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最高人民法 院关于审理商品房买卖合同纠纷案件适用法律若干问题的解释(英文版)

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Promulgation date

2003/04/28

Effective region

NATIONAL

Promulgator

Supreme People's Court

Document no

Fa Shi [2003] No. 7

Effectiveness

Effective

Effective date

2003/06/01

Category

Contract ( Civil Law->Contract ) , Real Estate Transaction ( Land & Real Estate Law->Real Estate->Real Estate Transaction )



Interpretation of the Supreme People's Court on Issues concerning the Application of Law to the Hearing of Cases involving Disputes over Contracts for the Sale and Purchase of Commodity Housing

Fa Shi [2003] No. 7

April 28, 2003

The Interpretation of the Supreme People's Court on Issues concerning the Application of Law to the Hearing of Cases involving Disputes over Contracts for the Sale and Purchase of Commodity Housing, which was adopted at the 1,267th meeting of the Judicial Committee of the Supreme People's Court on March 24, 2003, is hereby promulgated and shall come into force on June 1, 2003.

Interpretation of the Supreme People's Court on Issues concerning the Application of Law to the Hearing of Cases involving Disputes over Contracts for the Sale and Purchase of Commodity Housing
(Adopted at the 1,267th meeting of the Judicial Committee of the Supreme People's Court on March 24, 2003; Interpretation 7 [2003] of the Supreme People's Court)

This Interpretation has been 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 the Administration of the Urban Real Estate, the Security Law of the People's Republic of China and other relevant laws, in combination with civil procedure practice, with a view to hearing cases involving disputes over contracts for the sale and purchase of commodity housing in a correct and timely manner.

Article 1 The term "contract for sale and purchase of commodity housing" as used in this Interpretation means any contract in which a real estate development enterprise (hereinafter referred to as the vendor) sells an uncompleted or completed house to a member of the public and transfers the ownership rights for the house to the purchaser in return for the purchase price.

Article 2 Any contract for advance sale and purchase of commodity housing concluded between a vendor who has not obtained a certificate permitting the advance sale and purchase of the relevant commodity housing and a purchaser shall be confirmed to be invalid unless the vendor obtains a certificate permitting the advance sale and purchase of the relevant commodity housing before the matter is litigated, in which case the contract shall be confirmed to be valid.

Article 3 Advertisements and other promotional materials for the sale of commodity housing shall be regarded as invitations to treat. However, where the statements and promises made by a vendor in respect of any such house and the related facilities within the scope of the commodity housing development and plan are specific and definite, and greatly influence the conclusion of the contract for sale and purchase of the commodity house and the determination of the price for the house, the abovementioned advertisements and promotional materials shall be regarded as offers. Even where such statements and promises are not included in the contract for sale and purchase of the commodity house, they shall be deemed to form part of the terms of the contract. Any party who breaches any such term shall be liable for breach of contract.

Article 4 Where a vendor receives a deposit from the purchaser by way of subscription, order or reservation, etc., as a guarantee for the conclusion of a contract for sale and purchase of the relevant commodity house, if one of the parties for any reason is unable to conclude the contract for sale and purchase of the commodity house, deposit law provisions shall apply; if for any reason not attributable to either party the contract for sale and purchase of the commodity house in question cannot be concluded, the vendor shall refund the deposit to the purchaser.

Article 5 Where an agreement on a subscription or order for or the reservation, etc. of a commodity house includes the principal terms of a contract for sale and purchase of commodity housing prescribed in
 Article 16 of the Administrative Measures for the Sale of Commodity Houses, and the vendor has accepted money for the house purchase as stipulated, the agreement shall be confirmed to be a contract for sale and purchase of commodity housing.

Article 6 No claim made by a party to a contract for advance sale and purchase of commodity housing that the contract should be confirmed to be invalid because registration and filing formalities have not been carried out in accordance with applicable laws and administrative regulations shall be supported.
 
Any stipulation made by the parties to a contract for advance sale and purchase of commodity housing that the registration and filing formalities are a condition for the validity of the contract shall be complied with unless one party has performed its principal contractual obligations and the other party has accepted it.

