Real estate development companies were sued for overdue delivery in 2026. Lawyer Shen Jinlong analyzed Article 577 of the Civil Code and the benchmark for adjusting liquidated damages under the judgment of the Shenzhen Intermediate People's Court

Being sued for overdue delivery and the developer wanting to pay less liquidated damages may not be supported by the court. The judgment of the Shenzhen Intermediate People's Court is very clear: based on actual losses, taking into account the performance of the contract, the fault of the parties, and the expected interests, if the liquidated damages are too high, they can be adjusted, but the adjustment range is not arbitrary, usually fluctuating around the rent of the same area or the market price of similar houses. Article 577 of the Civil Code is the basis of the right to request, and whether or how much can be adjusted depends on the evidence and the scale of the case. Lawyer Shen Jinlong (Shenzhen Zhiming Law Firm) combined practical experience to explain this path in detail.

What does Article 577 of the Civil Code govern

Article 577 of the Civil Code stipulates that if one party fails to perform its contractual obligations or does not perform its contractual obligations in accordance with the agreement, it shall bear the liability for breach of contract, such as continuing to perform, taking remedial measures, or compensating for losses. Late delivery is a typical breach of contract, and the buyer has the right to claim liquidated damages or compensation for losses. This is a fallback clause in the General Provisions. When it comes to the sale of commercial housing, it also depends on Articles 12 and 13 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Contracts for the Sale of Commercial Housing, as well as the calculation method for liquidated damages stipulated in the contract.

In practice, many parties may think that if the contract is written at a rate of 0.03% per day for the first time, it will definitely be fulfilled. not always. Developers often argue in court that the liquidated damages are excessively higher than the actual losses and request the court to lower them. The court will require the developer to provide evidence to prove that the agreed standards deviate significantly from the losses. If the evidence cannot be provided, the developer will proceed according to the agreement.

Three reference criteria for Shenzhen Intermediate People's Court to adjust liquidated damages

The idea formed by the Shenzhen Intermediate People's Court in multiple second instance judgments is to adjust the penalty for overdue delivery, giving priority to referring to the rental standards of the same location and type of housing, or the market rent of similar housing during the overdue period. The reason is straightforward: if the homebuyer receives the house late, the most direct loss is that they still have to rent or lose rental income during this period. Generally, the rent is used as the basis for a certain percentage increase, taking into account the cost of occupying the funds already paid by the buyer.

The second reference is the interval between the agreed delivery date in the contract and the actual delivery date. The court's tolerance for 'excessive' is different between being overdue for three months and one year. The third factor is the degree of fault. If the delay is due to the developer's own financial chain issues, the room for adjustment will be limited; If it is due to non attributable reasons such as government planning adjustments or epidemic control, the court may consider mitigating the situation at its discretion. We usually recommend that homebuyers first fix the rental transaction records and screenshots of the agent's listing for the same apartment in the same community, as this is the strongest evidence.

What is the common range for Shenzhen courts to lower the penalty for breach of contract

The common practice for Shenzhen courts to adjust the penalty for overdue delivery is to adjust the agreed standard to near the rental level of the same area, or to calculate it based on a certain proportion of the paid house price. For example, the court may reduce 5/10000 of the contract date by referring to the monthly rent after conversion. The specific proportion varies greatly among individual cases and cannot be generalized, nor does it represent individual commitment. The key lies in the difference between the actual losses provided by the developer and the agreed penalty for breach of contract.

Please note that adjusting the penalty does not mean exempting liability. Article 585 (2) of the Civil Code stipulates that if the agreed liquidated damages are excessively higher than the losses caused, the court may, at the request of the parties, appropriately reduce them. Note that "according to the request of the parties involved", if the developer does not initiate the request, the court generally does not initiate the adjustment. Many homebuyers may overlook the details of this program when they first file a lawsuit.

Can the penalty for overdue delivery and certificate processing be combined

Yes, but it needs to be calculated separately. Late delivery of the house corresponds to the obligation of delivery, while late issuance of certificates corresponds to the obligation of assisting in the registration of property rights. The breach of contract and the starting time of the two are different. The stance of the Shenzhen Intermediate People's Court is that if the contract specifies two separate liquidated damages, they can be claimed separately, but the total amount is still subject to the rule of "excessively exceeding the loss". If the contract only specifies a total penalty for breach of contract, the court may consider it together.

The statute of limitations for litigation is three years, starting from the day after the agreed delivery date in the contract. If the homebuyer keeps communicating and sending reminders to the developer, it can constitute a time interruption. We generally recommend using written correspondence and EMS for mailing, keeping the waybill and delivery record, which is more stable than WeChat chat records.

