Xi'an Developers and Buyers Defaulting For Many Reasons

Rising defaults in the debt markets have investors' attention, but another kind of default is going on in cities with overheated housing markets. Sellers and developers use strategic defaults or find loopholes in an attempt to get the buyer to pay higher prices. This is the hot housing market's answer to jingle mail, but in most cases the law demands compensation for the buyer.

Xinhua: 西安开发商违约退房事件频出,法律怎么说?
Since the end of 2016, Xi'an house prices have experienced a rapid rise. In April this year, Xi'an house prices ranked first in the national cities with a growth rate of 73.89%. The rapid rise in house prices has led to the emergence of “one room is hard to find” in some popular properties. At the same time, there is another phenomenon in the real estate market – individual developers and homeowners deliberately default, forcing buyers to make up payments or even return homes.

Shaanxi headline "Qin know" combed public reports and found that regardless of whether the purchaser paid the full amount or the deposit, whether it was signed or not, whether it was a new house or an existing home, there were developers and homeowners who deliberately defaulted and the reasons are varied.
Some are strategically defaulting because, in this case, the price rose and the seller regrets an early sale. In other cases developers are abusing the law. For instance, one purchase contract was deemed invalid and the developer demanded the return or the home or its purchase )again) for 14,000 yuan/sqm.
According to the "Hua Shang Bao" reported on February 28, Ms. Ma, a citizen of Xi'an, purchased a house in a certain district of Chang'an District in 2016. At the request of the developer, she paid the full amount of the house and signed an internal subscription contract with the developer. Two years later, the developer was informed that the subscription contract signed by both parties should be an invalid contract according to law.

According to the "Hua Shang Bao" reported on June 20, Ms. Zhang of Xi'an purchased a house in 2017 and signed a "commercial house sales contract". In June this year, she suddenly received a notice from the developer to check out the message, saying that either Check out, or buy at a price of 14,000 yuan per square meter.

In the face of such obvious breach of contract requirements by developers, how does the legal aspect determine responsibility? "Qin Know" learned that according to the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Commercial Housing Contract Disputes", after the buyer and the seller sign the pre-sale contract, the developer shall report the pre-sale contract to the relevant department for registration. However, even if there is no registration formalities and the developer wants to confirm that the contract is invalid on this ground, the court will not support it.
If the developer defaults on the contract, the buyer can demand compensation for lost profit, but cannot exceed double the amount paid to the developer.
If the "commercial housing sales contract" has been signed, the developer has the right to claim damages when the contract is terminated due to the developer's breach of contract. The compensation should include the benefits that can be obtained after the contract is performed, that is, the developer should compensate the owner's house. The loss of price increases.

It should be noted that if the developer does not apply for the pre-sale certificate and conceals the facts, the purchaser can claim compensation for not more than double the amount of the purchased house.
Seller's remorse defaults are also punishable under the law:
In addition, there is also a phenomenon of "owner's remorse" in second-hand housing transactions. According to the "Hua Shang Bao" reported on June 4, in April 2018, Ms. Ma and her family took a fancy to a second-hand house in Gaoling District, and immediately talked with a real estate agency, at a price of 7,100 yuan / square meter, no I thought that after the deposit was paid for ten days, the agent told me directly that the house was not sold.

In fact, as with new commercial housing, if the homeowner defaults on the contract, the purchaser has the right to request to continue to perform the contract or compensate for the corresponding loss.

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