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The present interpretation is formulated in accordance with the General Principles of Civil Law of the People's Republic of China, the Contract Law of the People's Republic of China, the Law of the People's Republic of China on Urban Real Estate Administration, the Guaranty Law of the People's Republic of China and other relevant laws and in combination with the civil judicial practices with a view to correctly and timely trying the cases on dispute over contract for the sale of commodity houses. Article 1. The contract for the sale of commodity houses mentioned in the present interpretation means the contract in which the real estate development enterprise (hereinafter referred to the seller) sells uncompleted or completed houses to the public and transfers the ownership of the house to the buyer, and the buyer pays the price. Article 2. A contract for advance sale of commodity houses which is concluded between a seller who has not obtained the certificate on permit of advance sale of commodity houses and a buyer shall be ascertained to be invalid, however, if the seller has obtained the certificate on permit of advance sale of commodity houses before litigation, the contract may be ascertained to be valid. Article 3. The advertisements for sale of and the materials for publicity of commodity houses shall be invitations to offer. However, if the statements and promises made by the seller in respect of the houses and the related facilities within the scope of commodity houses development and planning are specific and definite, and are of great influence to the conclusion of the contract for the sale of commodity houses and the determination of the prices of the houses, the above said advertisements and materials shall be regarded as offers. Such statements and promises shall be regarded as the contents of the contract for the sale of commodity houses even if they are not included in the contract. The party concerned shall bear the breach liabilities for his violation if any. Article 4. Where the seller receives a deposit from the buyer by means of subscription, order or reservation, as the guaranty for concluding the contract for the sale of commodity houses, the provisions in the law on deposit shall be abided by if the contract for the sale of commodity houses fails to be concluded due to the reason of one party. The seller shall refund the deposit to the buyer if the contract for the sale of commodity houses fails to be concluded due to the reason for which neither party shall be liable. Article 5. Where an agreement on subscription, order or reservation, of commodity houses contains the main contents of a contract for the sale of commodity houses which are prescribed in Article 16 of the Measures on the Administration of Sale of Commodity houses, and the seller has accepted the money for purchase of houses stipulated, the agreement shall be ascertained as a contract for the sale of commodity houses. Article 6. Where a party concerned requests that a contract for advance sale of commodity houses should be confirmed to be invalid with the reason that no formalities of registration and record have been made for the contract in accordance with the laws and administrative regulations, he shall not be supported. Where the parties stipulate that the formalities of registration and record shall be a condition for the contract for advance sale of commodity houses to come into validity, such stipulation shall be complied with, unless one party has performed the principal obligation and the other party has accepted it. Article 7. Where the demolisher concludes the agreement on compensation and resettlement for demolishment with the resettled due to demolishment of houses by means of exchanging ownerships, which clearly stipulates that the former shall compensate and resettle the latter with a house at a certain locality and of certain use, but in fact the former sells the house for compensation and resettlement to a third person, then the latter's request for obtaining the house for compensation and resettlement in priority shall be supported. Where the resettled due to the demolishment of houses requests rescission of the agreement on compensation and resettlement for demolishment, Article 8 of the present interpretation shall be abided by. Article 8. In case of any of the following circumstances, which causes the purpose of a contract for the sale of commodity houses unable to be realized, the buyer who is unable to obtain the house may request the rescission of the contract, refund of the already paid money for purchase of the house and the interest thereof, as well as the compensation for losses, and may also request that the seller should bear the liability for compensating no more than one time of the already paid money for purchase of the house: (1) after the contract for the sale of commodity houses is concluded, the seller mortgages the house to a third person without notifying the buyer; or (2) after the contract for the sale of commodity houses is concluded, the seller sells the house to a third person. Article 9. If, when concluding a contract for the sale of commodity houses, the seller is under any of the following circumstances which causes the contract to be invalid or cancelled or rescinded, the buyer may request the refund of the already paid money for purchase of the house and the interest thereof, as well as the compensation for losses, and may also request that the seller should bear the liability for compensating no more than one time of the already paid money for purchase of houses: (1) the seller intentionally conceals the fact of not having obtained the certificate on permit of advance sale of commodity houses or provides false certificate on permit of advance sale of commodity houses; (2) the seller intentionally conceals the fact that the sold house has been mortgaged; or (3) the seller intentionally conceals the fact that the sold house has been sold to a third person or is the house for compensation and resettlement due to demolishment. Article 10. Where the buyer requests that the contract for the sale of commodity houses concluded between the seller and a third person should be confirmed to be invalid with the reason that the seller colludes in bad faith with the third person to separately conclude another contract for the sale of commodity houses and delivers the house for use, thus causing the buyer unable to obtain the house, such request shall be supported. Article 11. The transfer of occupation of the house shall be deemed as delivery of