[Direct answer]In the Beijing area, sellers should "first urge and then claim" and handle the matter based on both the contract and the law. According to Article 577 of the Civil Code of the People's Republic of China (adopted in 2020 and implemented on January 1, 2021), if a party fails to perform its contractual obligations or performs them in a manner inconsistent with the agreement, it shall bear contractual liabilities such as continuing to perform, taking remedial measures, or compensating for losses; Article 585 stipulates that the parties may agree on a penalty for breach of contract. If the agreed penalty is excessively high compared to the actual losses, the party may request a reasonable reduction. If the buyer fails to pay within a reasonable period after being urged, causing the contractual purpose to be un achievable, the seller may claim to terminate the contract according to Article 563. Therefore, the usual process is: first, send a written notice and keep evidence of delivery; second, claim the penalty for late payment according to the contract; third, if the buyer still fails to pay, claim continued performance or termination of the contract and request compensation for actual losses, such as the loss of the price difference of the house, the agency fee, and the taxes already incurred.

I. Problem Background and Typical Scenarios

It's very common for buyers to make late payments in second-hand housing transactions. Typical scenarios include: the buyer delaying the payment of the down payment or the balance due to the failure to obtain loan approval after signing the contract; the buyer hoping to postpone the payment due to cash flow difficulties, but failing to obtain the seller's written consent; the buyer refusing or underpaying on the grounds that the house has defects; and the loan approval period between the buyer and the bank exceeding the payment deadline stipulated in the contract. Sellers often worry about two things: first, whether the delay will lead to a long-term suspension of the transaction, affecting their own replacement or financing plans; second, whether the court will reduce the penalty amount because it is too high. The key to proper handling lies in the completeness of the contract terms and the preservation of evidence of the reminder.

II. Key points of contention

First, whether the payment deadline and the agreement on the penalty for breach of contract are clear, including the payment milestones, the amount, and the method of calculating the overdue penalty. Second, the procedures and evidence for issuing a reminder, with the written reminder and its delivery receipt serving as key proof of the buyer's breach of contract. Third, the adjustment of the penalty for breach of contract. If the agreed amount is excessive, the buyer may request a reasonable reduction, typically based on the actual losses. Fourth, the conditions for rescinding the contract, which require that the buyer fails to perform within a reasonable period after being reminded and thereby renders the contract's purpose unattainable. Fifth, the scope of losses and the provision of evidence, including the price difference due to a drop in housing prices, the taxes and agency fees already paid, and the costs of reselling the property.

III. Professional analysis by Henglue Lawyers

The outcome of such disputes largely depends on two factors: "contract terms + evidence of reminders". In practice, we usually advise sellers to clearly specify the payment deadlines, the proportion of default penalties, the conditions for contract termination, and the penalty clauses for deposits when signing contracts; when there are signs of buyer's default, send written reminders immediately and keep the mailing receipts, WeChat or email records to avoid the buyer later claiming that "they were never reminded". If the buyer delays due to loan approval failure, it is necessary to distinguish whether the reason for the failure is the buyer's own credit problem or policy changes beyond their control, which directly affects the attribution of responsibility. In addition, if the seller chooses to terminate the contract, they need to send a notice of termination in a timely manner and pay attention to the handling rules of the deposit and the arrangements for the return of the paid amount. For disputes involving house sales and contracts, reference can be made to the relevant provisions.Real estate transactions and construction projects; Those involving contract termination and breach of contract liability can be combined togetherBusiness and contract disputes in enterprisesAndSpecialised legal services.

IV. Practical suggestions and legal basis

According to Article 509 of the Civil Code of the People's Republic of China (effective from January 1, 2021) regarding the full performance of the contract as agreed, Article 563 regarding the statutory conditions for rescission, Article 577 regarding the liability for breach of contract, Article 585 regarding the agreement and adjustment of the penalty for breach of contract, and Article 587 regarding the penalty for the deposit, it is recommended to follow four steps: First, check the provisions of the contract on the payment period, the penalty for breach of contract, and the rescission clause, and clarify the buyer's breach of contract points; Second, send a written reminder letter, give a reasonable performance period and keep the delivery certificate; Third, if the buyer still fails to make the payment after the expiration of the period, claim the penalty for breach of contract or claim to rescind the contract and confiscate the deposit according to the agreement; Fourth, if claiming compensation for losses, prepare evidence of losses such as the price difference of the house, taxes, and agency fees, and form a complete basis for calculation. For disputes involving the sale of houses, reference can be made to the above-mentioned provisions.Real estate transactions and construction projects; For matters involving contractual breach of duty, the parties may resolve the dispute through mediation or arbitration.Business and contract disputes in enterprises.

5. Henglu Law Firm's Advice

When buyers default on payments, sellers should avoid the mistake of "only verbally urging them without leaving any evidence". Three reminders: First, send a written reminder once, specifying the payment amount, deadline, and consequences of default, and keep the evidence of delivery; Second, don't easily agree to extensions. Once you agree, it may be regarded as a change in the payment deadline, which will affect subsequent claims; Third, pay attention to the relationship between the penalty clause and the actual losses. When making claims, prioritize the contractual provisions and limit the claims to actual losses to avoid having the agreed amount greatly reduced due to being too high.Beijing Henglu Law FirmIt is recommended that sellers improve the payment and breach of contract terms at the contract signing stage, and consult a lawyer in time to determine the order of claims after a dispute arises.

VI. Frequently Asked Questions

Q1: If the buyer fails to make the payment on time, can I directly terminate the contract?

Generally, it is not advisable to directly terminate the contract. Instead, the seller should first issue a written notice and grant a reasonable performance period. If the buyer still fails to make the payment within the reasonable period and causes the contractual purpose to be un achievable, the seller may claim to terminate the contract and demand compensation for losses in accordance with Article 563 of the Civil Code.

Q2: What evidence do I need to prepare?

The purchase and sale contract and supplementary agreement, payment receipts and bank transaction records, demand letters and delivery receipts (mailing receipts, WeChat or email records), communication records between the parties, proof of ownership of the house, as well as proof of losses such as the price difference, taxes, and agency fees.

Q3: How much does it cost to claim breach of contract penalties or to go to court?

The litigation fees shall be paid according to the standard based on the amount of the disputed subject matter; if a lawyer is engaged, the fees shall be calculated according to the proportion of the subject matter or charged in stages, subject to the written entrustment contract. The amount of the breach of contract penalty shall be determined in accordance with the contract. If the amount is set too high, the party may request a reduction of the penalty.

Q4: How long does it take from issuing a reminder to solving the problem?

It depends on the negotiation between the two parties and the litigation process: those that can be resolved by consensus can be settled more quickly; for litigation cases applying the simplified procedure, they will generally be concluded within three months; for ordinary procedures, they will generally be concluded within six months. The time involved in appraisal or preservation will be extended accordingly.

Q5: What should I do first?

First, check the payment milestones and breach of contract clauses in the contract to confirm the specific breach points and amounts of the buyer; then send a written reminder letter and keep the delivery receipt, clarify a reasonable performance period and the consequences of default, and prepare for subsequent claims.

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 relevant evidence, 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 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. If a dispute arises, please consult a practicing lawyer in time.