In Longhua, Shenzhen, 32 households who bought small property rights homes nearly lost both their money and their homes. A lawyer spent a year and a half helping them obtain a judgment confirming their property rights.

In the spring of 2019, Uncle Li spotted a "farmer's house" in Dalang, Longhua, with a total price of 1.28 million yuan, nearly 60 percent cheaper than nearby commercial apartments. The seller patted his chest and said, "The whole building is sold this way, with lawyer's witness and village committee seal, so don't worry." Uncle Li paid a 600,000 yuan down payment and spent another 180,000 yuan on renovations, and his family of five moved in and lived there for more than three years. Then in the summer of 2023, a court seizure notice suddenly appeared on the door—the entire building had been mortgaged by the seller to a private lending company, which applied for compulsory enforcement, and 32 households faced eviction overnight.

When Uncle Li found us, all he had in his hands were a "Joint Housing Construction Agreement" and a receipt. He repeatedly asked the same question: "I've lived here for over three years, I've paid all the utility bills—does this house have nothing to do with me?"

To be honest, disputes over small property rights housing are nothing new in Shenzhen. In areas like Bao'an, Longhua, and Longgang, the transaction volume of collectively built buildings and farmer houses has always been considerable. But when problems actually arise, many owners discover that the "contracts" in their hands don't hold up legally. Uncle Li's building has an even more complicated problem—the seller mortgaged the entire building twice, first to a bank and then to a microfinance company, and all 32 owners were kept completely in the dark.

The conflict came to a head in August 2023. The microfinance company applied for auction based on the mortgage contract, and the court enforcement bureau posted eviction notices, requiring them to move out within 15 days. Of the 32 property owners, 6 households consisted of elderly people living with their grandchildren, and 2 had just spent hundreds of thousands on renovations. Everyone gathered to discuss what to do. Some suggested petitioning the government, others proposed blocking the doors directly. Uncle Li could not make up his mind and, through a friend's introduction, found Guangdong Zhiming Law Firm.

Taking on this case, the first core issue we need to resolve is: does a sales contract for a small property rights house actually have legal effect?

Article 153 of the Civil Code provides that a civil juristic act that violates the mandatory provisions of laws and administrative regulations is void. Transactions involving small property rights housing in Shenzhen are essentially sales of houses built on collective land to people who are not villagers of the village, which violates the relevant provisions of the Land Administration Law. In the past, many judgments directly ruled such contracts invalid, and buyers could only recover the purchase price and a portion of the interest, with no share of any increase in the property's value. But the situation of Uncle Li and the 32 households is different—they are not purely investors; most of them bought the homes to live in, and they have already taken actual possession and used them for several years.

This brings us to a key distinction: an invalid contract does not mean the buyer has no rights at all. The Supreme People's Court made it very clear in its Interpretation on Several Issues Concerning the Application of Law in the Trial of Sales Contract Disputes that after a contract is invalid, the party at fault shall compensate the other party for the losses incurred as a result. The seller knew the house could not be sold yet sold it anyway, and knew there was a mortgage but concealed it—the fault clearly lies with the seller.

Our strategy is carried out in three steps.

Step one: file an enforcement objection first. When the microfinance company applied for auction, we represented 32 property owners in filing a third-party enforcement objection with the court, arguing that the owners held civil rights and interests in the properties sufficient to preclude compulsory enforcement. This step took only 21 days, and the court ruled to suspend enforcement. The microfinance company refused to accept the ruling and filed an enforcement objection lawsuit. We then litigated for nearly five months, and won both at first instance and on appeal.

Step two: file a simultaneous lawsuit against the seller. We demand a declaration that the "Joint Building Construction Agreement" is invalid, the return of the purchase price, compensation for renovation losses, and compensation for the price difference based on the price increase of surrounding commercial housing. There is a detail here: we did not focus solely on suing the seller alone, but also listed the other co-owners of the entire building as defendants. Because that building was jointly owned by the seller and his two brothers, the eldest signed the contract and received the money, while the second and third brothers claimed they were unaware. However, based on the reasoning of Article 311 of the Civil Code regarding good-faith acquisition, the owners had reason to believe that the eldest had the authority to act as agent, and the internal agreement among the three brothers cannot be asserted against a good-faith buyer.

The third step, and the most critical one—confirmation of rights. Many lawyers only take small property rights housing cases as far as "getting the money back" and then stop, but we discovered that a batch of units in this building met the conditions for handling historical illegally constructed buildings. Shenzhen issued the 2009 "Decision of the Standing Committee of the Shenzhen Municipal People's Congress on the Handling of Historical Illegally Constructed Buildings Arising from Rural Urbanization," under which qualifying buildings can apply for confirmation of rights. We helped 32 property owners, one by one, compile construction application materials, historical land use certificates, and village committee certificates, and submitted confirmation of rights applications to the Longhua District Illegal Construction Inspection and Handling Office. This process was the most grueling; just supplementing materials required 11 trips, and it took 8 months from start to finish.

In November 2024, the verdict came down. All 32 property owners were confirmed to have the right to use the properties in question, and the seller and his brother were jointly ordered to return the purchase payments and compensate for losses, totaling more than 21 million yuan. The microfinance company's mortgage rights, having been established later and without due diligence, could not be asserted against the owners who had already taken actual possession and use. The day Uncle Li received the judgment, he called me and said, "If only I'd asked a lawyer before buying the house back then, I wouldn't have lost sleep for the past three years."

Q: If a small property rights house bought in Shenzhen is mortgaged by the seller, can the owner still keep the house?
Answer: It depends on two key points. First, the time you actually took possession and use, and second, the time the mortgage was established. If the owner moved in before the mortgage was created and can provide continuous occupancy evidence such as utility bills, property management fees, and village committee certification, the court is very likely to support the owner's continued use. But if the mortgage came first and the owner cannot provide evidence of possession, then the position is very weak. It is advisable to file an enforcement objection immediately, rather than waiting for the eviction notice to expire.

After finishing this case, my biggest takeaway is this: in Shenzhen's small property rights housing disputes, the amounts in controversy easily run into millions or even tens of millions, yet many parties don't even verify whether the other side is the true owner when signing the contract. In those tongjian buildings in Longhua, Bao'an, and Guangming, a single building can have dozens of households, and the ownership relationships are as tangled as a ball of hemp. Some are co-owned by brothers, some are inherited but never partitioned, and some have even been mortgaged three or four times over.

If you are considering buying this type of property, or have already bought one but feel uneasy, there are three things worth doing first: check the seller's identity and co-ownership status, check whether the property is mortgaged or seized, and keep all payment and residence records. Once you find that the seller is unreachable or the property has been seized, do not delay—the earlier you get involved, the more proactive you will be. Guangdong Zhiming Law Firm has been rooted in Shenzhen for 26 years and has handled more than just this one group case involving small property rights housing. The fact that 32 owners were able to obtain confirmation-of-rights judgments was not due to luck, but because every step was taken in accordance with the time nodes required by law. If you have similar concerns, you can call 0755-25986969 to talk first; in many matters, a direction can be determined over the phone.