Because the bank loan time was 2 months later than expected, the buyer who had already paid half of the house payment not only had to return most of the decoration, but also had to compensate the seller for 4.9 million yuan. Recently, the Shanghai No. 2 Intermediate People's Court published a second-instance judgment on a dispute over a housing sale contract. According to the judgment, the seller who did not receive all the payment on time because of the bank's delay in lending the money sued the buyer to the court. In the end, the court upheld the seller's claim, and the second instance upheld the original judgment: the two parties terminated the contract, and the buyer had to compensate the seller for 3.1 million yuan in liquidated damages and 1.8 million yuan in damages for house renovation fees, totaling 4.9 million yuan.
Contractual agreement
The Seller's Supplementary Clause has the right to terminate the unilateral contract
According to the facts ascertained by the court, on May 27, 2020, seller Fan and Ying signed a real estate sale and purchase intermediary agreement with the buyer Wu on a second-hand office building, and the total price of the house was 15.5 million yuan. According to the agreement, Wu paid the first installment of 7.75 million yuan on the day of signing the formal sale and purchase contract, and the second installment of the house price of 7.75 million yuan, the buyer should apply for a loan from the bank within five days after signing the formal contract, if Wu's loan application was not fully approved before the transfer or could not obtain a loan, Wu should also pay this part of the house payment to the seller before the transfer.
On May 30 of the same year, the two sides signed a supplementary clause stipulating that the total price of the house would still be 15.5 million yuan, and the buyer would pay a deposit of 1 million yuan. The house price of 15.5 million yuan was split into a contract price of 14.9 million yuan and a decoration compensation of 600,000 yuan. It is agreed that the seller will pay the house in advance, the buyer will pay a down payment of 7.45 million yuan before June 30, 2020, the decoration compensation of 600,000 yuan will be paid to Party A on the day of transfer, and the remaining loan of 7.45 million yuan will be loaned by the bank to Party A.
On July 2, 2020, the two parties officially signed the Shanghai Real Estate Sale and Purchase Contract (online signing contract). Prior to this, the seller had handed over the house to the buyer in June, and the buyer had paid the seller a deposit of 1 million yuan and part of the house price of 4 million yuan.
The online signing contract stipulates that before August 30, 2020, the two parties will jointly handle the transfer and transfer procedures. Wu should pay the remaining part of the down payment of 2.45 million yuan before July 31, 2020 (including the day), and at the same time should apply to the bank for the second installment of the house price of 7.45 million yuan within five days after signing the contract; if the loan application is not fully approved before the transfer or cannot obtain the loan, Wu must also pay the corresponding part of the house price to the seller before applying for the transfer of property rights.
It is worth noting that the supplementary clause of the contract also gives the seller the right to unilaterally terminate the contract. If the buyer does not perform on time, the seller will be required to pay a compensation of 5/10,000 of the total house price for each overdue day and shall continue to perform. If the buyer is overdue for more than 10 working days or the buyer requests to terminate the contract, it shall be deemed that the buyer is in breach of contract, and the seller has the right to unilaterally terminate this contract. When the seller terminates the contract, he shall notify the buyer that in addition to paying compensation for ten working days, the seller must also pay a liquidated damages equivalent to 20% of the total house price.
On the same day, the parties signed another agreement, stipulating that if the sale contract could not be performed normally due to the buyer's breach of contract, the buyer should restore the house to its original state within 7 days of rescinding the contract or compensate the seller for the decoration cost of 1.8 million yuan; if the contract was terminated due to the seller's breach of contract, the buyer should also be compensated for the loss of decoration costs of 1.8 million yuan.
Buyer defaults
The seller demanded the termination of the contract of sale and purchase and compensation for losses
In fact, it was not until July 13 of that year that Wu paid the down payment of 7.45 million yuan and paid overdue interest for it. The remaining 7.45 million yuan of bank loans were also delayed until October 29, 2020, when they were approved by the relevant banks.
During the period, on September 15, 2020, the seller sent a lawyer's letter to Wu, hoping that he would pay the money within 3 days from the date of receipt of the letter, if he still did not pay, he had the right to terminate the contract, and asked Wu to compensate for liquidated damages and decoration losses.
After 15 days, Wu still did not pay the remaining payment. The seller also issued a notice of termination of the sale contract to Wu, requiring Wu to move out and return the house, and at the same time pay a liquidated damages of 20% of the total price of the house and a loss of 1.8 million yuan for house decoration.
During the first-instance trial, defendant Wu insisted that although the loan extension was a fact, it was not that the bank refused the loan, but only affected the transfer time, so his behavior was not a fundamental default.
