If you paid reservation earnest money or a down payment on a new home, no formal contract was signed or the loan was not approved (for example policy tightened after signing, or the bank stopped lending), and it is not your fault, demand the money back from the developer

If you paid reservation earnest money but no formal contract was signed, or the loan was not approved, look first at whose fault it is. If the cause is neither yours nor the developer’s, the developer must return the earnest money, or return the purchase money plus interest. Policy tightening after signing or the bank stopping lending generally counts as neither side’s fault. Overdue items on your own credit report or income that is not enough count as your cause, and you may not get the earnest money back.

Cost

No money. When you sign the reservation and the formal contract, read two more clauses. If the developer will not return the money, you have to sue.

Benefit

The Supreme People's Court's judicial interpretation states: if a developer takes earnest money through a subscription, an order, or a reservation, and no formal sale contract is signed because of one side's cause, the earnest-money rules apply. The earnest-money rules are: if the side that paid breaks the deal, the earnest money is not returned; if the side that received it breaks the deal, it is returned double. See item 15 of section 12 (write 定金 when you take money). If no contract is signed for a cause that cannot be laid on either side, "the seller shall return the earnest money to the buyer." Another article covers the loan. If the sale contract agrees payment by loan, and no loan contract is signed because of one side's cause, so that the sale contract cannot be performed, the other side can end the contract and demand compensation. If no loan contract is signed for a cause that cannot be laid on either side, either side can end the contract. The developer must return the principal and interest of the purchase money it received, or return the earnest money. The articles only state the principle of what counts as a cause that cannot be laid on either side. The examples below are the author's. Policy on housing loans tightening locally after you sign, or the bank stopping lending, is generally a cause that cannot be laid on either side. Overdue entries on your own credit report, or income records that are not enough, count as your cause. Incomplete papers on the project, so that the bank will not lend on it, counts as the developer's cause. These two articles cover only commercial housing bought from a developer. They do not apply to buying a second-hand home.

Notes

When it is disputed what counts as "cannot be laid on either side," the court decides on the facts. So the formal contract should state that payment is by loan, and it is better if it also states what happens if the loan is not approved. If the reservation already writes out the main contents of a sale contract, and the developer has also taken the price, the court will treat it as a formal sale contract. It then does not count as "never signed." If the developer will not return the money, you have to sue. Ordinary first-instance procedure starts at 6 months. Summary procedure is 3 months. Lawyer fees are generally yours.

Sources · 2

1. 最高人民法院 (2020 修正). 关于审理商品房买卖合同纠纷案件适用法律若干问题的解释（第一、四、五、十九条）. court.gov.cn/fabu/xiangqing/282621.html
2. 全国人大 (2020). 民法典（第五百八十六、五百八十七条）. spp.gov.cn/spp/fl/202006/t20200602_463888.shtml