[Direct answer]In the Beijing area, it is not advisable to unilaterally stop repaying loans. Instead, the purpose of stopping repayment should be achieved through the termination of the contract. The mortgage loan contract between the buyer and the bank and the commercial housing sales contract are two independent legal relationships. According to Article 667 of the Civil Code of the People's Republic of China (adopted in 2020 and implemented on January 1, 2021) on loan contracts, after the loan is disbursed, the buyer is obliged to repay the loan on time; if the repayment is stopped without terminating the contract, it usually constitutes a breach of contract, and the bank may claim to recover the loan in advance, charge penalty interest, and exercise the mortgage right on the mortgaged property. At the same time, the overdue record will also affect the personal credit record. A more secure approach is: according to Article 563 of the Civil Code on the statutory conditions for termination, claim that the commercial housing sales contract cannot be performed due to the seller's delay in delivering the house or other breaches of contract, and according to Article 566 on the consequences of termination, request the seller to return the paid purchase price; on this basis, since the contractual purpose of the loan contract cannot be achieved either, it can be requested to terminate the loan contract simultaneously. In judicial practice, the Supreme People's Court has specified in relevant retrial cases that if the commercial housing sales contract is terminated due to the seller's failure to deliver the house and the contractual purpose of the loan contract cannot be achieved, the loan contract can be terminated, and the buyer is no longer obliged to continue repaying the loan. The seller shall return the principal and interest of the purchase loan received to the bank. In addition, according to the "Reply of the Supreme People's Court on the Protection of the Rights of Commercial Housing Consumers" (Law Interpretation [2023] No. 1), eligible commercial housing consumers can obtain priority protection in the order of compensation for their rights.

I. Problem Background and Typical Scenarios

The suspension of construction, delayed delivery, and even long-term unfinished projects have become common types of disputes over commercial housing in recent years. Typical situations include: developers' capital chains breaking down, projects being suspended for more than a year beyond the contractually agreed delivery deadline; houses having undergone online signing and filing but the projects still failing to be completed; developers entering bankruptcy proceedings or being listed as dishonest debtors; buyers having to continue repaying monthly mortgage payments while seeing no hope of receiving the houses. At this point, buyers' most pressing concern is often "whether they can stop repaying the loan", but in practice, what really needs to be resolved is how to terminate the contract to eliminate the dual burden of the purchase price and the loan in one go.

II. Key points of contention

Firstly, whether the sales contract for commercial housing can be rescinded depends on whether the seller's breach of contract results in the failure to achieve the purpose of the contract. Secondly, whether the loan contract can be rescinded simultaneously requires demonstrating that the contractual purpose of the loan contract has failed. Thirdly, the subject and order of the return of the paid purchase price and the principal and interest of the loan are whether the seller directly returns the money to the bank or first returns it to the purchaser. Fourthly, whether the protection of the rights of commercial housing consumers complies with the applicable conditions of the "Reply on the Protection of the Rights of Commercial Housing Consumers". Fifthly, the consequences of unilaterally stopping the loan, including breach of contract liability, credit impact, and the risk of disposing of the collateral.

III. Professional analysis by Henglue Lawyers

In handling disputes over unfinished buildings, the key point is to "replace the unauthorized suspension of loans with the termination of contracts". Firstly, evaluate whether the conditions for termination are met. This requires fixed evidence of the developer's delay in delivery, including the contractually agreed delivery period, the actual state of construction suspension, the developer's announcements, or notifications from government authorities, etc., to prove that the contractual purpose cannot be achieved. Secondly, determine the litigation path. Generally, the developer should be sued and requested to terminate the sales contract for commercial housing, return the paid purchase price and interest, and may also request to terminate the loan contract simultaneously. Directly suing the bank and omitting the developer often makes it difficult to fundamentally solve the problem. Thirdly, pay attention to the specific wording of the claim, making it clear that the seller should return the principal and interest of the purchase loan received to the bank, to avoid the embarrassing situation of "the loan contract being terminated but no one repaying the loan". Fourthly, pay attention to the protection of rights priority. For purchasers who meet the conditions, purchase the houses for residence purposes, and have paid all or most of the purchase price, their priority of compensation can be claimed in accordance with the aforementioned approval. Fifthly, properly handle the credit issue. Before the contract is terminated and takes effect, the purchaser should maintain communication with the bank to explain the dispute situation and avoid generating a bad record due to overdue payments. If a bad record has already been generated, the purchaser can apply for corresponding handling according to the judgment after the contract is terminated. For disputes involving real estate and construction projects, reference can be made to the above-mentioned provisions.Real estate transactions and construction projects; Those involving the recovery and enforcement of funds can be combined togetherCreditor's rights and debts, and enforcement cases.

