Court Rules on CNY 4.5 Million Mortgage Loan Dispute
A dispute over a secured loan of CNY 4.5 million led to a court judgment in Eastern China City, where the lender sought repayment and enforcement of a mortgage. The court found that the borrower had defaulted but adjusted the principal amount based on the actual funds transferred. The ruling highlights the importance of clear evidence of payment in loan agreements.
The plaintiff, Mr. Li, claimed that on January 24, 2011, he and the defendant, Ms. Wang, signed a mortgage loan agreement. Under the terms, Ms. Wang borrowed CNY 4.5 million for three months at a monthly interest rate of 1 percent. As security, she pledged a residential property located in Eastern China City, and both parties completed mortgage registration on the same day. Mr. Li stated that he delivered the loan via bank transfer. After the loan matured on April 23, 2011, Ms. Wang failed to repay either principal or interest. Mr. Li filed a lawsuit seeking repayment of the full principal, interest from January 25, 2011, onward, and enforcement of the mortgage. He also initially sought CNY 151,000 in attorney fees.
During the court hearing, Mr. Li submitted several pieces of evidence. These included the mortgage loan agreement, a property ownership certificate and a mortgage registration certificate, and a bank transfer receipt from the Agricultural Bank of China. The receipt showed that on the same day as the agreement, Mr. Li transferred a total of CNY 7.76 million to Ms. Wang’s account. This amount covered two separate loans. According to the proportion between the loans, the transfer attributable to the disputed loan was CNY 4.365 million, not the full CNY 4.5 million. Ms. Wang did not appear in court and did not file a defense, which the court treated as a waiver of her right to contest the evidence.
The court examined the evidence and confirmed its authenticity and relevance. It found that the loan agreement was legally valid and binding. However, the bank records showed that the actual payment made by Mr. Li was CNY 4.365 million. The court rejected Mr. Li’s oral claim that the remaining CNY 135,000 was paid in cash, as he provided no supporting proof. Therefore, the court held that the outstanding principal owed by Ms. Wang was CNY 4.365 million. The court also determined that Ms. Wang had defaulted by failing to repay on time, and Mr. Li was entitled to interest at the agreed rate of 1 percent per month from January 25, 2011.
On the legal analysis, the court applied the合同法 principlesthat a contract must be performed in good faith. Since the evidence showed partial payment only, the court limited the principal to the amount actually transferred. The mortgage agreement remained enforceable, and Mr. Li could seek foreclosure on the pledged property. The mortgage secured repayment of principal and interest up to the agreed maximum of CNY 4.5 million. The court also noted that Mr. Li voluntarily withdrew his claim for attorney fees during the trial, which the court accepted. Because Ms. Wang failed to appear, the court issued a default judgment.
The court ordered Ms. Wang to pay Mr. Li CNY 4.365 million plus interest at 1 percent per month from January 25, 2011, until the date of full payment. If she failed to pay, the property could be auctioned or sold, and the proceeds would go to Mr. Li up to the limit of CNY 4.5 million. Other claims were dismissed. The case underscores that even with a written agreement, courts will rely on documentary proof of the actual funds advanced. Borrowers and lenders alike should ensure that loan disbursements are fully documented to avoid disputes over principal amounts.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.