Court Upholds House Sale Contract for CNY 140,000 – Deposit Dispute

In a recent civil dispute heard in a Southern China City court, two employees of a local automotive company clashed over the validity of a house purchase agreement. The plaintiff, Mr. Li, sought a court declaration that the contract signed with defendant Mr. Wang was legally binding, while Mr. Wang counterclaimed for its rescission. The case centered on a residential unit in the company dormitory area, with a purchase price of 140,000 Chinese Yuan (CNY) and a 20,000 CNY deposit. After trial, the court ruled in favor of Mr. Li, confirming the contract’s validity and dismissing the defendant’s counterclaim.

The dispute began in May 2008 when Mr. Li rented the unit from Mr. Wang for 300 CNY per month. By September 2008, Mr. Li expressed interest in buying the property, and the parties signed a written purchase agreement on September 26, 2008. The contract stated that Mr. Li would pay a 20,000 CNY deposit, with the remaining 120,000 CNY due after Mr. Wang assisted in transferring the property title to Mr. Li. Mr. Li was to obtain a mortgage loan or withdraw housing provident fund to raise the balance. After signing, Mr. Li paid the deposit and moved into the unit, where he continued to live. However, Mr. Wang never helped with the title transfer, and Mr. Li eventually sued to enforce the agreement.

During the court hearing, both sides presented evidence. Mr. Li submitted the original purchase agreement and a receipt for the 20,000 CNY deposit dated September 22, 2008, signed by both parties and a witness. Mr. Wang produced the property ownership certificate in his name and a certificate from the company’s property office confirming he remained the registered owner and had been paying utility fees. Mr. Li acknowledged the authenticity of Mr. Wang’s documents but argued that the delay in transfer was due to Mr. Wang’s inaction. Mr. Wang conceded receiving the deposit but claimed Mr. Li had failed to complete the purchase and had not paid rent or utilities since June 2009.

The court found the purchase agreement to be valid and enforceable. It noted that both parties had full legal capacity and signed the contract voluntarily, with terms that did not violate any law or public interest. The evidence showed Mr. Li had paid the deposit and taken possession of the unit, while Mr. Wang retained the title and failed to initiate the transfer. According to the court, the defendant’s assertion that Mr. Li had not fulfilled his obligations was unsupported, as Mr. Wang’s own failure to assist with the title registration was the primary obstacle. The court therefore rejected the counterclaim seeking contract rescission.

The legal reasoning emphasized principles of good faith and contractual stability under Chinese civil law. The court held that once a valid civil legal act is formed, it binds the parties, and neither side may unilaterally rescind it without legal cause or mutual consent. The contract’s language required Mr. Wang to first help Mr. Li obtain the property title before Mr. Li had to pay the balance. Since Mr. Wang did not perform this step, he could not blame Mr. Li for non-payment. The court also noted that Mr. Li’s continued occupancy without objection from Mr. Wang suggested no intent to dissolve the deal. However, the court declined to declare Mr. Li the owner, because the full purchase price remained unpaid and neither party raised that issue in their pleadings.

This case reaffirms that a properly formed real estate purchase agreement remains enforceable even if the seller fails to cooperate with title transfer. Buyers who pay a deposit and take possession can seek judicial confirmation of the contract’s validity, while sellers cannot unilaterally withdraw simply because the buyer has not yet completed payment when the seller’s own duty is outstanding. The court left the question of property ownership for a separate proceeding, reminding parties that full payment must occur before title can be ordered. This decision underscores the importance of clear contract terms and diligent performance by both sides.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.