Text|Liu Law lectures
The article was first published by Liu Lu Lecture Headline
In bankruptcy cases involving real estate enterprises, there are various circumstances involving contract rescission, including the rescission of contracts as stipulated in Article 70 of the Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Enterprise Bankruptcy Cases and the statutory right of rescission under Article 93 of the Contract Law of the People's Republic of China.
In the bankruptcy case of a real estate enterprise, due to the termination of the rights and obligations of the parties after the termination of the contract, unlike ordinary civil contracts, it is more necessary to pay attention to the handling of the contractual rights and obligations after the termination of the contract.
Legal analysis
- Termination in disputes over contracts for the sale of commercial housing
In disputes over contracts for the sale of commercial housing, the administrator will often rule that the contract for the sale of commercial housing has been terminated as the reason that it is inadmissible. In this regard, some courts held that even if the court ruled inadmissible, the contract was still valid and could not be rescinded.
For example, in the (2017) SPC Min Shen 1970 case, the Supreme People's Court held that "when a company filed an application to the court not to accept the bankruptcy application of a real estate enterprise, it had already completed the termination of the Contract for the Sale and Purchase of Commercial Housing. The Contract for the Sale and Purchase of Commercial Housing signed by the parties was not invalid due to rescission.
After the bankruptcy of the real estate enterprise, the Contract for the Sale and Purchase of Commercial Housing has lost the basis for continued performance and should be valid. As for whether to terminate the contract for the sale of commercial housing and return the purchase price, the contract for the sale of commercial housing no longer exists."
The author believes that the right of rescission provided for in Article 70 of the Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Enterprise Bankruptcy Cases can be understood as a notice of rescission by way of notice. It is not clear whether a notice of rescission made by way of a lawsuit can be regarded as a rescission of notice.
- After the sale and purchase contract of commercial housing without obtaining a pre-sale permit is terminated, whether the buyer can continue to perform the obligation to pay the purchase price
According to Article 7 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Contracts for the Sale of Commodity Housing, the buyer has the right to demand the continued performance of the obligation to pay the purchase price if the purpose of the commercial housing guarantee loan contract cannot be achieved because the commercial housing sales contract is confirmed to be invalid, revoked or rescinded, and the parties request to rescind the commercial housing guarantee loan contract".
However, the following two issues should be noted: first, the house purchased by the buyer has not yet completed the transfer registration due to its own reasons, and should bear the corresponding responsibility; Second, if the house purchased by the buyer has been registered for transfer, but the transfer registration cannot be completed due to the developer's reasons, the buyer's loss is mainly reflected in the loss of the price difference of the house. The loss cannot be deducted solely on the grounds that the Contract for the Sale and Purchase of Commercial Housing has been terminated. This loss shall be borne by the developer.
- In the bankruptcy case of a real estate enterprise, the cancellation of the mortgage contract and the disposal of the bonded house
A mortgage contract refers to a contract in which after the debtor delivers the subject matter to the creditor, the creditor transfers the ownership of the subject matter to the debtor, and the original obligation has not been performed or has not been fully performed.
In the bankruptcy case of a real estate enterprise, the mortgage contract is very different from the ordinary money payment contract because it involves the act of monetary payment, and when the debtor has not fully paid off the debt, if the creditor and the debtor have signed a mortgage agreement and have gone through the filing and registration, the mortgage agreement has the nature of security.
For creditors, if the debtor's claims are not fully satisfied at the time of bankruptcy, there is a greater risk in requiring the disposal of the house that has been signed in the mortgage agreement. Therefore, in bankruptcy proceedings, special attention should be paid to the dissolution of the mortgage contract and the disposal of the house, and conflicts of interest between different stakeholders can be resolved in a variety of ways.
