In Shenzhen, 32 property owners purchased small property rights housing but couldn't obtain the certificates. A lawyer succeeded in confirming their property rights using this tactic, and the key lies in just one point.

In the summer of 2022, in a small property-rights housing community on Dalang Street, Longhua District, 32 homeowners gathered outside the property management office, clutching their purchase contracts and payment receipts, visibly agitated. They had lived in the apartments they bought for five or six years when suddenly the developer informed them that "the agreements originally signed are invalid," citing that the land was collectively owned and thus unable to be registered for real estate certificates. To make matters worse, the developer's capital chain had broken, and they were planning to mortgage the entire building to a third party for financing.

Among these 32 homeowners, there are programmers working at Nanshan Science and Technology Park, small business owners running shops in Futian, and a few retired seniors. When they bought their homes back then, the average price was just over 8,000 yuan per square meter, but now surrounding commercial properties have risen to over 60,000 yuan per square meter. If the properties are mortgaged or even auctioned off, they would not only lose the homes but also risk losing the payments they've already made.

The developer's stance is clear: the contract is invalid, and they will refund the money. But how will the refund be made? By what standard? The developer hasn't mentioned a word. The homeowners have privately done the math—32 households have paid a total of over 46 million yuan in property payments. If only the principal is refunded, who will bear the loss from the rise in housing prices over these years?

The crux of disputes over small property rights housing: invalid contract ≠ no remedy available

When we took on this case, we first established a fundamental assessment: under Article 157 of the Civil Code, once a civil legal act is invalidated, any property obtained through that act shall be returned, and the party at fault shall compensate the other party for the losses incurred as a result. The developer, as a professional real estate operator, knowingly sold the property despite being aware of the land's nature, demonstrating clear fault.

But the problem is not that simple. The biggest difficulty in disputes over small-property-rights housing lies in the two words "confirming rights." Although the court will rule the sales contract invalid, the owners have actually occupied the houses for years, having renovated, lived in, and even rented out some of them. If the court simply orders a refund and vacating of the premises, it would be extremely unfair to the owners.

Senior Partner Shen Jinlong and his team reviewed all materials from the 32 property owners and found that 23 of them had paid their purchase amounts via bank transfer with complete transaction records, while 9 had paid in cash but retained the developer's payment receipts and the original advertising brochures from that time. More critically, the developer had made a written commitment at the time of sale to "obtain the property ownership certificates within three years," and this statement became the breakthrough point for the entire case.

Agency strategy: Do not dispute the validity of the contract, directly pursue liability for negligence in contract formation.

Director Shen's strategy was clear: since contract invalidity was highly likely, the approach was to bypass the impossible task of "confirming the contract's validity" and directly assert the developer's liability for negligence in contracting, claiming compensation for the price difference. The legal basis was Article 500 of the Civil Code, which stipulates that a party who acts contrary to the principle of good faith during the formation of a contract and causes losses to the other party shall bear liability for compensation.

The core of this approach lies in the fact that what the homeowners actually lost is not the payments already made, but rather the "performance interest they could have obtained had the contract been valid." The developer promised to secure the property certificates but failed to do so—this is a classic case of culpa in contrahendo. We have collected transaction data for comparable commercial residential properties in the surrounding area, commissioned an appraisal agency to issue a market value report, and the total loss from price differences for the 32 households amounts to approximately 120 million yuan.

The litigation process did not go smoothly. The developer hired lawyers who argued that "both the buyer and seller were aware of the illegality, and both were at fault, so each should bear half the responsibility." This argument briefly shook the resolve of some homeowners. However, Director Shen asked the opposing side a question in court: "If you knew it was illegal, why did you still promise in your advertisements to handle the certificates? Isn't this malicious fraud exploiting information asymmetry?" The opposing side did not give a direct answer in court.

Outcome Reversed: Case Concluded Through Mediation, All 32 Property Owners' Rights Confirmed

After three court hearings, the court organized mediation. Director Shen seized on the developers' eagerness to revitalize their assets and proposed a plan: the homeowners would pay an additional 30% of their original purchase price as land transfer fees to the village collective, which would then issue a certificate approving the transfer, and the developers would assist in handling the legal property procedures. This plan safeguarded the interests of the village collective while allowing the homeowners to keep their homes.

All 32 homeowners accepted the agreement. The final mediation settlement specified that each household would pay an additional amount ranging from 180,000 to 350,000 yuan, totaling approximately 7.8 million yuan in supplementary payments. The developer would bear all litigation and appraisal costs, and compensate each household 50,000 yuan in liquidated damages. The houses were saved, and the property rights issue was resolved—though the process was tortuous, the outcome was far better than expected.

Three reminders for safeguarding rights regarding small-property-rights housing in Shenzhen.

First, look at the contract, but even more so at the promises.In many disputes over small property rights housing, the developer's sales promises (such as "guaranteed certificate issuance" or "never demolished") are written in brochures or supplementary agreements, and these materials are very important in litigation. The reason this case could be won is that the brochure promising certificate issuance played a key role.

Second, the payment method determines the difficulty of rights protection.For bank transfers and corporate account payments, the evidentiary weight is far greater than that of cash payments. It is recommended that all property purchase payments be made through banking channels, with the note "property purchase payment" indicated.

Third, don't procrastinate.The sooner disputes over small property rights housing are resolved, the more room there is for maneuvering. In this case, it took 11 months from taking on the case to reaching a settlement through mediation. During that period, two property owners missed the optimal window for evidence collection due to delays. Fortunately, the overall chain of evidence remained intact; otherwise, the consequences would have been unpredictable.

In Shenzhen, property dispute cases often involve subject amounts ranging from millions to tens of millions, with legal issues that are deeply intertwined. Guangdong Zhiming Law Firm has been rooted in Shenzhen for 26 years, handling various complex cases involving property rights confirmation, dual sales of the same property, and obstacles to property transfer. If you are facing similar difficulties, feel free to give us a call at 0755-25986969. The firm is located at Room 1802, Tower A, Xintian Century Business Center, Shixia North Second Street, Futian District. When it comes to property matters, the sooner you address them, the less risk you face.

Question: If the sales contract for a small property rights house is deemed invalid, can the owner still claim compensation?
Answer: Yes. The invalidity of the contract does not mean the at-fault party is exempt from compensation. Under Article 500 of the Civil Code, if the developer knowingly sells land with illegal zoning and promises to obtain the title certificate, this constitutes a violation of the principle of good faith. The homeowner is entitled to claim liability for fault in contracting and seek compensation for the price difference loss.

(This article is for legal reference only. Individual cases may vary; please consult a professional lawyer for specific matters. Guangdong Zhiming Law Firm, a 26-year-established law firm in Shenzhen, Tel: 0755-25986969, Address: Room 1802, Tower A, Xintian Century Business Center, Shixia North Second Street, Futian District, Shenzhen)