Practical Points of Commercial Housing Buyers' Execution Objection - From the Perspective of Taihe Beijing Yard's Execution Objection
Introduction
In January 2020, a customer purchased a commercial residential property in Beijing Courtyard (Phase II), developed by Tahoe, and a single purchase contract marked the beginning of a long journey to protect their rights. Property developers have defaulted, projects have stalled, and multiple creditors have filed lawsuits to seize land-use rights, leaving homes undelivered for an extended period. At present, all homeowners, under the guidance of the relevant government authorities, are pooling together the remaining balance of their home purchase payments and have entrusted the general contractor to resume construction, striving to ensure that the homes can be delivered and occupied after being stalled for seven or eight years.
In view of the prolonged delay in the delivery of the property, the client in this case filed a lawsuit with the Chaoyang District People’s Court in July 2024, seeking to rescind the contract, have the developer refund the entire purchase price, and pay liquidated damages. In August 2025, the case was first heard in court, and the client simultaneously applied for property preservation measures with respect to the property in question, which at that time was still under construction. During the preservation proceedings, the enforcing judge stated that it was necessary to verify the mortgage status of the construction-in-progress, and therefore the preservation could not be successfully completed.
After extensive communication and analysis, the SupremeArticle 3 of the Supreme People’s Court’s Reply Concerning the Protection of Rights and Interests of Consumers of Commodity Housing provides: Where a house cannot be delivered and there is no realistic possibility of delivery, if a consumer of commodity housing asserts that its claim for the return of the purchase price takes priority over the contractor’s priority right to payment for construction works, mortgage rights, and other creditors’ claims, the people’s court shall uphold such claim.
However, in this case, there are arrangements for the continuation of construction (with relevant government departments taking the lead and the homeowners voluntarily pooling remaining funds to proceed with construction). The buildings are about to be completed and put into use. The reason for continuing construction is not financial support from the developer, but rather that all homeowners are using their entire remaining loan proceeds to self-fund the completion of the buildings; therefore, it is not the case that “there is no realistic possibility of delivery.”Article 3 of the said reply is not applicable.
If the buyer insists on terminating the contract, their claim for a refund of the purchase price will not prevail against the priority right to payment for construction project costs or the mortgage rights. Given that the developer has already lost its ability to pay, such termination could result in the complete loss of the initial down payment. After weighing the pros and cons, the client decided to withdraw the lawsuit and forgo canceling the purchase, opting instead to retain the property, pay the remaining balance through a mortgage, and await delivery.
At present, the project in question is nearing completion and acceptance; however, the land use rights have been subject to initial seizures by more than twenty institutions, as well as subsequent queued-up seizures. To retain ownership of the property, one must assert the real‑property expectancy rights of a homebuyer through the procedures for filing an objection to enforcement or bringing an action challenging the enforcement.
During the course of case handling, it has been observed that many purchasers confuse two distinct procedural frameworks: objections to enforcement (subject to formal review by the Enforcement Bureau) and actions contesting enforcement (subject to substantive adjudication by the trial court). Furthermore, there is a lack of clarity regarding the logical relationships, review standards, litigation structures, and boundaries of ancillary claims among Article 29 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Handling of Cases Involving Objections to and Reviews of Enforcement” (hereinafter referred to as the “Objections and Reviews Provisions”), Article 125 of the Supreme People’s Court’s Notice Issuing the “Minutes of the National Courts’ Conference on Civil and Commercial Trial Work” (hereinafter referred to as the “Nine Civil Minutes”), and Article 11 of the “Interpretation of the Supreme People’s Court on Questions of Law Applicable to the Trial of Actions Contesting Enforcement” (hereinafter referred to as the “Judicial Interpretation on Actions Contesting Enforcement”), which often leads to procedural pitfalls.
Drawing on practical experience in handling cases, this article identifies and analyzes the key issues that require particular attention in enforcement objections.