- Other types of relief after rescission
1. Relief after the termination of the house sale contract. According to Article 2 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Contracts for the Sale of Commodity Housing, "if the seller concludes a contract for the sale of commercial housing under any of the following circumstances, resulting in the contract being invalid, revoked or rescinded, the buyer may request the return of the purchase price paid and interest, compensate for losses, and may request the seller to bear the liability for compensation not exceeding one time the purchase price paid:
(1) Intentionally concealing the fact that they have not obtained a pre-sale permit certificate for commercial housing, or providing a false certificate of a pre-sale permit for commercial housing; (2) intentionally concealing the fact that the house sold has been mortgaged;
(3) Intentionally concealing the fact that the house sold has been sold to a third party or that the house has been relocated for demolition compensation. "In the bankruptcy case of a real estate enterprise, the bankruptcy administrator has the right to rescind the contract because the parties did not obtain the pre-sale permit certificate when signing the house sale contract, and there were circumstances such as fraud and malicious collusion.
For buyers, they have the right to request the refund of the purchase price and interest paid, and compensation for losses; For the developer, it has the right to claim the return of the purchase price and interest, and compensation for losses.
- Whether the administrator needs to notify the other party of its right to rescind the contract
According to Article 18 of the Enterprise Bankruptcy Law, the administrator shall report to the creditor committee in a timely manner. When the directors, supervisors and senior management of the debtor are not with the debtor, the administrator shall report to the directors and senior management in a timely manner. In this case, the law does not expressly stipulate whether the administrator needs to perform the notification obligation to the other party.
Paragraph 2 of Article 70 of the Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Enterprise Bankruptcy Cases shows that if the administrator deems it necessary to rescind the contract in the course of performing its duties, it shall promptly notify the other party of its objections and may request the people's court or arbitration institution to confirm the validity of the rescission.
If, in this case, the administrator fails to comply with the notification obligation, the court may find that the administrator has not fulfilled the right to rescind the contract in accordance with the law. It can be seen from the above provisions that even if the debtor or creditor claims that the administrator has failed to perform the notification obligation in such circumstances, the court may find that the administrator's rescission of the contract is valid.
- The administrator should pay attention to the issues that the purchaser should pay attention to when deciding whether to continue to perform the contract
When determining the buyer's continued performance of the contract, the following issues should be noted:
1. The purchase price paid by the buyer should be the full purchase price, not part of the purchase price. If the purchaser pays part of the purchase price and the administrator decides to continue to perform the contract, it shall comprehensively consider whether there are expenses beyond the reasonable range of the purchase price paid, and if so, the administrator may decide not to continue to perform the contract.
2. If part of the purchase price paid by the buyer already includes taxes, deed taxes and other relevant taxes, it cannot be double-counted. If the administrator decides not to continue to perform the contract, it shall, on the basis of determining that the buyer has paid all the purchase price, pay the remaining purchase price to the buyer as the buyer's purchase money after deducting taxes, deed taxes and other relevant taxes.
3. For the termination of the contract due to other reasons after all the purchase price has been paid, the administrator may decide whether to continue to perform the contract after determining that the buyer has paid all the purchase price. If it is still necessary to continue to perform the contract, the administrator may pay the remaining purchase price to the buyer.
epilogue
In a real estate enterprise bankruptcy case, the administrator needs to deal with the creditor-debt relationship, not the contractual relationship, so the legal consequences of rescission of the contract should be used as the basis for distinction.
For the rescission of the contract where the debtor is at fault, if there is a breach of contract such as delay in delivery of the house, late issuance of certificates, etc., the administrator may terminate the contract based on this; For the termination of a contract without fault, the administrator shall exercise the right of rescission in a timely manner in accordance with the law, and shall not abuse the right of rescission in bankruptcy proceedings.
In short, the legal relationship involved in the bankruptcy case of a real estate enterprise is relatively complex, and it is different from ordinary civil cases, and there is a certain difference between how to remedy after the termination of the contract and ordinary civil cases. The administrator shall exercise the right of rescission within the framework prescribed by law, properly handle contract disputes, and enable the bankruptcy proceedings to proceed smoothly.