In the case of the sale of one house, how to protect the rights of each buyer?

【Main Points of the Judgment】When the people's court hears a dispute over the sale of one house, if several contracts are valid and the buyer requests the performance of the contract, it shall generally determine the order of rights protection in accordance with the order in which the registration of the change of ownership of the house has been handled, the legal possession of the house, the performance of the contract, and the order in which the sale and purchase contract is established. However, the rights of a buyer who registers in bad faith cannot take precedence over a buyer who has already lawfully occupied the house. The time of formation of the sales contract shall be determined by combining the filing time of the competent authority, the time of signing the contract and other evidence.

Supreme People's Court of the People's Republic

Civil Settlements

(2021) SPC Minshen No. 6382

Retrial applicant (third party in the first instance, appellant in the second instance): Jiang Changyuan, male, Korean, born on July 2, 1949, lives in Yanji City, Jilin Province.

Entrusted litigation agent: Jin Yongmin, lawyer of Jilin Jiyan Law Firm.

Applicant for retrial (defendant in the first instance, appellee in the second instance): Yanxing Real Estate Development Co., Ltd., Yanji City, domicile in Changbai Road, Jiangong Street, Yanji City, Yanbian Korean Autonomous Prefecture, Jilin Province (in the development zone).

Legal representative: Li Chunlong, the general manager of the company.

Respondent (plaintiff in the first instance, appellant in the second instance): Chi Xiujun, male, Han ethnicity, born on June 24, 1963, lives in Yanji City, Jilin Province.

Respondent (third party in the first instance and appellee in the second instance): Liu Huanfa, male, Han ethnicity, born on September 11, 1969, lives in Yanji City, Jilin Province.

The third person in the first instance: Li Xueshan, male, Korean, born on January 5, 1951, lives in Yanji City, Jilin Province.

The third person in the first instance: Ma Yingshu, female, Korean, born on July 17, 1952, lives in Yanji City, Jilin Province.

The applicants Jiang Changyuan and Yanji Yanxing Real Estate Development Co., Ltd. (hereinafter referred to as Yanxing Company) applied to this court for a retrial because of a dispute with the respondents Chi Xiujun and Liu Huan, and the third party Li Xueshan and Ma Yingshu in the pre-sale contract for commercial housing, and applied to this court for a retrial in the civil judgment of the Jilin Provincial Higher People's Court (2020) Ji Min Zhong No. 352. This court formed a collegial panel in accordance with law to conduct a review, and the review has now been concluded.