Article 7 Where a demolition enterprise concludes with any resettled party a demolition compensation and resettlement agreement involving an ownership exchange, and the agreement clearly stipulates that the former shall compensate and resettle the latter by providing a house at a certain location to be used for a certain purpose, but the former nevertheless proceeds to sell the house to be provided by way of compensation and resettlement to a third party, where the latter makes a claim to have a prior right to the house to be provided by way of compensation and resettlement, that claim shall be supported.
 
The claim of any resettled party who seeks to rescind a demolition compensation and resettlement agreement shall be dealt with in accordance with Article 8 of this Interpretation.

Article 8 In any of the following circumstances under which the purpose of a contract for sale and purchase of commodity housing is frustrated, the purchaser who is unable to acquire the house may request that the contract be rescinded, that all money already paid over for the house be refunded, along with interest thereon, and that compensation be paid for any loss suffered, and may also request that the vendor be liable to pay compensation of no more than the amount of money already paid to purchase the house:
 
1. where, after the contract for sale and purchase of the commodity house has been concluded, the vendor mortgages the house to a third party without notifying the purchaser;
 
2. where, after the contract for sale and purchase of the commodity house has been concluded, the vendor sells the house to a third party.

Article 9 Where, when concluding a contract for sale and purchase of a commodity house, any of the following circumstances apply to the vendor, which causes the contract to become invalid or leads to its cancellation or rescission, the purchaser may request that the money already paid to purchase the house be refunded, along with interest thereon, and that compensation be paid for any loss suffered, and may also request that the vendor be liable to pay compensation of no more than the amount of money already paid to purchase the house:
 
1. where the vendor intentionally conceals the fact that he has not obtained a certificate permitting him to sell the commodity house in advance, or provides a false certificate permitting him to sell the commodity house in advance;
 
2. where the vendor intentionally conceals the fact that the house sold has been mortgaged;
 
3. where the vendor intentionally conceals the fact that the house sold has been sold to a third party or is a house to be used for compensation and resettlement due to the demolition of another house.

Article 10 Where a purchaser requests that the contract for sale and purchase of commodity housing concluded between the vendor and a third party be confirmed to be invalid because the vendor has acted in bad faith by agreeing to a separate contract for sale, purchase and use of the commodity house to a third party, thus preventing the purchaser from acquiring the house, that request shall be supported.

Article 11 Any transfer of the right to occupy a house shall be deemed to be the provision of vacant possession of the house unless stipulated otherwise by the parties.
 
The risk of any damage to or loss on a house before vacant possession is given shall be borne by the vendor and by the purchaser after vacant possession is given; where, after receiving the vendor's written notice on vacant possession of the house, the purchaser refuses to accept it without any justifiable reason, the risk of any damage to or loss on the house shall be borne by the purchaser as of the date on which vacant possession is given as specified in the written vacant possession notice, unless prescribed otherwise by law or stipulated otherwise by the parties.

Article 12 Where vacant possession of a house cannot be given due to the fact that its main structure does not meet quality standards, or where the main structure of a house is inspected and found to fail quality standards after vacant possession has been given, and the purchaser requests that the contract be rescinded and seeks compensation for his loss, that request shall be supported.

Article 13 Where, due to any problem in the quality of a house that seriously affects the purchaser's occupation and enjoyment of the house, the purchaser requests that the contract be rescinded and seeks compensation for his loss, that request shall be supported.
 
Where any problem arises in the quality of a house for which vacant possession has been given, the vendor shall be liable to repair the defect during the quality guarantee period; where the vendor refuses to repair the house or does not repair it within a reasonable period of time, the purchaser may repair it himself or by instructing another party to do so. The repair costs and any other loss incurred during the repair period shall be borne by the vendor.

Article 14 Where the floor area of a housing complex as a whole or the floor area of a house for which the vendor has given vacant possession does not conform to the area stipulated in the contract for sale and purchase of the commodity house in question, and there is a relevant stipulation in the contract, the relevant stipulation shall apply; where there is no such stipulation in the contract or the stipulation is unclear, the matter shall be dealt with in accordance with the following principles:
 
1. where the proportional error in the floor area is within 3% of the absolute value (including 3%), and the purchase is settled according to the price stipulated in the contract, any request made by the purchaser that the contract be rescinded shall not be supported;
 
