Court Orders Repayment of CNY 150,000 Loan in Mortgage Dispute
In a financial dispute heard in an Eastern China City court, a bank sought to recover a loan of CNY 150,000 plus accrued interest from two borrowers who defaulted. The case involved a maximum guarantee personal loan contract and a mortgage over a residential property. The court ruled in favor of the bank, ordering both defendants to repay the outstanding principal and interest, and granting the bank the right to enforce the mortgage if the debt remained unpaid.
The plaintiff, Agricultural Bank of China, Eastern China City Sub-branch, entered into a maximum guarantee personal loan contract with Mr. Zhang on August 13, 2009. The contract allowed Mr. Zhang to borrow up to CNY 150,000 within a three-year period ending August 12, 2012. The interest rate was set at 10 percent above the benchmark rate published by the People’s Bank of China on each loan disbursement date. Mr. Zhang secured the loan with his residential property located in Eastern China City, and Mr. Wang signed a joint repayment and mortgage commitment letter, agreeing to assume full repayment liability as a co-borrower and mortgage guarantor. The mortgage was registered on August 13, 2009.
On August 24, 2010, the bank disbursed the loan of CNY 150,000 with a maturity date of August 23, 2011. By December 21, 2011, Mr. Zhang had paid only CNY 14,773.29 in interest, leaving the entire principal of CNY 150,000 and additional interest of CNY 11,875.82 unpaid. The bank presented evidence including the loan contract, loan voucher, joint repayment commitment, mortgage registration documents, property ownership certificates, and a debt explanation statement. Mr. Zhang appeared at the hearing and did not dispute the facts. Mr. Wang failed to appear despite proper legal notice.
The court found that the loan contract was valid and binding on all parties. The evidence showed that Mr. Zhang had defaulted on his repayment obligations, and Mr. Wang, having signed the joint repayment commitment, was equally liable. The court held that the bank was entitled to recover the entire outstanding amount plus continuing interest calculated as per the contract until full payment. Since the mortgage had been properly registered, the bank had a valid security interest in Mr. Zhang’s property.
Under the Contract Law of the People’s Republic of China, a borrower must repay principal and interest as agreed, and a lender may demand payment upon default. The Guarantee Law allows a secured party to enforce a mortgage if the debtor fails to perform. The court applied these provisions and also cited the Civil Procedure Law for default judgment against Mr. Wang. The decision emphasized that a co-signer’s commitment creates joint and several liability.
The court ordered Mr. Zhang and Mr. Wang to jointly repay the principal of CNY 150,000 and interest of CNY 11,875.82 within seven days of the judgment taking effect, with further interest accruing until actual payment. If they failed to pay, the bank could enforce the mortgage on Mr. Zhang’s property in Eastern China City through auction, sale, or valuation, and claim priority from the proceeds. The defendants were also ordered to bear the reduced court fee of CNY 1,769. This case illustrates the enforceability of properly documented loan agreements and mortgage registrations in China.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.