【Lead Attorney: Wang Tengfeng】 I. Case Overview

In this case, the plaintiff Luo XX (female) purchased property No. 1XX, Building 3, "Shengde Yuan," Shenzhen Bay Garden, developed by the defendant Shenzhen Haox Industrial Co., Ltd. (hereinafter referred to as Haox Company) on July 12, 2000, and paid the full amount. The defendant Haox Company delivered the property to the plaintiff Luo XX for use but repeatedly delayed signing a formal purchase contract and handling the relevant purchase procedures, and failed to complete the property ownership transfer procedures. In fact, before the plaintiff Luo XX purchased the property, the defendant Haox Company had already sold the property to another woman surnamed Song and completed the property ownership transfer procedures, but had not delivered the property. The plaintiff Luo XX was completely unaware of this fact at the time of purchase. Luo XX repeatedly urged the defendant to expedite the transfer procedures, but the defendant only issued several documents certifying Luo XX's legal ownership of the property. This situation dragged on until April 2003. To protect her legitimate rights and interests from harm, Luo XX, through a friend's introduction, entrusted lead attorney Wang Tengfeng to file a lawsuit with the Nanshan District People's Court.

II. Attorney's Opinion

This case is a typical instance of "dual sale of one property." The plaintiff Luo XX, despite paying the full amount, only possessed the property without truly owning the ownership rights, placing her rights in a highly precarious position. Once the rights holder claims the property, Luo XX would lose both the property and the payment. To ensure the safety of Luo XX's property during the litigation, lead attorney Wang Tengfeng filed a "Pre-litigation Property Preservation Application" with the court on behalf of Luo XX.

The attorney argued to maximize the plaintiff's legal interests through a "declaratory action" rather than a "performance action," and thus filed the following claims with the court:

(1) A judgment confirming that the house purchase contract relationship between the plaintiff and the defendant is established;

(2) A judgment ordering the defendant to immediately sign a formal house purchase contract with the plaintiff, complete the relevant purchase procedures, and obtain the plaintiff's property ownership certificate.

III. Judgment Result

Due to the defendant's absence at the trial, the court conducted a default trial and issued a judgment on June 17, 2003 [(2003) Shennanfa Min San Chu Zi No. 1208 Civil Judgment]. The judgment confirmed that the plaintiff's claims were true, ruled that the house purchase contract relationship between the plaintiff and the defendant was established, and ordered the defendant Hao X Company to sign a formal house purchase contract with the plaintiff within ten days after the judgment took effect, complete the relevant purchase procedures, and obtain the plaintiff's property ownership certificate within 180 days.

IV. Legal Analysis:

This seemingly simple case actually involves the lawyer's superb litigation skills. Why is that?

First, in this case, the plaintiff and defendant only performed the contractual obligations in fact without signing a formal house purchase contract. According to Chinese law, a formal written contract is required for house sales, so the first issue to address is to establish the factual contractual relationship between the two parties.

Second, this case can protect the client's interests through two different claims, which is both the difficulty and the highlight of the case.

The first claim is to seek revocation of the sales contract between the parties, using a "claim for performance," based on the fact that the defendant, Hao X Company, concealed the fact that the house had already been sold when selling it to the plaintiff, Luo XX, which constitutes serious fraud. This approach renders the contract invalid. With solid evidence, this type of lawsuit almost always wins, with a very high success rate, and it is the method most lawyers are accustomed to using. However, the problem with this approach is:

1. By the time of the trial, nearly three years had passed since Luo XX purchased the property, and the property's value had far exceeded its original purchase price. If the contract is revoked, the law stipulates that once the contract is revoked, it becomes invalid, Luo XX must vacate the house, and the defendant, Hao X Company, must refund the purchase price. This outcome is undoubtedly unacceptable to Luo XX.

2. Even if Luo XX agreed to forgo the three years of property appreciation and sought only the original purchase price, it is well known that debt collection in practice is the most troublesome. If unforeseen circumstances arise, such as the company going bankrupt or other situations, Luo XX might not recover the purchase price, resulting in winning the judgment but losing the case.

Another way to safeguard the client's legitimate rights and interests is to adopt a "right-confirmation lawsuit," asserting the validity of the contract and requesting the court to confirm the plaintiff Luo XX's ownership of the property. The advantages of this approach are:

1. It solidifies the plaintiff Luo XX's previously insecure ownership. Luo XX had been in possession of the property but did not enjoy full ownership, and even the right of possession was constantly under threat. Once the court confirms Luo XX's ownership of the property and affirms the validity of the real estate sales contract between the plaintiff and the defendant, Luo XX's rights to the property will be protected by law, free from any infringement, allowing for the safe exercise of ownership.

2. Based on the court's judgment, the plaintiff Luo XX can transfer the property to gain benefits from its appreciation. Only in this way can the plaintiff Luo XX's legitimate interests be maximized.

Of course, since this case involves the interests of another homebuyer, Ms. Song, the court may consider this factor in practice and expand the scope of the case, making the success rate of the second litigation method lower than the first, and it may also face some potential risks. This requires the practical experience of the handling lawyer. The key is to avoid involving other parties during the litigation process and to focus strictly on the legal facts that have already occurred between the plaintiff and the defendant in the "right-confirmation lawsuit": the plaintiff purchased the property developed by the defendant and paid the full amount, and the defendant had already delivered the house. Given that the main obligations of the contract have been fulfilled, the claim is that the contract is established, and thus the defendant is required to fulfill the ancillary obligation of handling the property procedures. The essence of this approach is to guide the judge through the lawyer's line of reasoning during the trial, naturally leading to the desired outcome of maximizing the protection of the plaintiff Luo XX's legitimate interests.

(Compiled and commented by Sun Zhitao)

Zhiming Office

June 26, 2003