2. where the proportional error in the floor area exceeds 3% of the absolute value, and the purchaser requests that the contract be rescinded and that the money already paid to purchase the house be refunded, along with interest thereon, that request shall be supported. Where the purchaser agrees to honor the contract, and the actual floor area of the house is larger than the area stipulated in the contract, the purchaser shall make an additional payment for that part of the house price within 3% (including 3%) of the proportional error in the floor area, such additional payment to be calculated on the basis of the stipulated rate, and that part of the house price in excess of 3% of the proportional error in the floor area shall be borne by the vendor, which shall nevertheless form part of the purchaser's ownership rights; where the actual floor area of the house is smaller than the area stipulated in the contract, the vendor shall refund that part of the house price within 3% (including 3%) of the proportional error in the floor area and interest thereon to the purchaser, and the vendor shall refund double the amount of that part of the house price in excess of 3% of the proportional error in the floor area to the purchaser.

Article 15 In accordance with
 Article 94 of the Contract Law of the People's Republic of China, where a vendor delays giving vacant possession of the house or the purchaser delays paying the purchase price, and the obligation concerned is not met within a reasonable period of time of three months from the date on which the other party is notified, any request made by the affected party that the contract be rescinded shall be supported unless the parties have stipulated otherwise. 
Where it is not prescribed by law or is not stipulated by the parties, the reasonable time limit for exercising the right of rescission shall be three months from the date on which the other party is notified. Where the other party has not been notified, the right of rescission shall be exercised within one year of the date on which the relevant circumstances occur; the right of rescission shall lapse if it has not been exercised before the relevant time limit expires.

Article 16 Where a party requests a reduction in the penalty stipulated for a breach of contract on the grounds that it is too high, it shall be reduced as appropriate only if the penalty for a breach of contract exceeds 30% of the loss caused thereby; where a party requests that the penalty stipulated for a breach of contract be increased on the grounds that it is lower than the loss suffered as a result of the breach, the penalty for the breach of contract shall be fixed at an amount equal to the loss suffered.

Article 17 Where the penalty amount for a breach of contract or the method for calculating the amount of compensation for any loss is not stipulated in the contract for sale and purchase of commodity housing, either such amount may be determined by reference to the following standards:
 
In the case of a late payment penalty, the amount of the penalty shall be calculated on the basis of the total amount of money that remains owing to purchase the house, and by reference to the standards prescribed by the People's Bank of China for the calculation of interest on overdue loans by financial institutions.
 
Where vacant possession is delayed, the amount shall be determined on the basis of the standard rental for houses of the same kind in the same area, as promulgated by the relevant competent department or evaluated by a qualified real estate appraisal institution, during the period of time for which vacant possession of the house is delayed.

Article 18 Where, for any reason attributable to the vendor, a purchaser does not obtain the house ownership certificate before the expiry of any of the following periods of time, the vendor shall be liable for breach of contract unless the parties have specifically stipulated otherwise:
 
1. the period of time stipulated in the contract for sale and purchase of the commodity house for house ownership registration;
 
2. where the contract for sale and purchase relates to an uncompleted house, 90 days from date on which vacant possession of the house is given;
 
3. where the contract for sale and purchase relates to a completed house, 90 days from the conclusion of the contract.
 
Where it is difficult to determine either the amount of the stipulated penalty for breach of contract or the amount of loss, it may be calculated as the total amount of money already paid to purchase the house, and by reference to the standards prescribed by the People's Bank of China for the calculation of interest on overdue loans by financial institutions.

Article 19 Where more than one year has elapsed since the expiry of the time limit stipulated in the contract for sale and purchase of commodity housing or the time limit prescribed in
 Article 33 of the Administrative Regulations on Urban Real Estate Development and Operation for house ownership registration, and the purchaser is still unable to register his ownership of the house for any reason attributable to the vendor, the purchaser's request for rescission of the contract and compensation for his loss shall be supported.

Article 20 Where a vendor concludes an underwriting contract for commodity housing with an underwriter, and the contract stipulates that the vendor shall deliver the houses it has developed and built to the underwriter to be sold in the name of the vendor, those houses that remain unsold on the expiry of the underwriting period shall be purchased by the underwriter at the underwriting price stipulated in the contract unless stipulated otherwise by the parties.

