[Direct answer]In the Beijing area, the most comprehensive protection plan for buyers of unfinished buildings is to pursue multiple avenues simultaneously: "evidence preservation, collective action, administrative complaints, civil termination, and criminal charges". The first step is to jointly establish a shared evidence database with owners, collecting purchase contracts, payment receipts, and evidence of project suspension. The second step is to file complaints with the housing construction department and financial regulatory authorities about the misappropriation of pre-sale funds, and to promote the resumption of project construction. The third step is to evaluate the termination of the commercial housing sales contract and mortgage loan contract. According to Article 563 of the Civil Code, if the developer breaches the contract fundamentally and renders the contractual purpose unattainable, the buyer may terminate the contract and claim a refund of the paid amount. If the circumstances meet the requirements of the "Interpretation of the Supreme People's Court on the Protection of Consumer Rights in Commercial Housing" (Law Interpretation [2023] No. 1, effective April 20, 2023), the buyer's right to a refund of the purchase price will receive priority protection. The fourth step is to apply for criminal charges against clues such as the misappropriation of pre-sale funds. For more details, please refer to the following link:Special services and other case services.

I. Problem Background and Typical Scenarios

Typical situations: Delayed delivery of pre-sale properties for months or even years, project stagnation, developers' capital chain disruption, and funds from regulatory accounts being embezzled; owners "have to pay monthly mortgage but can't get the house"; some projects may resume work with the intervention of government task forces, while others remain stagnant for a long time or even enter the developer's bankruptcy procedure. Different situations call for different strategies. Blindly stopping loans or rushing to terminate contracts may make the situation more passive. It is necessary to first understand the project's prospects and financial situation before deciding on actions.

II. Key points of contention

There are four main points of contention: First, whether the right to rescind the contract exists, whether the delay in delivery constitutes a fundamental breach of contract, and whether the developer fulfilled the notice procedure; Second, whether the loan contract can be rescinded together with the sales contract, and how the repayment responsibility reverts to the developer; Third, the priority of the refund of the purchase price. According to the aforementioned approval, the consumers' right to refund the purchase price of commercial housing takes precedence over the right to priority compensation for the construction project price and the right to protection of the mortgage; Fourth, the choice between the two paths of "rescission and refund" and "waiting for resumption of construction and delivery" needs to be judged based on the possibility of reconstruction of the project and the developer's repayment ability.

III. Professional analysis by Henglue Lawyers

Based on practical experience in handling group disputes over commercial housing, the protection of rights should be tailored to the project's current status: For projects with the possibility of reconstruction, priority should be given to promoting administrative intervention, recovering supervision funds, and resuming construction, as terminating the contract may not be cost-effective; For projects with long-term construction stoppages and developers who have clearly lost their ability to perform their obligations, litigation should be used to terminate the sales contract and loan contract, confirm the priority of repayment of the purchase price, and simultaneously apply for property preservation to seize unsold housing units and land use rights. Collective entrustment can unify evidence and strategies, and reduce costs. Representative cases can be selected to form model judgments first, and then promote overall solutions. Common pitfalls include: individual loan suspension leading to credit issues and breach of contract liability; suing directly without notice being rejected; missing the period for exercising the right to terminate the contract; and failing to timely declare creditor's rights when the developer goes bankrupt. In recent years, courts in Beijing and other regions have paid more attention to the protection of consumers' rights in such cases. For issues involving project payments, mortgage priority, and preservation and enforcement, reference can be made to relevant provisions.Real estate sales and construction project services、Creditor-debtor relations and enforcement case services.

IV. Practical suggestions and legal basis

Legal basis: Article 563 (Statutory Right of Rescission) and Article 566 (Consequences of Rescission) of the Civil Code (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 Commodity Housing Sales Contracts (effective June 1, 2003 and amended on December 29, 2020) regarding the rescission of fundamental breaches of contract and the handling of loan contracts; the Reply of the Supreme People's Court on the Protection of Consumers' Rights in Commodity Housing (effective April 20, 2023); and other provisions related to fund supervision responsibilities, such as the Urban Real Estate Management Law and local regulations on the supervision of pre-sale funds for commercial housing (based on the current effective version). Action list: Build an evidence database, issue written notices, file complaints with relevant departments, initiate class-action lawsuits or model cases, apply for property preservation, and follow up on the resumption of work or enforcement and bankruptcy filings; those who intend to file criminal charges against those who misappropriate funds may also prepare relevant evidence for prosecution.Criminal defense and criminal case filing services.

