What to Do If a Seller Breaches Your Home Purchase Contract
A homebuyer can sue in court and request a ruling that the seller transfer the title to the buyer. Depending on when the seller breaches the contract, there are four scenarios:
• Breach before online signing
• Breach after online signing but before loan approval
• Breach after loan approval but before title transfer
• Breach after title transfer
In the first scenario, some buyers think that if they haven’t paid enough, the contract cannot be enforced. That’s wrong. To win a lawsuit and get the property title, the amount you’ve paid isn’t the key factor—even a deposit of just tens of thousands of yuan can secure a win. What matters is whether the title can be transferred.
In the second scenario, if the loan hasn’t been approved, the court may require the buyer to pay in full during the trial (or even during enforcement). Some buyers ask, “If I can’t get a mortgage, who can afford to pay in cash? Isn’t this just forcing me to cancel the contract?” Actually, no. If you can’t pay in full, there’s still another option: borrowing money (from other sources to complete the purchase first). Many banks now offer secondary-market mortgage assumption services, meaning the buyer gets the title quickly after paying the purchase price, then uses it as collateral for a housing mortgage loan.
Normally, the seller would cooperate with the buyer’s mortgage application. But now that property prices have risen, some sellers deliberately refuse to cooperate in order to force a cancellation. (Mortgage loans require seller cooperation because the property is still under the seller’s name at the time of loan processing, making it a three-party agreement where all parties must be involved; the loan is technically issued to the seller.)
By suing, the buyer effectively becomes the owner. The buyer can then apply for a secondary-market mortgage assumption loan using the property in their own name—a 30-year loan that makes repayments manageable. Once the loan is approved, the proceeds can pay off the bridge loan principal, keeping interest costs within the buyer’s budget. To avoid risks, buyers should consult their bank and plan ahead before or at the time of filing the lawsuit. Until the end of court deliberations, you can still change your claims. If a secondary-market mortgage assumption falls through, it’s still timely to switch to a claim for contract cancellation. Otherwise, if you get the title but can’t secure the loan, you’ll end up selling the property again immediately (just to repay the bridge loan)—and at a daily interest rate of 0.1%, that’s tens of thousands of yuan in losses.
In the third scenario, once the loan is approved, if the seller refuses to cooperate with the transfer, courts typically rule for full payment and mandatory title transfer. In rare cases, the court may enforce the transfer directly based on the loan approval letter.
In the fourth scenario, the buyer almost always wins.