A PROPERTY owner has been ordered to pay the maximum compensation, 20 percent of the agreed home price, for breaching a home purchase contract.

    Real estate agents said the case might indicate a new tendency for judges to impose harsher punishments on contract breakers in order to curb breaches.

    The Longgang District People’s Court handed down the ruling July 19, the Southern Metropolis Daily reported Thursday.

    The owner, who refused to transfer the ownership of the apartment, located in Bantian Subdistrict, has to pay 440,000 yuan (US$70,840) in compensation to the buyer. According to the ruling, the owner also has to cover legal costs and maintenance costs totaling 7,820 yuan.

    The buyer and the owner signed the contract March 14 this year. But the property owner failed to transfer the property after discovering its value had increased significantly after the contract was signed.

    The 88-square-meter apartment was sold to the buyer at 2.2 million yuan, but the price rose to nearly 2.8 million yuan in only a month, according to an evaluation by a third-party.

    Housing prices in Shenzhen have risen significantly since April because of new purchasing policies meant to stimulate the real estate market in China.

    The property owner backed out of the deal April 22, saying that the apartment’s current tenants did not agree to move and wanted to purchase the property.

    The buyer filed a lawsuit against the owner May 5, claiming that the owner’s reason for abandoning the contract was not valid, as the contract required the owner to make sure no tenants lived in the property before signing a new contract.

    The court decided that it wasn’t possible to enforce the sale, but decided the property owner needed to compensate the person who wanted to buy the apartment.

    According to some real estate lawyers, it is rare for the courts to demand a compensation of 20 percent when dealing with cases of pre-owned apartment trading. Normally, the compensation only amounts to 10 or 15 percent of the total value of the property.

    Many property owners in Shenzhen broke home-sale contracts over the past few months, leading to lawsuits and pushing the courts to give heavier fines.

    (Zhang Qian)