The wave of homebuyers of unfinished buildings refusing to pay mortgages in China is constantly increasing. The Gao’an City Court in Jiangxi Province recently gave an order in a case involving unfinished buildings.
According to Chinese media Da Ji Yuan, on July 19, the “China Court Network” under the Supreme People’s Court of China announced a case that the developer should bear all the responsibility for the unfinished buildings. The news then attracted public attention in the context of property developers’ dragging on construction projects.
The court found that in 2019, three buyers signed a ‘Commodity Sales House Contract’ with a real estate company in Gao’an city to purchase houses developed by the company.
Right after the down payment was made, both the buyer and the developer signed the ‘Commodity Housing Mortgage Loan Contract.’ According to the contract, the buyer will pay the balance of the purchase from the bank mortgage loan.
The deadline for handing over the houses was then over, but the developer said that it could not determine when the house would be delivered.
After that, the buyers filed a lawsuit with the court.
The court ruled that because the developer could not deliver the house within 90 days of the deadline, the buyer had the right to terminate the contract.
The court also ordered the developer to return the homebuyers’ down payment. In addition, the plaintiff will be able to take back the amount of the mortgage loan already paid. The developer will also be responsible for paying the remaining mortgage.
Once the news broke out, some netizens questioned if the developer is rich, will it still be unfinished.
Another wrote that the owner’s down payment was already paid when the house purchase contract was signed. The developer later went bankrupt. Who will pay for the owner’s down payment and the loan? In the end, the owner’s down payment was gone, and the house was gone…
Chinese people are joining ‘mortgage strike’ protests on such housing projects sitting unfinished and abandoned. The movement then intensified. The Economist cited documents published online as reporting that buyers have halted payments on at least 319 projects in 93 cities.
Several Chinese experts said that the authorities would make an effort to maintain stability prior to the 20th National Congress. However, whether the problem can be truly solved remains unknown.