If a developer is late handing over a new home, or late getting the title deed done, send a written demand first and keep the evidence, then claim the penalty in the contract

If the developer hands over late, send a written demand first. If it still has not handed over within three months, you can return the home. If the contract states no penalty, it pays you the rent of a similar home in the same area. If you cannot get the title deed because of the developer, it also pays; if the delay runs more than a year past the deed deadline, you can also return the home. The right to return the home has a time limit — do not keep putting off saying what you will do.

Cost

No money. Write a demand, send it by courier, and keep a copy. If you actually want to return the home or claim compensation, it will most likely mean a lawsuit.

Benefit

The Supreme People's Court's judicial interpretation states: if the developer is late handing the home over, and still has not handed it over within 3 months after you demand it, you can end the contract, unless the contract agrees otherwise. The right to end the contract has a time limit. If the developer demands that you say what you will do, you must decide within 3 months. If the developer does not demand that, you must use the right within one year of the day you knew you could end the contract. After that it is gone. If the contract agrees neither a penalty nor how compensation is calculated, late handover is counted as the rent, over the period of the delay, of a similar home in the same area. If, because of the developer, you still have no title deed by one of the following deadlines, the developer bears liability for breach. There are three deadlines: the deed deadline agreed in the contract; for an off-plan home, 90 days from the day of handover; for a finished home, 90 days from the day the contract was signed. If the contract agrees no penalty, it is calculated on the total purchase money you have paid, by reference to the standard for overdue-loan interest set by the People's Bank of China. If, more than one year after the deed deadline, registration still cannot be done because of the developer, you can end the contract and demand compensation. If the agreed penalty is too high and the developer asks for it to be reduced, the court adjusts it on the standard of exceeding the actual loss by 30%.

Notes

Make the demand in writing. Courier it to the developer's address written in the contract, and keep the mailing receipt and the record of receipt. The judicial interpretation only says "after a demand." It does not specify the form. Writing it and sending it by courier is the author's experience. If the contract already agrees a penalty for late handover, calculate from the contract first. After you return the home, the loan contract can be ended together with it. The developer returns the loan to the bank, and returns to you the price you paid and the interest. If the developer will not accept it, you have to sue. Ordinary first-instance procedure starts at 6 months, and can be extended. 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（第十一、十二、十三、十四、十五、二十、二十一条）. court.gov.cn/fabu/xiangqing/282621.html
2. 全国人大 (2020). 民法典（第五百六十三条）. spp.gov.cn/spp/fl/202006/t20200602_463888.shtml