[Direct answer]It is not allowed to stop repaying the loan without authorization. The mortgage loan contract is signed between the buyer and the bank. If the developer fails to complete the project, it does not automatically exempt the buyer from the obligation to repay the loan. Unilateral default on repayment will constitute a breach of contract, and the buyer will face risks such as being sued by the bank, being charged penalty interest, having their credit record affected, and being subject to forced execution. The correct approach is to terminate the contract in accordance with the law: According to Article 563 of the Civil Code of the People's Republic of China (effective January 1, 2021), if the developer breaches the contract fundamentally and makes it impossible to achieve the contractual purpose, the buyer may terminate the commercial housing sales contract and simultaneously request to terminate the mortgage loan contract. The developer shall return the down payment, the principal and interest already paid, and bear the remaining loan. It is recommended that the owners collectively fix the evidence of the suspension of construction as soon as possible and use collective litigation to terminate the contract and stop payments.

1. Problem background and typical scenarios

After the unfinished new housing projects, owners face the dual pressure of "not being able to get the house and still having to pay the monthly mortgage". Some owners choose to stop making mortgage payments directly, only to be sued by banks and even have their credit records affected. In recent years, real estate projects have been frequently suspended, and owners' demands for rights protection have become concentrated. However, the emotion of stopping mortgage payments cannot replace legal procedures. Only after the sales contract and loan contract are legally rescinded can the remaining repayment obligations be legally transferred to the developer. Blindly stopping mortgage payments not only fails to solve the problem, but also adds new default records. Relevant project disputes can be referred to for reference.Real estate sales and construction project services.

II. Key points of contention

There are three main points of contention. Firstly, whether the developer's delay in delivering the house constitutes a fundamental breach of contract, and whether the buyer can exercise the statutory right of rescission; Secondly, whether the mortgage loan contract can be rescinded simultaneously after the termination of the sales contract, and who should bear the remaining loan; Thirdly, the boundary between unilateral suspension of supply and legally rescinded contracts. Banks often sue homeowners for suspension of supply on the grounds of the independence of the loan contract. The core of the court's review is the fact of non-delivery and the chain effect of contract rescission. The rules of contract-linked rescission can be referred to for reference.Business and contract dispute services for enterprises.

III. Professional analysis by Henglue Lawyers

Judging from the public judgments from various regions, when developers suspend construction for a long time and it is clear that they cannot deliver the houses, the courts usually support buyers to rescind the sales contract and the mortgage loan contract, order developers to return the down payment, compensate for the principal and interest already paid, and repay the remaining loans to the bank. Relevant precedents have been included in the case database of the Supreme People's Court. Conversely, if owners cut off payments without litigation, they may still be deemed to be in breach of contract. Henglu Lawyers usually advise owners to first form a group to fix the suspension of construction notifications, reminder letters, and repayment receipts, and jointly entrust a lawyer to file a collective lawsuit. At the same time, they should report the pre-sale fund issues to the housing and urban-rural development departments and financial regulatory authorities. By taking multiple actions in parallel, they can enhance their overall bargaining power and avoid individual defaulting taking on all the risks.

IV. Practical suggestions and legal basis

The core legal basis is Article 563 (Statutory Right of Rescission) and Article 566 (Return and Compensation after Rescission) of the Civil Code of the People's Republic of China (effective January 1, 2021); 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 (effective June 1, 2003 and amended and effective January 1, 2021), which stipulates that the guarantee loan contract may be rescinded together with the commercial housing sales contract after the rescission of the contract, and the seller shall return the principal and interest of the loan; and the Reply of the Supreme People's Court on the Protection of Consumers' Rights in Commercial Housing (effective April 20, 2023), which protects the rights of purchasers when the houses cannot be delivered. Practical suggestions: Stop new foreclosures, send written notices to developers, jointly collect evidence and file a lawsuit for rescission of the contract, and apply for property preservation at the same time.

5. Henglu Law Firm's Reminder

The key to protecting rights against unfinished buildings is to "exchange termination of the contract for stopping payment", rather than stubbornly resisting the cutoff of supplies. Owners should take unified action: share evidence, appoint a unified lawyer, and file a class-action lawsuit to prevent being defeated one by one in individual battles; for projects located in Beijing or other regions, they can pay attention to the list of risky projects and the progress of resumption of work released by local housing and urban-rural development departments, and promptly file complaints to regulatory authorities about clues of misappropriation of pre-sale funds; in litigation, they should prepare an execution plan for the developer's insufficient repayment ability. The process may be quite long, so it is necessary to maintain rationality and stay within legal boundaries to minimize losses. Individual case solutions can be referred to for reference.Special services and other case servicesAndCreditor-debtor relations and enforcement case services.

VI. Frequently Asked Questions

Q1: What responsibilities will developers face if they suspend loans for unfinished buildings?

