[Direct answer]In the Beijing area, this is true, but you must meet the applicable conditions of the penalty clause for deposits. Article 587 of the Civil Code of the People's Republic of China (effective January 1, 2021) stipulates that if the party receiving the deposit fails to perform the obligation or performs it in a manner inconsistent with the contract, resulting in the failure to achieve the contractual purpose, it shall return the deposit in double. At the same time, Article 586 stipulates that the deposit contract is established upon the actual delivery of the deposit, and the amount of the deposit shall not exceed 20% of the subject matter of the main contract. The excess amount shall not produce the effect of a deposit. Article 588 stipulates that if both the penalty for breach of contract and the deposit are agreed upon, the party in breach of contract may only choose to apply one of them. If the deposit is insufficient to compensate for the losses, the party may separately request compensation for the losses exceeding the amount of the deposit. Therefore, whether the seller can get the double deposit in case of breach of contract depends on three key factors: whether the deposit has been actually delivered, whether the amount exceeds the limit, and whether the breach of contract has reached the extent that the contractual purpose cannot be achieved.

I. Problem Background and Typical Scenarios

In second-hand housing transactions, it is a common dispute for the seller to back out after the buyer has paid the deposit: when signing the contract, the housing price is stable, but before online signing, the price rises. The seller would rather return the deposit than cooperate with the online signing and transfer of ownership; there are also sellers who, after receiving the deposit, sell the house to a third party who offers a higher price, or delay and evade responsibility by claiming that their family does not agree or that the house is mortgaged. Buyers often only receive a receipt and are not clear about what they can claim - double the deposit, breach of contract damages, or the actual losses caused by the rising housing prices. During negotiations, they are easily persuaded by agents or sellers to settle for a low price by saying "just give you back the deposit".

II. Key points of dispute

First, the nature of the payment. The legal effects of a deposit, a booking fee, an intention deposit, and a security deposit are completely different. Only if the agreement explicitly stipulates that it is a deposit and specifies the applicable penalty for a deposit, can the buyer claim a double refund. Second, whether the payment has actually been made. A deposit contract is a practical contract. If the payment has not actually been made, the deposit will not take effect. Transfer notes and receipt contents will all be used as the basis for determination. Third, the maximum amount. The deposit cannot exceed 20% of the subject matter of the main contract. The excess amount will not have the effect of a deposit and can only be treated as an ordinary advance payment and require a refund. Fourth, the degree of breach of contract and the choice of remedies. If the seller refuses to sign the online contract, sells the property to others, or refuses to cooperate with the transfer of ownership, etc., resulting in the failure to achieve the purpose of the contract, it constitutes a fundamental breach of contract. In this case, the buyer can choose to claim either the penalty for a deposit or the breach of contract damages, and may also request compensation for the actual losses exceeding the amount of the deposit.

III. Professional analysis by Henglue Law Firm

From Henglue's practical experience in handling second-hand housing transactions, most cases where buyers fail to obtain double deposit refunds are not due to legal issues, but rather to problems with contractual provisions and evidence: receipts only state "received purchase intention deposit", and contracts only stipulate "if the seller breaches the contract, the deposit will not be refunded". Such provisions cannot trigger the deposit penalty clause, and requests for double refunds therefore lack legal basis. Conversely, in cases with clear contractual provisions and actual receipt of funds, claims typically proceed more smoothly. There are two points that are often overlooked: first, the deposit penalty clause and the breach of contract penalty cannot be used concurrently. If the breach of contract penalty stipulated in the contract is significantly higher than the deposit amount, choosing the breach of contract penalty clause is often more advantageous; second, in cases where the house price has risen significantly, the compensation effect of the deposit penalty clause may not be sufficient to cover the actual losses. In such cases, while claiming the deposit penalty clause, the buyer can also request compensation for the difference exceeding the deposit amount, but this must be supported by evidence such as appraisal prices and transaction prices in the same neighborhood to prove the losses. The burden of proof in such transaction disputes lies in financial records and communication records, and these issues belong to the category of complex disputes in real estate transactions.Real estate transactions and construction project disputesThis is a rather typical type in China, and it's similar to...Contract disputesIt is consistent with the default remedy system of the Civil Code of the People's Republic of China.