Jiang Changyuan applied for a retrial, stating that (1) the first instance judgment rejected Jiang Changyuan's erroneous claims after finding that the enforcement settlement agreement reached between Jiang Changyuan and Yanxing Company on July 14, 2011 and March 6, 2012 was a valid agreement. The second-instance trial found that the enforcement of the settlement agreement was invalid and that the law was wrongly applied in accordance with item 4 of the first paragraph of article 58 of the General Principles of the Civil Law of the People's Republic of China. There was no malicious collusion between Jiang Changyuan and Yanxing Company to harm the interests of Chi Xiujun and Liu Huanfa. (2010) Yanzhong Zhijian Zi No. 14 and (2010) Yanzhong Zhijian Zi No. 7 Enforcement Rulings rejected the application for enforcement objection on the grounds that the relationship between Chi Xiujun, Liu Huanfa and Yanxing Company was a loan relationship rather than a sale and purchase relationship. The enforcement settlement agreement between Jiang Changyuan and Yanxing Company was signed on July 14, 2011 and March 6, 2012. According to Article 20 of the Interpretation of the Supreme People's Court on <中华人民共和国民事诉讼法>Several Issues Concerning the Application of Enforcement Procedures, it is legal for the enforcement court to continue to enforce the houses involved in the case when Chi Xiujun and Liu Huanfa did not provide sufficient and effective guarantees in accordance with the provisions of law. The enforcement of the settlement agreement was not reached privately between Jiang Changyuan and Yanxing Company, but was drafted, reviewed and approved by the Intermediate People's Court of Yanbian Korean Autonomous Prefecture (hereinafter referred to as the Yanbian Intermediate People's Court) in Jilin Province. On the day of signing the enforcement settlement agreement, the enforcement judge of the Yanbian Intermediate Court delivered houses 101 and 102 to Li Xueshan and Ma Yingshu at the site of the Yanxing Complex. There is no malicious collusion in the process of signing the settlement agreement that harms the interests of Chi Xiujun and Liu Huanfa, and the implementation of the settlement agreement is legal and valid. (2) Jiang Changyuan is the sole legal occupant of houses No. 101 and 102 of Yanxing Comprehensive Building, and according to article 15 of the Minutes of the Eighth National Court Work Conference on Civil and Commercial Trial Work (Civil Part) on the performance of contracts for the sale of one room, he should enjoy the priority protection of the above-mentioned houses as the right holder of the legally occupied houses. On August 27, 2007, houses 101 and 102 of Yanxing Complex were seized by security and were in a state of seizure until April 23, 2012. On April 6, 2010, the "Photos of the Valuation Object" in the real estate valuation report made by Jilin Huayu Real Estate Land Appraisal Consulting Co., Ltd. showed that the house involved in the case was a rough house before it was legally delivered to Jiang Changyuan (Li Xueshan, Ma Yingshu) for use, and no one occupied and used it. Liu Huanfa and Chi Xiujun claimed that the possession of houses No. 101 and 102 of Yanxing Comprehensive Building did not produce the legal effect of legal possession without the permission of the people's court. (3) The first-instance and second-instance judgments identified the enforcement settlement agreement reached between Jiang Changyuan and Yanxing Company as a debt-in-kind agreement, which was not an error in the housing demolition and resettlement compensation agreement. Article 86 of the Provisions of the Supreme People's Court on Several Issues Concerning the Enforcement Work of the People's Courts (for Trial Implementation) stipulates that the parties have the right to change the subjects of rights and obligations, the subjects of performance, and the methods of performance determined by effective legal documents. The enforcement settlement agreement reached on July 14, 2011 has changed the monetary compensation obligation determined in the (2007) Yanzhou Minsi Chuzi No. 40 Civil Judgment to the obligation to relocate and resettle the settlement agreement, and delivered the houses No. 101 and 102 of the Yanxing Complex Building, which should have been relocated to Jiang Changyuan (Li Xueshan and Ma Yingshu), to the actual relocated households Li Xueshan and Ma Yingshu. In the implementation of the settlement agreement, Yanxing Company is the demolition person and Jiang Changyuan is the demolished household, which is in line with the main characteristics of the demolition compensation and resettlement agreement. Yanxing Company compensates Jiang Changyuan with the house rebuilt in situ by Jiang Changyuan's demolished house, which is also in line with the characteristics of compensation for demolition and resettlement. The essence of the implementation of the settlement agreement is the demolition compensation and resettlement agreement with the relocation of houses 101 and 102 as compensation, and its true intention is to move houses 101 and 102 of Yanxing Complex to Jiang Changyuan to compensate For Jiang Changyuan's 196 square meters of store houses that were demolished. (4) The first-instance and second-instance trials failed to judge the new evidence and exempt Chi Xiujun from the corresponding error in the burden of proof when there was new evidence sufficient to overturn the basic facts of the case as determined by the (2014) Jimin Yi zhong zi No. 71 Civil Judgment (hereinafter referred to as the "No. 71 Judgment"), which had already taken effect. On March 23, 2020, Li Xueshan's entrusted litigation agent, holding the Yanbian Intermediate People's Court's Investigation Order, retrieved from the Yanji Municipal People's Court the (2010) Yanji Chuzi No. 459 Criminal File, in which the three "Housing Sale and Purchase Contracts" and the "Contract for the Sale and Purchase of Commercial Housing" determined by the No. 71 Judgment were completely different in terms of basic facts such as the unit price of the house, the total house payment, the payment method, and the liability for breach of contract, and belonged to the new evidence that was not found at the time of the No. 71 Judgment, so Chi Xiujun's burden of proof should not be exempted. The first-instance and second-instance judgments only took Judgment No. 71 as an effective judgment, finding that Jiang Changyuan could only provide relief through supervision procedures, violating the second paragraph of article 10 of the Several Provisions of the Supreme People's Court on Evidence in Civil Proceedings. There is no real relationship between Chi Xiujun and Yanxing Company for the sale and purchase of commercial housing, whether it is the three "Housing Sale and Purchase Contracts" signed on October 20, 2005, or the "Commercial Housing Sale and Purchase Contract" signed between Yanxing Company and Chi Xiujun on July 23, 2007, which are all guarantees for loans. Yanxing Company and Chi Xiujun have never reached an agreement to "pay debts in kind" or "offset the housing payment with loans", and the two parties have never made a final settlement, and Yanxing Company has also advocated guarantees in the form of sales contracts in previous trials, and has never "triangulated" or "paid off debts" to Chi Xiujun. Judgment No. 71 found that Chi Xiujun had erroneously determined that Chi Xiujun had paid all the housing payments for Houses 101, 102 and 104 of Yanxing Complex on the grounds of "borrowing to offset the housing payment". (5) The original transfer agreement submitted by Yanxing Company can prove that Chi Xiujun did not pay the purchase price of House No. 101, 102 and 104 of Yanxing Comprehensive Building. The original transfer agreement shows that the date of signing the agreement was June 5, 2008, and Chi Xiujun could not claim to pay part of the housing payment for Houses 101, 102 and 104 of Yanxing Complex Building on the grounds that the transfer of debts that had not yet occurred in July 2007. According to the second paragraph of article 10 of the Several Provisions of the Supreme People's Court on Evidence in Civil Proceedings, Chi Xiujun should not be exempted from the burden of proof to prove that he paid the purchase price. (6) The settlement agreement signed between Chi Xiujun and Liu Huanfa was an invalid legal act of malicious collusion that harmed Jiang Changyuan's legitimate rights and interests. The courts of first instance and second instance found the agreement to be legal and valid. Jiang Changyuan applied for a retrial in accordance with the provisions of items 1, 2, 3, 4, 5 and 6 of Article 200 of the Civil Procedure Law of the People's Republic of China.