Article 21 Where a vendor himself sells any house an underwriter has agreed to underwrite, the underwriter's request that the vendor pay compensation for his loss shall be supported unless stipulated otherwise by the parties.

Article 22 In the event of any dispute between a purchaser and a vendor over a contract for sale and purchase of commodity housing, the people's court shall notify the underwriter to participate in the litigation; where the vendor, the underwriter and the purchaser have clearly stipulated their respective rights and obligations, the litigation status of each party shall be determined on the basis of such stipulations.

Article 23 Where a contract for sale and purchase of commodity housing stipulates that the purchaser shall make payment by way of a secured loan, but the secured commodity housing loan contract is not concluded due to the actions of either party, thus frustrating the contract for sale and purchase of commodity housing, the other party may request that the contract be rescinded and that compensation be paid for his loss. Where the secured commodity housing loan contract is not concluded due to any reason for which neither party is liable, thus frustrating the contract for sale and purchase of commodity housing, the party concerned may request that the contract be rescinded and the vendor shall refund any principal sum of money accepted for the purchase of the house and interest thereon, or the deposit, to the purchaser.

Article 24 Where a contract for sale and purchase of commodity housing is confirmed to be invalid or is cancelled or rescinded, thus frustrating the purpose of an associated secured commodity housing loan contract, any party's request to rescind the secured loan contract for the commodity house shall be supported.

Article 25 Where one party to a contract for sale and purchase of commodity housing under which payment is to be made by way of a secured loan requests that the contract for sale and purchase of commodity housing be confirmed to be invalid, or that it be cancelled or rescinded, and the security holder brings a litigation claim as a third party with an independent claim, the said litigation claim shall be heard together with the dispute relating to the secured commodity housing loan contract; where no litigation claim is brought, only the dispute under the contract for sale and purchase of commodity housing shall be settled. Where the security holder brings a separate lawsuit regarding the dispute relating to the secured commodity housing loan contract, the dispute may be heard together with the dispute relating to the contract for sale and purchase of commodity housing.
 
Where, after a contract for sale and purchase of commodity housing is confirmed to be invalid or is cancelled or rescinded, the secured commodity housing loan contract is also rescinded, the vendor shall refund the loan funds accepted for the purchase of the house; any principal sum of money paid for the purchase of the house and interest thereon shall be refunded separately to the security holder and the purchaser.

Article 26 Where a purchaser fails to repay a loan made pursuant to a secured commodity housing loan contract and has failed to register the commodity housing mortgage entered into with the security holder, the security holder shall, if it brings a lawsuit against the purchaser requesting that the purchaser's rights under the contract for sale and purchase of commodity housing be denied, notify the vendor to participate in the litigation; where, when the security holder simultaneously brings a lawsuit against the vendor, the vendor provides a surety for the secured commodity housing loan contract, both the security holder and the vendor shall be named as co-defendants.

Article 27 Where a purchaser fails to repay a loan in accordance with the terms of the secured commodity housing loan contract, but has received the house ownership certificate and has registered the commodity housing mortgage entered into with the security holder, and the mortgagee requests that the purchaser repay the loan or that his prior claim be satisfied, the vendor shall not be added as a party unless the vendor provides a surety.

Article 28 This Interpretation shall come into force on June 1, 2003.
 
For any case involving a dispute over a contract for sale and purchase of commodity housing concluded after the
 Law of the People's Republic of China on the Administration of the Urban Real Estate came into force, if the case is still being heard at the first or second instance after this Interpretation has been promulgated and has come into force, this Interpretation shall apply. 
For any case involving a dispute over a contract for sale and purchase of commodity housing concluded after the
 Law of the People's Republic of China on the Administration of the Urban Real Estate came into force, if the hearing has been completed prior to the promulgation and coming into force of this Interpretation, and any party applies for a rehearing or it is decided that the case should be reheard in accordance with trial supervision procedures, this Interpretation shall not apply. 
Any sale and purchase of commodity housing that occurred prior to the date on which the
 Law of the People's Republic of China on the Administration of the Urban Real Estate came into force shall be governed by the laws and regulations applicable at that time and the Answers of the Supreme People's Court on Issues concerning the Hearing of Cases on the Development and Management of Urban Real Estate Prior to the Coming into Force of the Law on Urban Real Estate Administration.

 

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