In Shenzhen, 32 homeowners who bought small-property-rights housing were trapped for a decade. A lawyer used this strategy to help them all successfully confirm their property rights.

In the autumn of 2018, more than thirty people gathered in front of a collectively built residential building on Dalang Street in Longhua, clutching their property purchase contracts and receipts, only to be told that the building was to be deemed illegal construction and demolished. Among them were retired workers, young couples who had just arrived in Shenzhen to make a living, and small business owners who had sold their homes back in their hometowns to scrape together the full payment. One owner surnamed Chen grabbed my hand, trembling: "Lawyer, is our money just going down the drain?"

These properties were sold around 2009, when the developer promised that "these are village committee co-built buildings, and red property certificates will be issued sooner or later." The owners purchased them at prices ranging from 8,000 to 12,000 yuan per square meter, with total payments varying from 600,000 to 2 million yuan. But a decade later, instead of receiving the red certificates, they got a "Notice of Demolition Within a Time Limit." Thirty-two households pooled together over a hundred thousand yuan and consulted several groups of people—some claimed they could pull strings, others suggested waiting for demolition compensation. After nearly a year of running around, nothing came of it.

Why are disputes over small property rights housing so difficult to resolve?

The difficulty in cases like this lies in the tangled web of legal relationships. The purchase contract is highly likely to be deemed invalid for violating Article 63 of the Land Administration Law, which prohibits collective land from being used for non-agricultural construction. However, the money has already been paid and the buyers have moved in—forcing them to return the property and get a refund would essentially leave them with nothing. To make matters worse, the developer has long since been deregistered and fled, leaving no one to hold accountable.

After taking the case, we did three things first: first, we organized the payment vouchers, receipts, and contracts of all 32 property owners into a table, and found that most payments were made in cash, with only 11 households having bank transfer records; second, we went to the Planning and Land Commission to obtain the land parcel archives and confirmed that this building was on land reserved by the original village collective; third, we visited three nearby real estate agency stores to inquire about the sales pitch used at the time.

The problem is more complex than expected.

Halfway through the investigation, new trouble arose. In early 2019, the sub-district office officially issued a demolition notice, giving the homeowners 15 days to move out. Some homeowners panicked and privately approached the sub-district office to negotiate relocation compensation, nearly being persuaded by a staff member's offer of "3,000 yuan per square meter in subsidies." Fortunately, the team intervened in time—under that standard, the total compensation for all 32 households would have been less than 5 million yuan, while their total home purchase payments had already exceeded 26 million yuan.

Managing Partner Shen Jinlong convened an emergency meeting overnight and settled on a two-pronged approach: on one front, they would file a request for government information disclosure with the Municipal Bureau of Planning and Natural Resources to confirm whether the plot had been included in the urban renewal unit plan; on the other, they would sue the village joint-stock cooperative company under the cause of action of "disputes over house sale contracts," arguing that as the actual seller, it should bear liability for negligence in contract formation.

The turning point came in a small detail.

A week before the trial, we obtained a key document—the meeting minutes from the Longhua New District Management Committee in 2015 regarding land consolidation in that area, which explicitly stated that "historical issues related to collectively-built buildings should be properly resolved in accordance with the Several Provisions of the Shenzhen Municipal People's Government on Handling Historical Real Estate Issues." This document meant that the property in question was not necessarily destined for demolition, but rather there was a possibility of retroactively completing the formalities.

During the court hearing, the village joint-stock company argued that the houses were self-built by villagers and had nothing to do with the company. We presented the sales contracts stamped with the company's official seal, payment receipts, and the testimony of the former sales manager as witnesses. The judge immediately asked the opposing party: "If it has nothing to do with the company, why is the official seal genuine?" The opposing lawyer was momentarily at a loss for words.

The verdict is not what you expected.

In June 2020, the Futian District Court issued a first-instance judgment: it confirmed that the 32 property purchase contracts were invalid, but the village joint-stock company was required to return the purchase payments and compensate for interest losses. Additionally, considering that the owners had actually resided there for many years, the court discretionarily supported a reliance interest compensation of 80,000 yuan per household. Calculated, each household could recover anywhere from 900,000 to 2.1 million yuan. However, the case was not over—we simultaneously applied for property preservation, freezing two commercial shops and a piece of vacant land under the village joint-stock company's name to ensure enforcement.

After the judgment, some property owners were eager to take the money and leave, but Director Shen advised waiting a bit longer. Sure enough, in March 2021, the city introduced a new urban renewal policy, and the area was included in the demolition and reconstruction scope. We immediately represented the owners in negotiations with the developer, ultimately reaching an "old-for-new" agreement: each household would exchange commercial housing quotas at a ratio of 1:1.2. By the end of last year, the first batch of 16 households had already selected their apartments.

The core of this case can be summed up in one sentence: disputes over small property rights housing cannot focus solely on whether the contract is valid, but must also consider policy windows and property preservation. Shenzhen has a vast number of such historically遗留 buildings, and the handling methods change every year. If you encounter a similar issue, it's advisable not to rush into seeking connections or waiting for demolition. Instead, bring your documents and come to our office for a discussion.

Guangdong Zhiming Law Firm has been deeply rooted in Shenzhen for 26 years, handling over 10,000 cases in total. Director Lawyer Shen Jinlong (Master's degree from Fudan University, Senior Economist) has pioneered the "Zhiming Art Litigation" system, excelling at finding breakthroughs in seemingly unsolvable disputes. If you are currently trapped by property issues, you are welcome to visit us at Room 1802, Tower A, Xintian Century Business Center, Shixia North Second Street, Futian District, or call 0755-25986969. We will help you sort things out.

问：If the sales contract for a small property rights house is deemed invalid, can compensation still be obtained?
答：Okay. Under Article 157 of the Civil Code, property obtained under a contract that is invalidated shall be returned, and the party at fault shall also compensate the other party for losses. In practice, Shenzhen courts generally support the return of the home purchase price plus interest, and in some cases, they may, at their discretion, support compensation for a certain proportion of appreciation loss.