Despite another cut in the reserve requirement ratio this week, the property market is still facing a grim situation as purchase restrictions and loan limits have not been loosened. In such circumstances, trading disputes caused by falling housing prices are more common. However, a recent notice issued by the Supreme People's Court indicates that it will be difficult for "property protesters" to gain legal support.
Real estate disputes must strictly apply the principle of changed circumstances
Recently, the Supreme People's Court issued a notice titled "Strengthening Civil Trial under the Current Situation to Effectively Protect Livelihood," which requires all levels of people's courts to properly handle real estate disputes and promote the implementation of national real estate control policies. They must stand on the height of maintaining the seriousness of the law and ensuring steady and rapid development of the economy and society, strictly apply the principle of changed circumstances, correctly identify the boundaries between changed circumstances and normal market risks or transaction risks, enhance the predictability of market behavior and the certainty and reliability of contract interests, and promote the healthy development of the real estate market.
The so-called principle of changed circumstances refers to the situation during the effective period of a contract where unforeseeable changes occur not due to either party involved, such as significant changes in economic conditions. If maintaining the original effect of the contract at the time of its formation leads to manifestly unfair performance, one party may request arbitration institutions or people's courts to amend or terminate the contract to maintain fairness.
In the view of lawyer Lin from Fujian Zhongmei Law Firm, "strictly applying the principle of changed circumstances" essentially means rarely using it. Real estate policy changes might lead to situations where homebuyers cannot fulfill their contracts, making the application of the principle of changed circumstances possible. However, price fluctuations caused by market changes clearly do not fall under the principle of changed circumstances since price variations are determined by market economy rules.
“Price reduction compensation” harder to get support
After interviewing industry insiders and some homebuyers yesterday, it was learned that most people agree with the above-mentioned notice.
Since October 2011, with the deepening of real estate regulation, the real estate market has started to decline, and a few developments have adjusted their pricing strategies accordingly.
However, most Fuzhou homebuyers believe that while prices in Fuzhou have indeed dropped, on the one hand, many developments have been vague about price reductions; on the other hand, the overall downward adjustment of the property market has not met the expectations of most people. Many developments refuse to lower prices mainly because they fear angering early buyers who purchased at higher prices.
In fact, since the end of last year, there have been several incidents of "property protests" in Fuzhou's real estate market. For example, in Shangjie, Minhou, after a price drop in one development, some irate homeowners vandalized the sales office. Some buyers even used this as an excuse to demand price difference compensation from the developers.