In this regard, the Huangpu District People's Court of the first instance expressed difficulty in agreeing. The judgment pointed out that the time when Wu finally obtained the loan was october 29, 2020, which greatly exceeded the time agreed in the contract and exceeded the expectations of the parties themselves. Of course, the reason for the approval of the loan extension has nothing to do with the seller, and may not have anything to do with Wu's own creditworthiness. However, the court held that, as a qualified civil and commercial entity, it should have been aware of the risks that might arise in the transaction, especially in the case that the contract had been expressly agreed, but Wu did not perform its payment obligations in a timely manner, and under the premise that the plaintiff's understanding and permission could not be obtained in the end, the corresponding liability for breach of contract Wu could not be exempted.
Court judgment
Whether the liquidated damages are too high for 20% of the total price of the house
As for Wu's view that the amount of liquidated damages (20% of the total price of the house) claimed by the seller was too high, the court also expressed difficulty in agreeing. Because the housing sale and purchase contract itself has its own particularity, because the amount involved in the subject matter of the transaction is generally larger (and the subject of the sale and purchase in this case is an office building, not a general residential building), the economic losses suffered by the other party caused by the breach of contract by one party are also correspondingly larger, combined with the relevant ascertained facts in this case, it shows that the plaintiff in this case may have to bear the corresponding liability for breach of contract to the outsider (the seller of the house outside the case) due to Wu's breach of contract (the amount may not be too small).
Therefore, considering the relevant legal provisions of the Civil Contract Law, it is not excluded that the parties can claim liquidated damages and actual damages at the same time. Considering the actual consequences caused by Wu's breach of contract, Fan X and Ying X have not been able to successfully purchase another house normally so far, etc., and the economic losses are huge, so the court adopts a supportive approach to the seller's claim for liquidated damages and actual loss compensation.
The court of second instance held that the first-instance judgment found that the facts were clear and the law was correct, and should be upheld.
In the end, the court ruled that the house sale and purchase contract and related agreements signed by the two parties were terminated on October 7, 2020; the defendant Wu should move out and return the plaintiff's house within 10 days from the effective date of the judgment, and if it was overdue, it should pay an additional housing occupancy and use fee, calculated according to the standard of 1,000 yuan / day, calculated until the date of actual return; Wu should pay the plaintiff a lump sum of 3.1 million yuan in liquidated damages and 1.8 million yuan in losses in house renovation costs within 10 days from the effective date of the judgment.
The Beijing Youth Daily reporter noted that the judge also "helplessly expressed regret" in the judgment on this result. Because the court of first instance has given the parties sufficient and reasonable time for out-of-court settlement, in the hope that the parties may be able to continue to perform the contract, but the result is not as desired.
The judgment said that the contract for the sale and purchase of the house involved in this case is not a special contract that must be compulsorily protected and performed by mainland law (otherwise it will harm the interests of the state, the public or a third party). If, under the circumstance that the plaintiff, the seller, enjoys the legal right to rescind the unilateral contract, but forcibly orders the two parties to continue to perform the contract, there is a risk of "forced buying and selling", which is a serious violation of the principle of freedom of contract between civil and commercial entities in civil and commercial activities.
Lawyer support
Buyers can negotiate "to bank actually."
Lending time prevails" terms of the contract
4.9 million yuan can almost buy a house in Shanghai. Because banks postpone lending, buyers have to bear such huge compensation. Many buyers saw this case and broke out in a cold sweat. After all, the timing of bank lending is beyond the control of the buyer. In the process of replacing houses, one ring after another, many sellers are actually buyers. Once the bank has an extended lending cycle, it will inevitably affect several transactions. In this case, how to protect the legitimate rights and interests of both parties to the transaction?
Xu Guilin, a partner at Times Nine law firm, pointed out that in this case, the two parties agreed that regardless of whether the bank lends money on schedule, the buyer must pay the full amount before the agreed transfer date, and also stipulates that if the buyer is more than 10 days overdue, the seller can unilaterally terminate the contract. These terms are clearly not good for buyers. This may be because the buyer was eager to buy the house at the time and was too accommodating to the seller; it may be that he did not carefully study the terms of the contract; or he may have underestimated the risk of the bank lending time, but in any case, both parties must abide by the signed contract.
Lawyer Xu Guilin suggested that both parties should carefully consider the uncertainty of the bank's lending time when signing the contract. For the buyer, the clause "subject to the actual lending time of the bank" can be negotiated to avoid the liability for breach of contract caused by the overdue lending of the bank. For sellers, it is best to write the latest payment date in the contract, and stipulate the standard of overtime liquidated damages or the standard of rescission of the contract, and when the bank postpones the lending, the seller can also protect his rights and interests from being damaged. Of course, there will definitely be a conflict of interest between the buyer and the seller, and how the final contract is agreed depends on the results of communication and negotiation between the two parties.
This group of articles / reporter Cheng Jie
Photo courtesy of Visual China