Yanxing Company applied for retrial, stating that (1) there was a loan relationship between Yanxing Company and Chi Xiujun, and Yanxing Company provided guarantees for Chi Xiujun's loan in the form of a contract for the sale and purchase of commercial housing. The two receipts for the house payment in July 2007 could not prove that Chi Xiujun paid 4,979,200 yuan for the house. In order to repay the principal and interest of the loans of Chi Xiujun and other creditors of Yanxing Company, on July 23, 2007, in order to be able to obtain bank loans through mortgage loans and then repay the principal and interest of Chi Xiujun's loans, Yanxing Company signed a contract with Chi Xiujun for the sale and purchase of six sets of stores, including houses 101, 102 and 104 of Yanxing Complex, the purpose of which was to obtain the bank mortgage loan funds for the above six sets of stores to repay the loan principal and interest of Chi Xiujun and other creditors. A total of six houses in Yanxing Complex No. 101, 102, 104, 110, 111 and 209 are still filed in Chi Xiujun's name. The sale and purchase contract of July 23, 2007 was not a real sale, and the three sales contracts dated October 20, 2005 were only guarantees provided to Chi Xiujun. Yanxing Company has never settled accounts with Chi Xiujun, still less has it placed the roof of Houses 101, 102 and 104 of Yanxing Complex building to Chi Xiujun, judgment No. 71 does not clarify the facts such as the project funds, current funds, Chen arrears between Yanxing Company and Chi Xiujun, as well as the standards for calculating the principal and interest of the loan, and does not include the repayment that Yanxing Company has already repaid to Chi Xiujun, and this case made an error in the judgment on the basis of judgment No. 71. (2) Jiang Changyuan is a relocated household, and Li Xueshan and Ma Yingshu are actually relocated households, and their interests should be protected on a priority basis. Due to the failure of the operation of the Yanxing comprehensive building project, Yanxing Company has been heavily indebted and is unable to perform its obligations in accordance with the (2007) Yanzhou Minsi Chuzi No. 40 Civil Judgment. The original trial found that Yanxing Company and Jiang Changyuan maliciously colluded to sign an enforcement settlement agreement, which had no factual basis. Yanxing Company applied for a retrial in accordance with the provisions of Items 2, 3, 4 and 6 of Article 200 of the Civil Procedure Law of the People's Republic of China.

