the lawsuit, it may apply to seize the borrower's other assets or auction the collateral, expanding the scope of losses to include litigation fees and interest. Third, the credit record will be kept for five years from the date the adverse behavior ends, with far-reaching implications beyond this case. A more secure approach is to pursue two parallel paths: claim breach-of-contract penalties or request to rescind the purchase contract from the developer, and maintain communication with the bank to avoid creating new breaches. If the purchase contract is rescinded, it is essential to ensure that the judgment clearly stipulates that the remaining loan must be repaid to the bank by the developer, to avoid the awkward situation of the house being returned but the loan still outstanding. Related disputes should be handled in accordance with the law.Contract disputesAndProperty disputesThese two concepts often overlap in Chinese, so it is recommended to conduct an overall assessment before deciding on a strategy.Beijing Henglue Law FirmTip: First, calculate the breach of contract penalty and the repayment obligation separately, and then choose your course of action.

VI. Frequently Asked Questions

Q1: If I stop paying the mortgage due to a delay in the handover of the house, will the bank sue me?

Yes. The relationship between the buyer and the bank is an independent borrowing contract, and the developer's delay in delivering the house does not, in principle, constitute a defense against the bank. Stopping repayment constitutes a breach of the borrowing contract, and the bank may, in accordance with the contract, demand repayment, file a lawsuit, and apply for forced execution. The court will usually support the bank's request for repayment of the principal, interest, and penalty interest. Even if the house has not been delivered, the mortgage and repayment obligations still exist.

Q2: What evidence do I need to prepare if I want to terminate the contract?

First, the commercial housing sales contract and supplementary agreement, which specify the delivery time, grace period, and penalty clause; Second, payment receipts, mortgage loan contracts, and repayment records, used to verify the amount of payments made and the principal and interest; Third, evidence of the developer's delay, including move-in notifications, photos of the construction site being halted, and communication records; Fourth, demand letters and delivery receipts, proving that the developer has been demanded to fulfill its obligations but failed to do so within a reasonable timeframe.

Q3: Which is more cost-effective, going to court or continuing to repay the loan?

These two sums of money are of different nature and cannot be simply compared. The litigation fees are prepaid according to the standards for property cases. According to Article 13 of the "Measures for the Payment of Litigation Fees" (Decree No. 481 of the State Council, implemented on April 1, 2007), they are accumulated in stages according to the amount of the dispute, and are generally borne by the losing party after the victory; the monthly mortgage payment is a contractual obligation that must be fulfilled. Unauthorized suspension of payment will result in penalty interest, litigation fees, and credit loss. It is usually more cost-effective to repay the loan according to the contract first and then seek legal redress later.

Q4: After terminating the purchase contract, how should the loan be handled?

According to Articles 20 and 21 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Disputes over Commercial Housing Sales Contracts" (Legal Interpretation [2020] No. 17, effective January 1, 2021), if the purpose of the guarantee loan contract cannot be achieved due to the termination of the sales contract, the parties may request to terminate the loan contract. The developer shall return the principal and interest of the purchased housing loan received to the bank, and the repaid principal and interest of the loan shall be returned by the developer to the purchaser. The operative part of the judgment shall specify these two items.

Q5: What should I do first?

First, do three things: check the delivery time, grace period, and penalty standard in the contract and supplementary agreement, and calculate the amount of penalty that can be claimed; sort out the payment receipts and loan repayment records to clarify the amount paid and repaid; send a written reminder letter to the developer and keep the delivery certificate. At the same time, keep in touch with the bank to explain the progress of the purchase dispute and avoid the bank unilaterally stopping the loan, which will create a new record of default.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretations in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are currently 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 the sale and purchase of real estate·Attorney Tian Jiaoyan·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public 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. In case of disputes, please consult a practicing lawyer in time.