5. Henglue Law Firm's Reminder

The fight to protect rights against unfinished buildings is a long-term battle. First, you need to formulate a strategy and then take action. Stay vigilant against real estate agents' claims such as "pay first, then cancel the contract" and "change the name and withdraw the deposit through internal channels". Pay attention to procedural deadlines such as the time limit for exercising the right of rescission and the period for filing bankruptcy claims. Keep all communication records in writing. Prioritize both financial security and housing rights, and choose between rescinding the contract and getting a refund, waiting for the project to resume construction, or a combination of these options. You can refer to the following for more details:Special services and other case services.

VI. Frequently Asked Questions

Q1: Can the owners of unfinished buildings win their lawsuit to terminate the contract?

It depends on the degree of breach of contract and the project's status. If the delivery period stipulated in the contract has expired and the house has been idle for a long time, and the developer still fails to deliver the house within a reasonable period after being reminded, the request to rescind the contract in accordance with Article 563 of the Civil Code can usually be supported; if it meets the circumstances stipulated in the Supreme Court's interpretation, the buyer's refund of the purchase price can also be given priority protection. However, winning the lawsuit does not mean getting the money back, which ultimately depends on the developer's repayment ability. It is necessary to cooperate with property preservation and enforcement. If the project is expected to resume work, waiting for the delivery of the house may sometimes be more beneficial than rescinding the contract. It is recommended to evaluate the situation first before making a decision.

Q2: What evidence do I need to prepare to protect my rights against unfinished buildings?

The evidence includes the sales contract for commercial housing, purchase invoices, payment receipts for down payments and monthly mortgage payments, letters of reminder for delayed delivery and the developer's responses, photos and videos of construction site shutdowns, government notifications, information on pre-sale fund supervision accounts, and clues about the flow of funds, as well as records of coordinated actions by homeowners' groups. The evidence is organized around the three main issues of "the developer's fundamental breach of contract, delivery failure, and the amount of losses". For collective cases, it is necessary to unify the evidence provided by each household to avoid inconsistent statements.

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

The litigation fees are accumulated in stages according to the amount of the litigation subject and borne by the losing party. For group cases, efforts can be made to collectively entrust lawyers to share the costs; the attorney's fees are charged per case or based on a percentage of the litigation subject, with the entrustment contract serving as the basis for negotiation; and there are additional preservation fees and guarantee fees for applying for property preservation. It is recommended to first clarify whether the claim is to terminate the contract and refund the money or to promote the resumption of work, and then calculate the costs and expected benefits.

Q4: How long will it take to get results when fighting for rights against unfinished buildings?

The first-instance litigation process typically takes six months for ordinary procedures and three months for summary procedures. For mass cases or cases involving the bankruptcy of developers, the process may take even longer, possibly measured in years; preservation and enforcement measures require additional time. The timeline for resuming work depends on the project progress and the pace of government intervention. It is recommended to advance complaints and litigation simultaneously to avoid wasting time on a single channel.

Q5: How should owners of unfinished buildings protect their rights step by step?

Five-step process: First, jointly establish a shared evidence database with owners and send written notices to developers; Second, file complaints against developers with the housing and urban-rural development authorities and financial regulatory departments for misappropriation of pre-sale funds and apply for information disclosure; Third, entrust lawyers to evaluate the rights of rescission and priority and initiate collective lawsuits or demonstration cases and apply for property preservation; Fourth, file criminal charges against those involved in misappropriating funds; Fifth, continuously follow up on the resumption of work, enforcement, or bankruptcy declarations. It is crucial to avoid individual actions and maintain unity in order to gain leverage in negotiations.

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. →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. If you encounter disputes, please consult a practicing lawyer in time.