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Metro Beijing

New home-loan policies spark city's first civil suit

Updated: 2010-05-25 07:57
( China Daily)

A man is suing a woman for failing to honor her agreement to sell her apartment, asking for 100,000 yuan in compensation.

This is the first time an apartment sales dispute has been taken to court, following changes in the government's housing and banking policies last month and this month.

The man, surnamed Wu, has taken the woman, surnamed Guo, to Chongwen district. The hearing began on Monday.

Wu said he signed an agreement with Guo on April 12 to buy her apartment in the Chongwen district.

Both parties were supposed to sign an e-contract, an official process in Beijing, on April 13 and finalize the mortgage issue on April 20. Wu paid a 50,000 yuan down payment.

However, Wu said, Guo delayed the procedures and the e-contract was not signed on April 13.

On April 17, the State Council released a circular, telling banks to increase the down payment for apartments to 30 percent from 20 percent, for people who want to get mortgages.

Wu said he had 400,000 yuan for the 20 percent down payment, but with the increase, he needed 160,000 yuan more, which he could not afford. Wu asked to terminate the contract.

However, Guo said at that time, Beijing had not implemented the State Council's regulation and the contract could still have been finalized.

The court has yet to deliver a verdict.

After the Beijing and central governments began action to cool the property market, many buyers and sellers breached contracts.

In Tongzhou district, an area with the highest jump in prices, 96 disputes involving second-hand apartments were filed with the district court.

Chen Handong, a civil suit judge of the court, told Legal Daily that 65 percent of the cases were raised by buyers, who did not want to, or could not, honor the contracts.

Some buyers found they could not meet the bank loans requirements, while others withdrew, wanting to avoid buying at peak times and were wanting for prices to fall.

Such cases have become a headache for judges, because buyers or sellers usually debate whether policy change should be regarded as force majeure.

Chen said if such breaches are regarded as force majeure, both parties should share the responsibilities. However, if one party breaks the contract intentionally, they should take the major responsibility.

However, Cui Guang, a judge with Daxing district court, said it is very difficult to determine if a person can't afford to honor the agreement financially because the down payment requirement is higher.

Cui said he believed government policy changes should be seen as a force majeure.