Real Estate Perspective | Legal Risk Alerts in Model House Sales Contracts
Published:
2024-12-11
Model homes are showcase units that display the exterior effects of commercial housing. Before the concept of fully furnished homes became popular, model homes were often an important way for developers to attract buyers. Since there are no mandatory structural requirements, most projects require temporary construction methods for model homes, which is why most model homes are usually dismantled after sales are completed. However, with the popularity of fully furnished homes and the more intuitive experience that physical model homes provide to buyers, developers are increasingly choosing to decorate different types of units as model homes and sell them together. Compared to ordinary homes, the relatively low price of model homes is a key factor in attracting buyers, and their visually appealing decorations are also one of the reasons for their popularity. However, model homes often focus on creating a superficial visual experience, which may lead to various defects in hidden works. This article will highlight the legal risks in the sales contracts of model homes from the perspective of buyers.
The model room is a display room showcasing the appearance of commercial housing. When the concept of finely decorated houses was not yet popular, model rooms were often an important way for developers to attract buyers. Since there are no mandatory requirements for the structure, most projects require temporary construction methods for building model rooms, and thus most model rooms are usually dismantled after sales are completed. However, with the popularity of finely decorated houses and the more intuitive experience that physical model rooms bring to buyers, developers are increasingly choosing different house types for model decoration and selling them together.
Compared to ordinary houses, the relatively low price of model rooms is a key factor in attracting buyers. The more visually appealing decoration is also one of the reasons model rooms are favored. However, model rooms usually focus on creating a superficial visual experience, which may have various defects in hidden works. This article will remind buyers of the legal risks in the sales contract disputes of model rooms from the perspective of buyers.
Part One: Issues to Pay Attention to in the Sales Contract of Model Rooms
As an important display method for developers to attract buyers, the sales contract for model rooms should be distinguished from ordinary purchase contracts. When buyers express their intention to purchase a model room, they should carefully consider and understand the following aspects.
(1) Regarding the quality of the house.Although the physical model room is selected from the houses for sale, if the project houses are under construction, the model room, as a display function room, is usually completed much earlier. At this time, issues such as lighting and quality of the house need to be considered. It is recommended that buyers request developers to provide three certificates and one table, or both parties sign a quality assurance agreement to avoid quality issues caused by developers shortening the construction period to showcase the house type as soon as possible. At the same time, carefully compare the project planning drawings to avoid later construction affecting the lighting of the purchased house.
(2) Regarding hidden works.The model room is the face of a property project, so developers will execute high standards in style design, material selection, and decoration construction. However, there may be perfunctory situations in the construction of hidden works, which require buyers' attention. For example, drainage works, bathroom waterproofing, electrical wiring, water and heating pipelines, floor base, wall panel base, door and window frame base, ceiling base, etc., need to be carefully checked for compliance. If necessary, professional teams can be invited for inspection, and any issues should be communicated with the developer in a timely manner.
(3) Regarding decoration quality.Due to the display function of model rooms, a large number of buyers will enter the room for viewing. Therefore, buyers should pay attention to whether the house and decoration are damaged when purchasing a model room, especially checking the soft decoration, such as the firmness and flatness of the floor or tiles; checking whether the supporting facilities are damaged, etc. Generally, buyers can sign a damage compensation agreement with the developer when purchasing a model room to ensure their rights.
(4) Regarding the price of the house.The most attractive aspect of model rooms to consumers is the low price. Therefore, buyers should negotiate more with developers when purchasing model rooms, discussing aspects such as handover time and wear and tear of indoor decoration, ultimately forming a satisfactory transaction price.
(5) Regarding the handover date.The main function of model rooms is display, so developers usually choose to sell model rooms only after most houses are sold, or sign agreements with buyers to set a later handover date. Therefore, buyers with urgent occupancy needs need to pay special attention to the agreement on the handover date. At the same time, since model rooms involve later display, they are usually handled by the developer (the exhibitor) for the property ownership registration. At this time, it is important to note that the time for handling property ownership registration is not the handover time, but rather after the display period ends and the house meets the delivery standards.
(6) Regarding contract signing.In addition to the delivery content that should be clearly stated in the contract, model rooms may involve the removal or depreciation of some decorative items due to indoor decoration. At this time, buyers need to agree on a handling plan with the developer and clearly list it in the contract or supplementary agreement to avoid disputes during the formal handover later.
Part Two: Case Analysis
Case 1: Bi Gui Company vs. Zheng Property Service Contract Dispute
Case Number: (2024) Yue 1882 Min Chu 519
Case Summary:This case is a property service contract dispute. The plaintiff, Bi Gui Company, submitted the "Lianzhou Bi Gui Garden Preliminary Property Service Agreement", "Guangdong Province Commercial Housing Sale Contract", arrears details, WeChat payment reminders, "Pre-litigation Notice", and "Payment Reminder" to prove that the defendant, Zheng, owed service fees. The defendant, Zheng, submitted original photos of the model room (partially); photos of the room's condition after damage. After the court session, additional submissions included: audio recordings, video discs; screenshots of WeChat chat records; receipts. These were intended to prove that the house in question did not meet the delivery standards.Payment Reminderand the receipt of the "Pre-litigation Notice".
Judgment Result:The plaintiff's claims were dismissed.
