Author: Lawyer Wang Lu
In the past two years, under the influence of the economic downturn and the epidemic, the situation of deferred delivery of pre-sale commercial housing is becoming more and more common, for the owners of pre-sale houses, the inability to move in on time is not only a loss in the economy, but also affects the performance of decoration contracts, children's schooling, etc. If the extension is too long, worry about whether it will become a rotten building.
So in the face of this delayed behavior of developers, how should owners protect their rights? Today I will analyze it with you through a case.
In 2018, Ms. Qin of Shanghai purchased a commodity pre-sale house of a real estate company in Qingpu District, and the two parties agreed on a total purchase price of 1.64 million yuan and delivered the house before June 30, 2019. After the contract was signed, the plaintiff paid the first installment of the house 820,000 yuan as agreed, but it was not until April 4, 2020 that the real estate company notified that it could receive the house, and Ms. Qin completed the mortgage loan in June 2020 and paid the balance of 820,000 yuan.
The two parties disagreed on the assumption of liability, and Ms. Qin believed that the liquidated damages stipulated in the contract were only 0.3 per cent of the day, which was too low and should be raised, and the date of liquidated damages should be calculated from the date of delivery to the date of actual delivery. The property company believes that the new crown pneumonia epidemic has caused the failure to complete the project on schedule, which is a force majeure, not the responsibility of the company, and even if it is to pay liquidated damages, it should be in accordance with the proportion agreed in the contract, and it can only be calculated until April 2020.
01
Will the developer lose money if the house is delayed?
When purchasing pre-sale commercial housing, the owner will sign a commercial housing pre-sale contract with the developer, and the terms of the contract will stipulate: If the developer does not deliver the house to the owner within the period agreed in the contract, it shall pay liquidated damages to the owner, and agree on the proportion of liquidated damages, generally calculated according to the 10,000 to 5/10,000 days of the house price paid, and the liquidated damages are calculated from the second day of the final delivery period agreed in the contract to the date of actual delivery. If the overdue time is too long, the owner has the right to unilaterally terminate the contract.
If there is such an agreement in the contract, then according to the contract, the developer needs to bear the liability for breach of contract, and the calculation of liquidated damages is based on the amount and period agreed upon in the contract between the two parties.
If the contract does not stipulate a specific amount or proportion, it shall be determined in accordance with Article 13 of the Interpretation on Several Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Contracts for the Sale and Purchase of Commercial Housing (hereinafter referred to as the Judicial Interpretation on Disputes over Commercial Housing Contracts), and shall be determined in accordance with the rent standards for similar houses in the same lot published by the relevant competent departments or assessed by qualified real estate appraisal agencies during the period of overdue delivery and use of the housing.
02
Can liquidated damages be raised if they are too low?
The current sale and purchase of commercial housing is still a seller's market, and the owner is in a weak position, so in the face of the standard purchase contract presented by the developer, the owner is difficult to figure out whether the agreement is fair in the face of complex contract terms, and the second is that even if he knows that it is not conducive to himself, he does not have the right to speak that can be modified. Therefore, there are often unfair liquidated damages clauses in the purchase contract, for example, I have seen a pre-sale housing contract stipulate that no matter how long it is overdue, the maximum penalty shall not be higher than 1,000 yuan.
Based on this situation, the Supreme People's Court issued a judicial interpretation on commercial housing contract disputes in 2003 and revised it in 2021, article 12 of which stipulates that if a party requests an increase on the grounds that the agreed liquidated damages are lower than the losses caused, the amount of liquidated damages shall be determined by the losses caused by the breach.
There is a question to note, how much damage is caused by the breach of contract, and the owner needs to produce evidence to prove it, for example, the owner can refer to the rent of the same kind of house in the same area in the local area.
03
Is the epidemic force majeure?
Force majeure refers to objective circumstances that cannot be foreseen, avoided and overcome. According to the provisions of Civil Code 180, those who cannot perform civil obligations due to force majeure shall not bear civil liability. Therefore, in disputes over late delivery, developers often use force majeure as a reason to evade responsibility, and common reasons include the failure to approve administrative permits in a timely manner by government departments, the inability to start work due to natural disasters, and the failure to complete the expropriation and demolition on time, resulting in the inability to accept acceptance. To determine whether the overdue delivery of the house is due to force majeure, it is necessary to judge specifically from the three conditions of unforeseeable, unavoidable, and incapable of overcoming the facts of the case, and cannot be used as an excuse not to take responsibility because of the outbreak of the epidemic in general.
In this case, if the developer submits that the completion and acceptance of the project has been delayed due to the force majeure of the new crown pneumonia epidemic, the developer must cite evidence to prove the causal relationship between the two, such as whether the epidemic prevention and control has caused the employees to be unable to work and have no way to overcome it. If there is no evidence to prove it, then the court will not find it to be force majeure.
04
How is the start and end period of liquidated damages calculated?
Generally speaking, the liquidated damages should be calculated from the date of delivery to the date of actual delivery, but there is a special situation in this case, that is, after receiving the notice that she can deliver the house, Ms. Qin did not handle the delivery in time, but because the loan was not approved, it was only processed in June, so the delay caused by the two months of time not attributable to the fault of the developer could not be counted in the term of the liquidated damages.
The property company paid the plaintiff Ms. Qin the liquidated damages for late delivery of the house, based on 820,000 yuan and one in ten thousand per day, calculated from July 1, 2019 to April 4, 2020, and delivered the house to the plaintiff. ①
Pay attention to the liability clause for breach of contract when signing the contract
Generally speaking, the purchase contract will stipulate in detail the liability of both parties for breach of contract, such as overdue payment, late delivery, overdue certificate, termination of contract and other circumstances. When signing the purchase contract, the owner should focus on reviewing whether the assumption of the liability for breach of contract is fair and reasonable, whether the liquidated damages are too low, although the law stipulates that the liquidated damages are too low and can be raised, but the protection of rights afterwards undoubtedly increases the owner's litigation costs and burden of proof, and it is better to prevent problems than to make up for them.
Don't believe verbal promises
In the process of buying a house, there will be verbal promises from the sales staff about some things, such as promising that the delivery time or the time of the certificate will be earlier than the time specified in the contract. Regarding verbal commitments, owners are advised to be cautious. In the event of a dispute, the owner has no evidence that the salesperson made a verbal commitment, and the developer can also deny that the salesperson's conduct was authorized. Once the owner signs the purchase contract, it also recognizes its legal effect and bears the corresponding consequences, so the importance of the written contract cannot be overemphasized.
Owner rights protection path
If the delay in delivery has occurred, the owner has two ways to solve it, either to require the developer to pay the house and bear the liability for breach of contract, or to require the termination of the contract, and the developer to return the purchase price and bear the liability for breach of contract. How to choose to see the needs of the owner and the contract agreed. In the process of negotiating with the developer, it is necessary to try to preserve the evidence of the developer's breach of contract through written forms such as WeChat, TEXT messages, and paper materials, and if the consultation cannot be resolved, the judicial procedure should be started as soon as possible, relying on the strength of the judicial organ to improve its negotiation chips or directly through the court judgment to protect its legitimate rights and interests.
(1) :(2020) First Instance Civil Judgment on Contract Dispute 0118 Min Chu No. 23510
Author:Wang LuVicter, Hansheng Law Firm, Shanghai(WeChat:18601637299)