IV. Practical suggestions and legal basis

According to Article 563 of the Civil Code of the People's Republic of China (effective January 1, 2021) on the statutory conditions for rescission, Article 566 on the consequences of rescission, Articles 577 and 584 on the scope of liability for breach of contract and compensation for losses, and Article 667 and subsequent provisions on loan contracts, 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 (amended in 2020) on the provisions of delayed delivery and the right of rescission, as well as the Reply of the Supreme People's Court on the Protection of Consumers' Rights in Commercial Housing (Legal Interpretation [2023] No. 1) on the priority of protecting consumers' rights in commercial housing, it is recommended to follow four steps: First, comprehensively collect contracts, payment receipts, loan contracts, and repayment records to fix evidence of the developer's delayed delivery or long-term suspension of construction; Second, send a written notice to the developer and retain the delivery certificate to create conditions for rescission of the contract; Third, file a lawsuit to request rescission of the commercial housing sales contract and the loan contract, and explicitly require the seller to return the purchase price and the principal and interest of the loan; Fourth, maintain communication with the bank during the litigation process to explain the progress of the dispute and, if necessary, apply for preservation measures against the developer's property. For real estate disputes, reference can be made to the above-mentioned provisions.Real estate transactions and construction projects; For disputes involving contract terms and performance, they can be resolved jointlyBusiness and contract disputes in enterprises.

5. Henglu Law Firm's Advice

When protecting your rights against unfinished buildings, don't use the tactic of "stopping the loan". Three reminders: First, don't stop the loan unilaterally. Stopping the loan before the contract is terminated constitutes a breach of contract, and the bank may sue you, dispose of the mortgaged property, and leave a bad credit record; Second, don't just sue the bank. You should list the developer as the main defendant and request to terminate the sales contract and return the purchase price; Third, don't forget to handle the loan together. In the lawsuit, it should be clearly stated that the seller should return the principal and interest of the bank loan, otherwise you may fall into the dilemma of "the house is gone, but the loan is still there".Beijing Henglu Law FirmIt is recommended that buyers consult a lawyer as soon as possible after discovering that the project has been suspended, evaluate the conditions for termination, and seize the opportunity to initiate legal proceedings.

VI. Frequently Asked Questions

Q1: The house is unfinished. Can I just stop making mortgage payments directly?

It is not recommended. The sales contract for commercial housing and the loan contract are independent of each other. If the lender directly stops the loan without terminating the contract, it usually constitutes a breach of contract. The bank may claim to recover the loan in advance, dispose of the mortgaged property, and record it in the credit information system. The correct approach is to terminate the sales contract, and then request to terminate the loan contract, and have the seller return the principal and interest of the loan.

Q2: What evidence do I need to prepare?

The sales contract for commercial housing and the supplementary agreement, payment receipts for the down payment and monthly mortgage payments, loan contracts and repayment records, proof of the developer's delay in handing over the house or the project being suspended (announcements, on-site photos, and notifications from the competent authorities), demand letters and delivery receipts, as well as materials regarding the buyer's family housing situation.

Q3: How much does it cost to litigate such cases?

The litigation fees shall be paid in accordance with the standard based on the amount of the litigation subject matter. For requests to rescind the contract and return the purchase price, the fees shall be calculated based on the amount of the subject matter; for entrusting a lawyer, the fees shall be calculated based on the proportion of the subject matter or charged in stages, subject to the provisions of the written entrustment contract. For applications for property preservation, applicants shall pay the preservation fees separately and provide guarantees.

Q4: How long does it take from filing a lawsuit to obtaining the court's decision?

Cases subject to simplified procedures are generally concluded within three months, and cases subject to ordinary procedures are generally concluded within six months; the duration of cases involving developers' bankruptcies, mass litigations, or appeals will be significantly prolonged, and the time required to recover the funds depends on the developer's financial status.

Q5: What should I do first?

First, sort out and fix the factual evidence of the developer's delay in handing over the house or long-term suspension of construction, and judge whether the contractual delivery deadline has been breached, resulting in the failure to achieve the purpose of the contract; then send a written reminder to the developer and keep the delivery certificate, and communicate with the bank to explain the situation to avoid a bad credit record due to the suspension of loan disbursement.

The above questions and answers are mainly based on the judicial practice in Beijing. There may be differences in the adjudication opinions 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 evidence materials, so as to avoid missing the statutory time limit. →Specialised services - legal services·Beijing Henglu 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. In the event of a dispute, please consult a practicing lawyer in a timely manner.