house for use, unless otherwise stipulated between the parties. The risk of damage or loss of a house shall be borne by the seller before it is delivered for use and by the buyer after it is delivered for use. If after receipt of the seller's written notice on delivery of the house, the buyer refuses to accept it without any justifiable reason, the risk of damage or loss of the house shall be borne by the buyer as of the date for delivery for use determined in the written notice on delivery of the house, unless otherwise prescribed in laws or stipulated between the parties. Article 12. Where, due to the fact that the main structure of the house is unqualified in quality or cannot be delivered for use, or that the main structure of the house is inspected to be indeed unqualified in quality after it has been delivered for use, the buyer requests rescission of the contract or compensation for losses, such request shall be supported. Article 13. Where, due to the problem in the quality of the house which seriously influences the normal residence and use, the buyer requests the rescission of the contract and compensation for losses, such request shall be supported. If there is any problem in the quality of a house having been delivered for use, the seller shall bear the repair liability within the period of quality warranty. If the seller refuses to repair the house or delays repairing it within a reasonable time limit, the buyer may repair it by himself or by entrusting others to repair it. The repairing expenses and other losses caused during the repairing period shall be borne by the seller. Article 14. Where the internal construction area or construction area of a houses delivered by the seller for use does not conform to the area stipulated in the contract for the sale of commodity houses, and if there is a stipulation in the contract, the stipulation shall be complied with; while if there is no such stipulation in the contract or the stipulation is not clear, the following principles shall be complied with: (1) if the proportion of error in area is within 3% of the absolute value (including 3%), and the settlement is made actually according to the price stipulated in the contract, the buyer's request for rescission of the contract shall not be supported; and (2) if the proportion of error in area exceeds 3% of the absolute value, and the buyer requests rescission of the contract, refund of the already paid money for purchase of the house and the interest thereof, such request shall be supported. If the buyer agrees to continue implementing the contract, and the actual area of the house is larger than the area stipulated in the contract, the part of house price within 3% (including 3%) of the proportion of error in area shall be supplemented by the buyer according to the stipulated price rate, and the part of house price over 3% of the proportion of error in area shall be borne by the seller, and the ownership shall belong to the buyer. If the actual area of the house is smaller than the area stipulated in the contract, the part of house price within 3% (including 3%) of the proportion of error in area and the interest thereof shall be refunded by the seller to the buyer, and the part of house price over 3% of the proportion of error in area shall be refunded in double amount by the seller to the buyer. Article 15. In accordance with Article 94 of the Contract Law, if the seller delays delivering the house or the buyer delays paying the money, and the obligation concerned is not implemented with a reasonable time limit of three months after being notified, one party's request for rescission of the contract shall be supported, unless otherwise stipulated between the parties. Where it is not prescribed in the law or not stipulated between the parties, the reasonable time limit for exercise of the right of rescission shall be three months after the other party's notification. If the other party has not notified, the right of rescission shall be exercised within one year as of the date of its occurrence; the right of rescission shall be eliminated if it has not been exercised before the expiry of the time limit. Article 16. Where a party requests reduction of the stipulated penalty for breach with the reason that it is too high, it shall be properly reduced only if the penalty for breach has exceeded 30% of the losses caused therefrom. If a party requests the increase of the stipulated penalty for breach with the reason that it is lower than the losses caused therefrom, the amount of the penalty for breach shall be determined to be equal to the losses caused from breach. Article 17. Where the amount of penalty for breach or the method for calculating the amount of compensation for losses is not stipulated in the contract for the sale of commodity houses, either of the said two items of amount may be determined with reference to the following standards: If the payment is made overdue, the amount shall be calculated according to the total amount of the unpaid money for purchase of the house, and with reference to the standard prescribed by the People's Bank of China for financial institutions to calculate the interest on overdue loans. If the house is delivered for use late, the amount shall be determined according to the standard of rental of the house at the same area and of the same kind, which is promulgated by the relevant competent department or evaluated by the qualified real estate appraisal institution during the period of overdue delivery of the house for use. Article 18. Where, due to the seller's reason, the buyer fails to obtain the certificate of house ownership before the expiry of the following time limit, the seller shall bear the breach liabilities unless particularly stipulated between the parties: (1) the time limit stipulated in the contract for the sale of commodity houses on making registration of the house ownership; (2) 90 days as of the delivery of the house for use if the subject matter stipulated in the contract for the sale of commodity houses is an uncompleted house; (3) 90 days as of the conclusion of the contract if the subject matter under the contract for the sale of commodity houses is a completed house. Where the amount of the stipulated penalty for breach or of the losses is difficult to be determined, it may be calculated according to the total amount of the already paid money for purchase of the house, and with reference to the standard prescribed by the People's Bank of China for financial institutions to calculate the interest on overdue loans. Article 19. Where, after more than one