Chi Xiujun submitted an opinion saying that after the first-instance judgment of this case was rendered, Yanxing Company did not appeal, and the second-instance judgment did not change the judgment of the first-instance judgment on the company's rights and obligations, and the reasons for the retrial of Yanxing Company should not be reviewed. Jiang Changyuan had objections to the No. 71 judgment, but after the judgment was rendered, Jiang Changyuan neither applied for a retrial nor an inspection organ to protest, which should be regarded as recognition of the No. 71 judgment.

Liu Huanfa submitted an opinion saying that Liu Huanfa had obtained the real estate property rights certificate of the house involved in the case and carried out fine decoration and business so far. Jiang Changyuan, Yanxing Company and Li Xueshan maliciously colluded to harm the legitimate rights and interests of the actual buyer Liu Huanfa, and the retrial application of Jiang Changyuan and Yanxing Company should be rejected in accordance with law.

After review, this court held that article 15 of the Minutes of the Eighth National Court Work Conference on Civil and Commercial Trials (Civil Part) states that "when hearing a dispute over the sale of a number of houses, if several contracts are valid and the buyers require the performance of the contract, the order of protection of rights shall generally be determined in accordance with the order in which the registration of the change of ownership of the house has been handled, the legal possession of the house, the performance of the contract, and the order of formation of the sale and purchase contract." However, the rights of a buyer who registers in bad faith cannot take precedence over a buyer who has already lawfully occupied the house. The time of formation of the sales contract should be determined by taking into account the filing time of the competent authority, the time of signing the contract and other evidence", which determines the order of protection in the case of the sale of one house, and the case should be based on the priority protection order of the parties to houses 101 and 102.

The original judgment that Jiang Changyuan and Yanxing Company reached an enforcement settlement agreement to dispose of the property involved in the case was malicious collusion to harm the interests of a third party, and the evidence was insufficient. The property involved in the case was seized by the enforcement court during the enforcement proceedings on August 26, 2009, and Jiang Changyuan and Yanxing Company reached an enforcement settlement on July 14, 2011, before that, on April 3, 2010, the enforcement court rejected the objections raised by Outsiders Chi Xiujun and Liu Huanfa. Since the enforcement objection ruling objectively negated the claims of outsiders, Jiang Changyuan and Yanxing Company claimed that they had no subjective malice and had a certain factual basis. This case should be further examined in accordance with the spirit of Article 15 of the Minutes of the Eighth National Court Work Conference on Civil and Commercial Trial Work (Civil Part), and properly handled in accordance with law.

In summary, the grounds for Jiang Changyuan and Yanxing Company's retrial application are in line with the circumstances stipulated in Items 2 and 6 of Article 200 of the Civil Procedure Law of the People's Republic of China. In accordance with Articles 204 and 206 of the Civil Procedure Law of the People's Republic of China and the first paragraph of Article 395 of the Interpretation of the Supreme People's Court on Application, this Court <中华人民共和国民事诉讼法>ruled as follows:

1. Instruct the Jilin Provincial High People's Court to retry the case;

2. During the retrial period, the enforcement of the original judgment shall be suspended.

Judge Zhou Qimeng

Judge Xiang Guohui

Judge Zheng Yong

December 9, 2021

Legal Officer Assistant Liu Ning

Secretary Zhou Jian

Source: Civil Trials