Case Analysis:In this case, the court found that the defendant obtained the property registration certificate on November 23, 2021, but had not actually received the house. According to the supplementary agreement signed between the plaintiff and the developer regarding the "Commercial Housing Sale Contract", the developer was entrusted to handle the property registration of the house in question, meaning that the developer could handle the property registration without the defendant completing the handover procedures. Therefore, the time when the defendant obtained the property registration certificate could not be considered the time when the developer delivered the house to the defendant. The plaintiff also confirmed during the trial that the defendant had not yet actually received the house because it did not meet the delivery standards.
Case 2: Wang Cuihua vs. Hunan Orange County Urban Real Estate Co., Ltd. and Others - Commercial Housing Pre-sale Contract Dispute
Case Number: (2021) Xiang 01 Min Zhong 6072
Case Summary:This case is a commercial housing pre-sale contract dispute. The plaintiff believes that the defendant sold the basement belonging to her at a low price to a third party and claims that the basement is an accessory to the house she purchased. The defendant and the third party provided the "Supplementary Agreement for the Sale of Model Rooms", which stated that the defendant and the third party knew they were purchasing a model room, and the agreement clearly included the decoration, supporting facilities, and the already decorated basement.
Judgment Result:The appeal of Wang Cuihua was dismissed, and the original judgment was upheld.
Case Analysis:The purpose of citing this case is to remind home buyers that when signing a supplementary agreement for purchasing a house, it is often agreed upon the content negotiated with the developer. At this time, it is particularly important to clearly specify each item and try to list the details item by item, so that home buyers can provide clear evidence to protect their legal rights in case of disputes over the agreement content later.
Case 3: Hunan Hongji Real Estate Development Co., Ltd. and Ren Jinjun Housing Sale Contract Dispute
Case Number: (2021) Xiang 01 Min Zhong 2712
Case Summary:The appellant, Hongji Company, claims that Huanju Company is the obligor for the decoration of the house involved in the case and is responsible for the overdue decoration. The appellee has formed a legal relationship of decoration contract with Huanju Company. The first-instance judgment breaks through the relativity of the contract and the determination of the contract, and there are errors in both the determination of facts and the application of law regarding the appellant's liability for breach of contract due to overdue decoration. The appellee has reached a new supplementary agreement with Huanju Company regarding issues such as overdue decoration, which has resolved the issues of overdue decoration. The appellee also acknowledges that the responsibility arising from the overdue decoration belongs to Huanju Company.
The appellee, Ren Jinjun, states that the construction personnel for the decoration contract were designated by Hongji Company, and Ren Jinjun did not negotiate any decoration matters with Huanju Company. The decoration project standards were confirmed by Hongji Company and Huanju Company, and in essence, it is fulfilling the obligation of fine decoration on behalf of Hongji Company. The decoration funds from Huanju Company all come from Hongji Company. The fine decoration cooperation agreement signed between Hongji Company and Huanju Company clearly stipulates that Hongji Company collects the fine decoration funds and then pays them to Huanju Company, so the legal responsibility for decoration should be borne by Hongji Company.
The third party, Huanju Company, argues that signing a supplementary agreement for fine decoration with the owner is a supplement and continuation of the residential decoration engineering construction contract previously signed by both parties. The contract stipulates that Huanju Company pays a one-time compensation fee to the owner. At this point, the owner can no longer claim any rights from Huanju Company, and the rights and obligations of both parties regarding decoration are thus concluded.
Judgment Result:The original judgment is revoked, and all litigation requests from Ren Jinjun are dismissed.
Case Analysis:This case involves a dispute over the decoration of the model house purchased by the home buyer. The special point of this case is that after signing the 'Commercial Housing Sale Contract' with the developer, the buyer also signed a 'Residential Decoration Contract' with the decoration company hired by the developer, and supplementary matters were also agreed upon.
From the perspective of the delivery result, after Ren Jinjun paid the house price, he should receive a house decorated according to the model house standards. However, Hongji Company, Huanju Company, and Ren Jinjun have externalized the aforementioned process by signing a commercial housing sale contract in which Hongji Company sells the rough house to Ren Jinjun, and then Ren Jinjun separately signs a decoration contract with Huanju Company, with the decoration costs (model house standards) paid by Hongji Company. Therefore, Hongji Company does not need to bear decoration-related obligations.
However, it should be noted that Hongji Company, as the appointing party of the decoration company, should bear corresponding obligations regarding the selection of the decoration company, supervision of the decoration process, and payment of decoration funds. Home buyers can separately sue Hongji Company for faults in the decoration contract relationship and claim compensation.
Part Three: Risk Avoidance Suggestions in the Sale of Model Houses
As model houses are usually sold by developers at preferential prices, there are often cases where the soft decoration is exquisite while the hidden works are rudimentary. As a home buyer, when choosing such houses for various reasons, you can refer to the following suggestions:
1. Sign a comprehensive supplementary agreement with the developer. The purpose of the supplementary agreement is to form written evidence. Home buyers need to fully consider the delivery standards, replacement items for decoration, compensation for decoration damage, responsible parties, and whether there are any complimentary items in the negotiation content. Regarding the confirmation of delivery standards, it is best to require the developer to create a detailed list.
2. Retain images and video materials. When it is not possible to record the delivery standards of the model house in writing, you can use mobile phones, cameras, and other photographic equipment to record, and in the video, ask whether this part belongs to the delivery standard content, requesting a clear response from the developer.
3. Fulfill the responsibilities of the buyer and retain relevant evidence. During the house delivery process, home buyers should promptly respond to the inspection notices issued by the developer, save evidence of any issues found in a timely manner, and request the developer to rectify within a specified time to minimize their own losses.
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