year as of the expiry of the time limit stipulated in the contract for the sale of commodity houses or prescribed in Article 33 of the Regulation on the Administration of Development and Management of Urban Real Estate for making registration of the house ownership, the buyer is unable to make the registration of the house ownership due to the seller's reason, the buyer's request for rescission of the contract and compensation for losses shall be supported. Article 20. Where the seller concludes with an underwriter a contract on underwriting commodity houses, which stipulates that the seller shall deliver the houses it has developed and built to the underwriter for sale in the name of the seller, the houses which are unsold before the expiry of the underwriting period shall be purchased by the underwriter at the underwriting price stipulated in the contract, unless otherwise stipulated between the parties. Article 21. Where the seller sells by himself the houses which have been stipulated to be underwritten by the underwriter, the underwriter's request for the seller's compensation for losses shall be supported, unless otherwise stipulated between the parties. Article 22. With respect to a dispute between the buyer and the seller over the contract for the sale of commodity houses, the people's court shall notify the underwriter to participate in the litigation; where the seller, the underwriter and the buyer have clear stipulations on their respective rights and obligations, the litigation status of each party shall be determined according to the stipulated contents. Article 23. Where the contract for the sale of commodity houses stipulates that the buyer shall make the payment by means of guaranteed loans, but the contract on guaranteed loans for commodity houses fails to be concluded due to the reason of one party, thus causing the contract for the sale of commodity houses unable to be implemented continuously, the other party may request rescission of the contract and compensation for losses. If the contract on guaranteed loans for commodity houses fails to be concluded due to any reason for which neither party shall be liable, thus causing the contract for the sale of commodity houses unable to be implemented continuously, the party concerned may request rescission of the contract, and the seller shall refund the accepted principal of the money for purchase of the house and the interest thereof or the deposit to the buyer. Article 24. Where the contract for the sale of commodity houses is confirmed to be invalid or is cancelled or rescinded, thus causing the purpose of the contract on guaranteed loans for commodity houses unable to be realized, the party's request for rescission of the contract on guaranteed loans for commodity houses shall be supported. Article 25. Where one party to a contract for the sale of commodity houses under which the payment is made by means of guaranteed loans requests that the contract for the sale of commodity houses should be confirmed as invalid, cancelled or rescinded, and if the obligee to the guaranty brings a litigation claim as a third person with independent claim, the said litigation claim shall be tried in combination with the dispute under the contract on guaranteed loans for commodity houses. If no litigation claim is brought, only the dispute under the contract for the sale of commodity houses shall be settled. Where the obligee to the guaranty separately brings a lawsuit regarding the dispute over the contract on guaranteed loans for commodity houses, such a dispute may be tried in combination with the one over the contract for the sale of commodity houses. If, after the contract for the sale of commodity houses is confirmed as invalid, cancelled or rescinded, the contract on guaranteed loans for commodity houses is also rescinded, the seller shall refund the accepted loans for purchase of the house, the principal of the money for purchase of the house and the interest thereof separately to the obligee to the guaranty and the buyer. Article 26. Where the buyer fails to repay the loans pursuant to the contract on guaranteed loans for commodity houses, and fails to make registration of mortgage of commodity houses with the obligee to the guaranty, the obligee to the guaranty shall, if bringing a lawsuit against the buyer to request the disposition of the buyer's rights under the contract for the sale of commodity houses, notify the seller to participate in the litigation. If, when the obligee to the guaranty simultaneously brings a lawsuit against the seller, the seller provides suretyship for the contract on guaranteed loans for commodity houses, both the obligee to the guaranty and the seller shall be listed as common defendants. Article 27. Where the buyer fails to repay the loans according to the stipulation in the contract on guaranteed loans for commodity houses, but has obtained the certificate of house ownership and has made registration of mortgage of commodity houses with the obligee to the guaranty, and the mortgagee requests the buyer's repayment of the loans or the priority of having his claim satisfied, the seller shall not be added as a party, unless the seller provides suretyship therefor. Article 28. The present interpretation shall come into force on June 1, 2003. For a case on dispute over a contract for the sale of commodity houses that is concluded after the enforcement of the Law of the People's Republic of China on Urban Real Estate Administration, if it is still in the first or second instance after the promulgation and enforcement of the present interpretation, the present interpretation shall apply. For a case on dispute over a contract for the sale of commodity houses that is concluded after the enforcement of the Law of the People's Republic of China on Urban Real Estate Administration, if the trial of it has been finalized prior to the promulgation and enforcement of the present interpretation, and it is to be retried upon application of the party concerned or is decided for retrial subject to the procedure for trial supervision, the present interpretation shall not apply. The sale of commodity houses that occurs prior to the enforcement of the Law of the People's Republic of China on Urban Real Estate Administration shall be governed by the laws and regulations of that time and the Answers of the Supreme People's Court on the Relevant Issues concerning the Trial of Cases on Development and Management of Urban Real Estate Prior to the Enforcement of the Law on Urban Real Estate Administration. |
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