IV. Practical suggestions and legal basis

According to Articles 586, 587, and 588 of the Civil Code of the People's Republic of China (all of which came into effect on January 1, 2021) regarding the deposit contract, the penalty for breaching the deposit contract, and the option to apply either the deposit or the breach of contract penalty, we recommend the following: 1. Before making any payment, ensure that the contract or receipt clearly states "deposit" and specifies the applicable penalty for breaching the deposit contract. 2. Pay via bank transfer and retain the transaction notes and receipts to avoid difficulties in providing evidence if payment is made in cash. 3. Limit the deposit amount to no more than 20% of the total price. Any excess amount should be separately agreed upon as a prepayment and clearly stated as fully refundable. 4. When stipulating breach of contract liability, specify both the calculation method for the breach of contract penalty and the scope of damages. If the seller reneges on the deal, compare the two remedies (deposit and breach of contract penalty) and choose the most advantageous one. 5. Timely collect evidence of the seller's breach of contract, such as reselling the property or refusing to cooperate with online signing. If necessary, apply for property preservation to prevent the transfer of the subject matter. If the seller has already transferred the property to a third party, evaluate whether bona fide acquisition applies and then decide whether to claim restitution or compensation, taking into account relevant legal principles.Creditor's rights and debts, and enforcementSynchronously plan the repayment plan and, if necessary, proceed through it.Specialised legal servicesCoordinate the pace of litigation and preservation of evidence.

5. Henglu Law Firm's Reminder

The deposit is not an all-purpose leverage. It has clear upper limits and applicable prerequisites. Three points need to be reminded: Firstly, the double refund only applies to the party receiving the deposit who breaches the contract and causes the contractual purpose to be unrealized. If the seller is willing to continue to perform the contract but is only delayed for a few days, it may not trigger the penalty; Secondly, the deposit penalty and the breach of contract penalty can only be chosen one at a time. First, calculate how much each party can get from the two paths, and then decide on the claim method; Thirdly, when reaching a settlement, do not easily sign a receipt or understanding document that "neither party will pursue legal action against each other", otherwise, you may lose the basis for subsequent claims.Disputes over second-hand housing transactionsThe golden processing period for real estate transactions is usually relatively short. Once the house is transferred to others, the difficulty of obtaining relief will increase significantly. After receiving the seller's clear indication of regret, it is recommended to immediately send a written reminder to fulfill the contract and consult a lawyer at the same time, specifying whether to insist on continued performance, demand double deposit, or terminate the contract and seek compensation.Beijing Henglu Law FirmTip: First read the contract text, then discuss the amount of compensation. The order cannot be reversed.

VI. Frequently Asked Questions

Q1: If a seller breaches the contract and demands a double refund of the deposit, do they have a good chance of winning the case?

The contract clearly stipulates that it is a deposit, and the payment has been actually delivered. If the seller breaches the contract and the contractual purpose cannot be achieved, the claim for double repayment can usually be supported; if the payment is described as a deposit, an intention deposit, or if the seller only delays performance but does not refuse to perform, the request for double repayment is often difficult to establish.

Q2: What evidence do I need to prepare?

The house purchase and sale contract and supplementary agreement, the deposit receipt and transfer voucher, chat and call records, the transaction process description issued by the intermediary, evidence of the seller selling the house elsewhere or refusing to sign the online contract, and information on the transaction prices of similar houses in the same community, which are used to prove the facts of breach of contract and the amount of losses.

Q3: How much does it cost to protect one's rights?

The litigation fees are calculated in stages according to the amount of the disputed subject matter. To apply for property preservation, you need to pay the preservation fee separately and provide a guarantee; you need to pay the appraisal fee if you need to evaluate the market value of the house; and the attorney's fees are paid according to the provisions of the entrustment contract. If the contract stipulates that the defaulting party shall bear the attorney's fees, you can claim them together with your litigation requests.

Q4: How long will the entire process take approximately?

It usually takes several weeks to negotiate with the seller and send a letter to urge them to fulfill their obligations. After initiating legal proceedings, the first-instance trial typically lasts three to six months, and the second-instance trial adds another three to four months. If the house has been sold to someone else, it may involve third parties joining the litigation, which will prolong the process. Therefore, it is advisable to apply for provisional measures as soon as possible.

Q5: What should I do first?

Immediately send a written notice to the seller, requiring them to fulfill their obligations within a reasonable timeframe, and explicitly reserve the right to pursue legal action against them for breach of contract; simultaneously organize the contract and payment receipts, verify the status of the property registration, and promptly engage a lawyer to assess the feasibility of three claims: continued performance of the contract, penalty clauses for the deposit, and compensation for losses.

The above questions and answers are mainly based on the judicial practice in the Beijing area. There may be differences in the interpretation of judgments in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

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·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open 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.