CNY 111,806.51 Awarded for Delayed Property Delivery
In this case, a buyer sued a property developer for failing to deliver a newly built apartment on time. The contract required delivery by December 30, 2009. The developer did not meet that deadline. The buyer sought CNY 139,758.14 in liquidated damages for 708 days of delay. The court after trial reduced the daily penalty rate and awarded CNY 111,806.51.
The buyer, Mr. Qian, signed a商品房买卖合同 with a developer in Eastern China City on September 3, 2008. The purchase price for a unit and a parking space was CNY 394,797. The contract stated the developer would hand over a completed and inspected apartment by December 30, 2009. If delivery was more than 90 days late, the developer would pay a daily penalty of 0.05 percent of the total price. Mr. Qian paid all sums on time. The developer did not deliver by the agreed date. By December 8, 2011, the delay had reached 708 days. Mr. Qian filed suit demanding the full contractual penalty.
During the hearing, both sides presented evidence. Mr. Qian submitted the signed contract and payment receipts. The developer submitted a提前领取房屋备用协议书 dated May 29, 2011, in which Mr. Qian agreed to take early possession of the keys. The developer also produced an engineering supervision report showing the building passed inspection on June 20, 2011. The developer argued that some of the delay was caused by owner complaints and quality inspections requested by buyers. It also claimed that Mr. Qian had paid the mortgage 31 days late and should bear some responsibility. Mr. Qian replied that he followed the developer’s instructions for the mortgage process.
The court found that the original contract and the later early‑possession agreement were both valid. The early‑possession agreement changed the delivery condition: the developer would formally deliver the apartment only after obtaining a comprehensive acceptance record. The developer had not obtained that record by the time of trial, so it remained in breach. The court rejected the developer’s argument that owner‑requested inspections should extend the delivery deadline. The court noted that owners had a legitimate right to question construction quality, and the resulting government‑ordered停工 could not be blamed on the buyer. As for the buyer’s alleged late payment, the developer had not filed a counterclaim, so the court did not address that issue.
On the question of damages, the court applied the principle that liquidated damages should primarily compensate rather than punish. The developer argued that the daily rate of 0.05 percent was too high because the actual rental loss for similar apartments in the area was lower. The court agreed that the contractual rate was excessive. It reduced the rate to 0.04 percent per day. Using that rate, the court calculated the penalty for 708 days: CNY 394,797 multiplied by 0.0004 multiplied by 708, yielding CNY 111,806.51. The court ordered the developer to pay that amount within ten days of the judgment. Any further delay after December 8, 2011 could be litigated separately.
This ruling highlights several practical points for property transactions. Courts in China have discretion to adjust liquidated damages when the contractual rate appears disproportionate to actual losses. Taking early possession of keys does not automatically mean the developer has fulfilled its delivery obligation if statutory acceptance records are missing. Buyers should also note that late‑payment issues on their side may be raised by the developer, though here the developer chose not to counterclaim. The decision reinforces that developers bear the risk of delays caused by third‑party inspections, as long as the inspections are prompted by legitimate buyer concerns.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.