The unilateral suspension of loan repayment violates the loan contract. The bank may sue to demand early repayment of the entire principal and interest and collect penalty interest. The overdue record will be entered into the credit information system. If the defendant fails to perform after the judgment, the court will enforce the judgment by force. However, after the sale contract and the loan contract are legally terminated, the repayment obligation will be transferred to the developer, and the homeowner no longer needs to make monthly repayments. Therefore, the responsibility boundary depends on whether the termination process has been completed. It is a safe procedure to terminate the contract first and then stop the payment.

Q2: What evidence is needed to terminate the contract and protect one's rights in the case of unfinished buildings?

These mainly include the purchase and sale contract for commercial housing and the mortgage loan contract, the invoice for the down payment and the monthly repayment records, the photos and videos of the project being suspended and the government's notice of the suspension, the written letters urging the developer to deliver the houses and the receipts, the notifications from the homeowners' group and the disclosure of information on the funds in the supervision account. The evidence needs to support the core fact that "the developer has fundamentally breached the contract and cannot deliver the houses". It is better to collect evidence in a unified manner when conducting collective rights protection, which can achieve better results.

Q3: How much does it cost to file a class-action lawsuit against unfinished buildings?

The litigation fees are calculated in accordance with the "Measures for the Payment of Litigation Fees" based on the amount of the litigation subject matter, usually taking the paid purchase price and the principal and interest of the loan as the subject matter, and shall be borne by the losing party; collective entrustment of lawyers can dilute the cost of a single household, and the fee rate shall be negotiated on a per-case or proportional basis, subject to the entrustment contract. Compared with the total amount of a single household, the cost after collective protection is obviously lower, but it is necessary to reserve necessary expenses such as property preservation fees.

Q4: How long does it take to resolve a lawsuit regarding unfinished buildings?

The first-instance ordinary procedure shall be concluded within six months and the summary procedure within three months; for mass cases, due to the large number of people and the complexity of the facts, the ordinary procedure is often applied. If it involves the developer's bankruptcy or appeal, the period may exceed one year. After the judgment takes effect, the remaining loan shall be repaid by the developer to the bank, and the owners' payment suspension goal will be achieved; but the actual repayment of the down payment depends on the developer's repayment ability and the execution situation, so it is necessary to have a reasonable expectation of the cycle.

Q5: What should the owners of unfinished buildings do now?

The first step is to stop unilateral supply interruption and avoid adding new default records; the second step is to jointly establish an evidence database with owners and entrust lawyers to evaluate the right of rescission; the third step is to initiate a collective lawsuit to rescind the sales contract and loan contract, and apply for the seizure of the developer's assets; the fourth step is to report the misappropriation of pre-sale funds to the housing and urban-rural development and financial supervision departments, and promote the resumption of work or the recovery of funds. Throughout the whole process, we should protect our rights legally and take unified actions to avoid making emotional decisions that may lead to greater losses.

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

VII. Relevant public cases (for reference only, not handled by our firm)

The following cases are all sourced from the official websites of courts at all levels, judicial authorities, and authoritative media outlets, and are unrelated to the cases handled by our firm. They are provided solely for reference in understanding relevant adjudication rules and do not constitute opinions on specific cases.

[Case Number]The case number has not been made public.
[Trial Court]The People's Court of Beilin District, Xi'an City
[Judicial Summary]The buyer paid a down payment of over 900,000 yuan and took out a loan of 1.12 million yuan to purchase an off-plan property. However, after the developer breached the contract and terminated the sale, the buyer was still required to repay the loan. The court ruled to rescind the sales contract for the commercial housing and the loan guarantee contract, and ordered the developer to refund the down payment, compensate for the principal and interest of the loan already repaid, and directly repay the remaining loan to the bank.
[Source]Guangming Net (Can't you pay the monthly mortgage if the house is unfinished? The judgment of the Beilin Court in Xi'an gives a clear answer) (2026-01)

[Case No.]The case number has not been made public.
[Trial Court]The relevant courts of Yancheng City, Jiangsu Province (cases archived in the Supreme People's Court Case Database)
[Judicial Summary]The developer explicitly stated that it was unable to deliver the houses. The buyers requested to rescind the sales contract and the loan contract. The first-instance court supported the rescission of all contracts and ordered the developer to return the down payment, pay the monthly mortgage payments already made, bear the remaining principal and interest of the loan, and pay the breach of contract damages. The second-instance court upheld the original judgment, and the case was included in the Supreme People's Court's case database.
[Source]China Consumer News (Breaking the Impasse of Unfinished Buildings: Clear Legal Precedents Define Rights and Responsibilities) (2025)

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with evidence materials to avoid missing the statutory time limit. →Legal services for real estate transactions·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 case of disputes, please consult a practicing lawyer in time.