RAMPANT defaults on real estate sales contracts have prompted a court to consider awarding higher compensation against the defaulters.
In draft guidelines published recently, the Shenzhen Intermediate People’s Court said if one party in a property deal refused to fulfill a contract, the court would support the other party’s claim for the price difference.
The price difference between the time a contract is signed and the new owner takes possession can be quite high in today’s volatile property market.
When housing prices dropped quickly last year, many buyers refused to go ahead with the purchase. With housing prices jumping 40 percent over the past four months, the situation has reversed and it’s the vendors who are pulling out.
A defaulter usually has to pay the other party double the sum of the deposit, a small figure compared with the price differences.
“We have had a lot of legal disputes concerning housing sale contracts since March,” said Zhang Maorong, a lawyer with Guangdong Dingwei Law Firm.
In May and June, more than 30 percent of sellers of pre-owned homes raised prices after contracts were signed. Recently, 15 to 20 percent of the sellers raised prices, said Zhang.
Zheng Changhong, a director with real estate agency Centaline, said the skyrocketing housing prices were behind the rampant defaults.
“Prices of pre-owned homes in central Bao’an rose 40 percent over the past three months. That means a property worth 1 million yuan (US$145,986) in March could be sold for more than 1.1 million in April,” said Zheng. It is not clear when the new guidelines will become effective. |