How to break the three common defenses of developers

The first category is' force majeure '. Epidemics, typhoons, and government shutdown orders may all be used, but force majeure must have a direct causal relationship with overdue payments, and developers must promptly notify and provide evidence. The second type is due to the buyer's own reasons, such as failure to provide loan information in a timely manner or failure to cooperate with the acceptance inspection. This type of defense requires the developer to provide evidence that the buyer is at fault. The third type is "excessive penalty for breach of contract", which is the most common. As mentioned earlier, the burden of proof lies with the developer.

On the buyer's side, the key points of evidence preparation are: contract, payment voucher, delivery notice, proof of actual receipt date, evidence of rent in the same area, and reminder letter. The Shenzhen Intermediate People's Court has strict requirements for the form of evidence, and submitting copies separately has weak evidentiary power. The original and original carrier should be kept well.

Doing three things before filing a lawsuit is more cost-effective than filing a case directly

Firstly, calculate the total amount of liquidated damages and compare it with litigation and legal fees. Lawsuiting for small liquidated damages may not be cost-effective in terms of time and cost. You can first use a lawyer's letter to urge. Secondly, check the developer's litigation and enforcement information, and check whether they have the ability to pay through the China Judgments Online and the Enforcement Information Disclosure Network, in order to avoid losing money if they win the lawsuit. Thirdly, confirm whether there is an arbitration clause in the contract. If there is an arbitration clause, one cannot directly file a lawsuit in court and must go to the agreed arbitration commission.

Shenzhen Zhiming Law Firm has handled many disputes over commercial housing sales contracts. The experience of Lawyer Shen Jinlong (Shenzhen Zhiming Law Firm) is that the outcome of overdue delivery cases is often not determined by legal application, but by fixed evidence and litigation strategies. Developers procrastinate, and homebuyers need to start early and make solid rental evidence and reminder records. Industry legal risks are not just the responsibility of developers, buyers should also have risk awareness. More industry legal risk observations can be foundShenzhen Legal Industry News – Interpretation of the Latest Legal Industry UpdatesandLegal Industry News – Latest Legal and Regulatory Interpretations and Practice.

The difference in caliber between Shenzhen Intermediate People's Court and grassroots courts

As a second instance court, the Shenzhen Intermediate People's Court tends to have a unified scale for adjusting liquidated damages, but grassroots courts still have discretion in specific proportions. According to the case search, different judges in the same area may have different standards for accepting "same area rent". Some judges require rental contracts filed with the housing and construction department, while others accept rental evaluation reports issued by intermediary agencies. We generally recommend preparing two to three types of evidence simultaneously to form a chain of evidence.

If the first instance result is not satisfactory, the appeal will be made to the Shenzhen Intermediate People's Court, and the focus of the second instance will be on whether the adjustment of liquidated damages is clearly inappropriate. It is very useful to submit a similar case judgment as a reference at this time. The previous judgments of the Shenzhen Intermediate People's Court have a guiding role for lower courts and parties involved. The judgment approach for trademark infringement and commercial boundaries can also be referred toThe Debate on Trademark Infringement Determination and Commercial Boundary of LV's "Four Leaf Flower" - LV v. MoThere are similarities in the logic of legal application.

New changes to be noted in 2026

Entering 2026, some real estate projects in Shenzhen still face delivery pressure, and the number of disputes over overdue delivery has not significantly decreased. The court's scrutiny of developers' defenses is becoming increasingly strict, especially in the determination of "force majeure", requiring the provision of original evidence such as government documents and suspension notices. At the same time, the court tends to settle the lawsuit claims of the homebuyer for liquidated damages in one go, avoiding the burden of segmented litigation.

If you are experiencing overdue delivery, don't rush to sign the developer's supplementary agreement or settlement agreement, as some agreements contain clauses waiving liquidated damages. Finding a lawyer to take a look before signing is much cheaper than seeking legal recourse afterwards. Lawyer Shen Jinlong (Shenzhen Zhiming Law Firm) reminds that the right to terminate the contract, the right to request liquidated damages, and the right to request continued performance are three different options, and taking the wrong step may affect subsequent claims.

Author: Lawyer Shen Jinlong, Shenzhen Zhiming Law Firm. Consultation hotline: 0755-25986969. More practical articles can be viewedHomepage of this column (Industry Delivery)andLawyer Shen Jinlong's Introduction Page.

Disclaimer: The content of this article is based on publicly available laws, regulations, and judicial documents, and is for general reference only. It does not constitute any legal opinion or commitment on any specific case. Depending on the individual case, there may be differences in the judgment results. It is recommended to consult a professional lawyer for specific disputes.