1. The logical relationships among core legal norms
1. Article 29 of the “Provisions on Objections and Reconsiderations”:
This primarily applies during the stage of filing an objection to enforcement and serves as the direct basis for the formal review conducted by the Enforcement Bureau. It stipulates three requirements for excluding commercial housing purchasers from enforcement: a lawful written sales contract must have been signed prior to the seizure; the purchased residential property must be intended for the purchaser’s own residence, and the purchaser must not own any other residential property; and the price already paid must exceed 50% of the total purchase price. The original intent of this provision was to facilitate a swift procedural review, with an emphasis on formalities and documentary evidence.
2. Article 125 of the “Minutes of the National Judicial Conference on Civil and Commercial Cases”:
These are rules guiding judicial practice and do not directly apply to the examination of enforcement objections (which is conducted on a formal basis). They are specifically intended for the substantive trial of actions contesting enforcement, with a particular focus on clarifying the condition that “the purchased residential property is intended for habitation and the purchaser does not own any other residential property.” The phrase “does not own any other residential property” refers to properties within the same prefecture-level city or county-level city. Even if the purchaser owns one residential property, they may still meet the requirements if that property satisfies their basic need for improved housing conditions.
The minutes clarify that when a court hears an action for enforcement objection, it may apply Article 29 by analogy; however, this does not mean that the trial standards are to be applied wholesale during the enforcement objection stage.
3. Article 11 of the “Judicial Interpretation on Actions for Objection to Enforcement” (Interpretation [2025] No. 10):
It specifically regulates the substantive adjudication of actions objecting to enforcement, updating and upgrading the requirements for excluding commercial housing purchasers from enforcement. The previous criterion of “owning no other residential property” is no longer used; it has been replaced with “the purchased commercial housing is intended to meet the family’s residential needs,” thereby lowering the rigid threshold for what constitutes a “single residence.” Additionally, a new rule has been added: where partial payment has been made, if the remaining purchase price is deposited with the court for enforcement between the date of seizure and the conclusion of the first-instance court debate, this also satisfies the requisite conditions. In terms of effect, such purchasers may exclude the priority right to payment for construction project costs, mortgage rights, and the compulsory enforcement of ordinary monetary claims.
2. Key practical issue: During the stage of filing an objection to enforcement, is it more advantageous to seek dismissal, or to obtain a ruling suspending enforcement?
An objection to enforcement is merely a preliminary procedure; whether the ruling grants the objection (suspending enforcement) or rejects it, it does not ultimately resolve the dispute.
1. If the objection to enforcement results in a direct ruling to suspend execution:
The applicant for enforcement will likely file a lawsuit challenging the enforcement order within 15 days, with the applicant as the plaintiff and our party as the defendant in the litigation.
2. If the objection is dismissed by order:
As a third party to the case, we will file a lawsuit objecting to the enforcement proceedings within 15 days. As the plaintiff, we will have control over the timing of the filing, the relief sought, and the organization of evidence.
In this case, for stalled property delivery projects that are subject to multiple seizures, have construction-in-progress mortgages, and involve complex legal relationships, having a claim dismissed often works more to the advantage of third parties.. The client initiates a third-party objection lawsuit, takes the lead in formulating the claims and preparing the evidence, thereby avoiding having to respond to the suit passively. At the stage of a lawsuit challenging an enforcement order, all creditors holding successive liens may be designated as third parties to ensure that the court’s judgment is binding on all lienholders.
Risk Warning
One should not deliberately adopt a passive approach to presenting evidence solely in order to obtain a rejection decision. Even during the stage of filing an objection, all evidence must be submitted in full to prevent the court from forming a prejudgment on facts that may be unfavorable to our side in any subsequent litigation arising from the objection.
3. Practical understanding of Article 125 of the Nine Provisions on Civil Matters: "The purchased commercial housing is for residential use, and the buyer does not own any other residential properties."
This provision serves as a substantive standard of interpretation applicable during the trial phase and cannot be directly applied to the formal review of enforcement objections.
