Court Orders Repayment of CNY 1.2 Million Loan
In this case, a bank in Eastern China City filed a lawsuit against two borrowers after they failed to repay a loan of CNY 1.2 million. The borrowers had signed a loan agreement secured by a mortgage on their residential property. The court ruled in favor of the bank, ordering the borrowers to repay the principal, interest, and legal costs.
The dispute arose from a loan agreement dated January 28, 2011. Mr. Wang applied for a loan to purchase materials. The bank and Mr. Wang signed a personal revolving loan contract with a maximum guarantee. The loan amount was CNY 1.2 million with an annual interest rate of 4.8417 percent. The loan term ended on January 29, 2012. The contract allowed for interest rate adjustments based on changes to the benchmark rate set by the People’s Bank of China. The loan was to be repaid with monthly interest and the principal at maturity. Mr. Wang and his wife, Ms. Cai, provided a mortgage on their apartment located in Eastern China City. The mortgage covered the loan principal, interest, penalties, and collection costs. The property was registered as a mortgage. The bank disbursed the loan as agreed. After the loan matured, Mr. Wang failed to repay the principal of CNY 1.2 million and the interest and penalty interest of CNY 10,862.78 as of February 7, 2012. The bank also paid attorney fees of CNY 52,400 to enforce the debt. The bank sued both Mr. Wang and Ms. Cai, arguing that the debt was incurred during their marriage and that they should be jointly liable.
During the court hearing on March 27, 2012, the bank presented several pieces of evidence. These included the loan contract, the loan receipt, property ownership certificates, a certificate of mortgage registration, an interest statement, an invoice for the attorney fees, and the marriage certificate of the defendants. The defendants were properly served with the complaint and evidence but did not appear in court or submit any defense. The court noted that by failing to appear, the defendants waived their right to cross-examine the evidence. The court accepted all of the bank’s evidence as valid and sufficient to prove the facts.
The court found that the loan contract and mortgage agreement reflected the true intentions of the parties. The contract did not violate any law, and the mortgage had been properly registered. Therefore, the contract was valid and enforceable. After the loan term expired, Mr. Wang still owed the principal and interest, which constituted a breach of contract. The court held that Mr. Wang was liable for the outstanding debt. Because Mr. Wang and Ms. Cai were married at the time of the loan and jointly provided the mortgage, the debt was a marital obligation under relevant family law. The court determined that Ms. Cai was also jointly liable. The bank’s claim for priority over the mortgaged property was valid because the mortgage was properly registered.
According to the law, a borrower must repay principal and interest on time. Failure to do so triggers an obligation to pay overdue interest. Under the Property Law, a mortgagee has the right to obtain priority payment from the mortgaged property if the debtor defaults. The court also applied the judicial interpretation of the Marriage Law, which states that a debt incurred during a marriage by one spouse is presumed to be a joint debt unless proven otherwise. In this case, no evidence showed that the debt was solely Mr. Wang’s personal obligation. The court thus ruled that both defendants must repay the full amount.
The court ordered Mr. Wang and Ms. Cai to pay the bank the loan principal of CNY 1.2 million, plus interest of CNY 10,862.78 as of February 7, 2012, and further interest from February 8, 2012, at the agreed overdue rate until full payment. They were also ordered to pay the bank’s attorney fees of CNY 52,400. The payment was to be made within ten days of the judgment taking effect. The court further confirmed that the bank had a priority right to recover these amounts from the sale or auction of the mortgaged apartment. The defendants were also ordered to bear the court costs. This judgment highlights the enforceability of secured lending agreements and the potential joint liability of spouses for debts incurred during marriage.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.