Geographic scope: The requirement does not apply nationwide; it is limited to the same prefecture-level city or county-level city. Having housing elsewhere does not affect eligibility. Eligibility is assessed on a household basis, defined as the married couple and their minor children.
2. Moderately accommodating housing for improvement: Even if a household already owns one residential property in the same city, a newly purchased home whose size still meets the family’s basic living needs may still be deemed to qualify as “for residential use.” However, properties classified as luxury homes or clearly intended for investment purposes will not be afforded such protection.
3. Procedural distinctions: At the stage of filing an objection to enforcement, enforcement judges often apply a mechanical standard, directly accessing real estate registration records; as long as the party has a registered residential property within the city, they will, on a formalistic basis, deem that the requirements of Article 29 are not met. However, at the trial stage of an action contesting the enforcement order, judges may, taking into account family size and housing needs and with reference to the “Minutes of the Ninth National Judicial Conference,” adopt a more substantive and lenient approach in their determination.
4. Article 11 of the “Judicial Interpretation on Actions for Objection to Enforcement” has been revised to state “used to meet the residential needs of the family,” and no longer imposes the strict requirement that the party “does not own any other residential property.” This represents a significant change in judicial practice.
In short: enforcement objections are assessed based on the appearance of the registration records, while actions challenging such objections are evaluated based on actual housing needs; there is a discrepancy between these two standards. Many purchasers encounter setbacks during the objection phase, but there remains substantive room for reversal in the subsequent action challenging the order.
4. Under the backdrop of multiple seizures, issues concerning the parties' standing and the effect of judgments in enforcement objection lawsuits.
In this case, the land use rights are subject to more than twenty primary and queued-up seizure orders. According to Article 2 of the “Judicial Interpretation on Actions for Objection to Enforcement”: In property preservation and enforcement proceedings arising from monetary claim disputes, where the subject matter of enforcement is subject to successive seizure, detention, or freezing, a third party may bring an action for objection to enforcement, with the applicant for preservation or the applicant for enforcement who first effected the seizure or holds a security interest or other priority right as the defendant, and other known applicants for preservation or applicants for enforcement who have imposed successive seizures as third parties.
1. Parties to be joined: The first-ranking creditor and the mortgagee shall be designated as defendants; all known creditors holding subsequent, pending liens shall be designated as third parties without independent claims, and shall be included in the adjudication of this case in a single proceeding, thereby avoiding repeated objections and redundant litigation by third parties with respect to each successive lien.
2. Res judicata: The judgment shall have res judicata effect only with respect to the defendants and third parties who participated in the litigation. Third parties whose property has been placed under standby attachment who were not included in the litigation proceedings, did not receive notice, and did not participate in the trial are not bound by the judgment; such third parties must still seek separate relief with respect to that portion of the property.
3. Practical obstacles: At the time of case filing, some courts refuse to include all creditors subject to queued attachments as third parties, on the ground that such attachments have not yet taken legal effect. In this regard, one should cite Article 2 of the Judicial Interpretation on Actions for Objections to Enforcement and argue the case on legal grounds, striving to include all known entities holding successive attachment orders in the litigation to achieve a one-time resolution of the dispute.
4. Consequences: If only the first-ranking creditor is sued, a favorable judgment will only stay the enforcement proceedings initiated by that creditor; the other queued-up liens will remain in place, and the property still cannot be transferred after completion of theCompletion acceptance (completion acceptance) procedures.
5. In a lawsuit for objection to enforcement, can the plaintiff also bring a claim for obtaining a property ownership certificate? How does the court review such a claim?
Pursuant to Article 5 of the Judicial Interpretation on Actions for Objection to Enforcement, in an action brought by a third party objecting to enforcement, the plaintiff may concurrently assert claims for relief, such as requesting the registration of transfer of real property (issuance of a property ownership certificate), and the court may hear such claims in a consolidated proceeding; however, the court also has the discretion, depending on the circumstances of the case, to clarify that the plaintiff must file a separate lawsuit and that the cases should be handled separately.
The core considerations for the court in reviewing and adjudicating claims for property ownership certificates.
1. Whether the property objectively meets the conditions for obtaining a property ownership certificate: the project has completedCompletion acceptance (completion acceptance), completedCompletion filing (completion filing), and the developer has completed the initial registration (obtaining the master title deed). This case is currently in the final stages of completion and has not yet obtained the property ownership certificate, so, objectively speaking, it does not yet meet the conditions for transfer of ownership. Even if the court determines that our party possesses civil rights sufficient to preclude enforcement, it cannot directly order the immediate issuance of the property ownership certificate; typically, it can only render a judgment that…“The house in question shall not be subject to enforcement”; after the developer has completed the initial registration, the transfer of ownership may then be processed, or a separate claim for such transfer may be made.
2. Whether a mortgage exists on the subject matter: If the land or the building is subject to a registered mortgage, transfer of ownership is legally impossible until the registration is canceled. Even if the sales contract is valid, it does not permit bypassing the mortgage right and directly ordering the transfer of ownership.
3. Developer’s Obligation to Cooperate: Obtaining the property ownership certificate is a contractual obligation of the developer; however, as the party subject to enforcement, the developer often loses its ability to perform this obligation.
Recommendation
The claims in the lawsuit are structured in two tiers:
① Request for confirmation of the property rights expectancy enjoyed by a purchaser of commercial housing, with a judgment that the house in question shall not be subject to enforcement;
②Request, subject to certain conditions, that the developer cooperate in completing the transfer registration once the conditions for obtaining the property certificate are met. Do not directly request the immediate issuance of the property ownership certificate, as such a claim may be dismissed outright.
6. Can a third party directly request the cancellation of a mortgage in litigation? What are the practical implications for homeowners if the mortgage cannot be canceled?
1. The Scope of Claims for the Cancellation of a Mortgage Right
According to Article 13 of the Judicial Interpretation on Actions for Objections to Enforcement, only when a third party deposits with the people’s court an amount sufficient to satisfy the principal claim secured by the mortgage may such party bring a joint suit requesting the mortgagee to cancel the registration of the mortgage on a unit-by-unit basis; in such cases, the court shall grant the relief. In other words, without first discharging the secured debt on behalf of the debtor, one cannot directly bring a lawsuit seeking a court order to have the mortgagee cancel the mortgage without compensation.
A mortgage is a real right of security, and the mortgagee’s priority right of repayment may not be directly deprived solely on the basis of a house sale contract. The priority of rights enjoyed by purchasers of commercial housing means that such rights take precedence over enforcement and disposal proceedings, but it does not directly extinguish the registered mortgage right.
2. The inability to cancel the mortgage registration has a significant impact on homebuyers who have already won their lawsuits.
Even if a favorable judgment is obtained stating that the property in question may not be subject to enforcement, the mortgage right will still remain registered in the real estate registry. Although the property ownership certificate can be issued, issues will persist regarding subsequent transfers and disposals of the property.
7. Case-handling insights: Practical reminders for homebuyers in commodity housing regarding the protection of their rights through execution objections.
Drawing on the experience of Taihe Beijing Courtyard, here are several practical reminders for homebuyers whose projects have been affected by a property developer’s financial crisis, including issues such as ensuring project delivery and multiple property seizures:
1. Exercise caution when choosing your course of action: opting to have the purchase price refunded or retaining the property entails entirely different legal consequences. Article 3 of the “Reply on Issues Concerning the Protection of Consumers’ Rights in Commodity Housing” grants priority for the return of purchase price only under the strict condition that “the house cannot be delivered and there is no realistic prospect of delivery.” If the project still has prospects for resuming construction and obtaining completion acceptance, ordinary creditors who receive refunds upon withdrawal from the contract will be unable to prevail over construction contractors’ priority rights and mortgage rights, and may very well end up with neither the property nor their money.
2. Distinguish between the two procedural systems of execution objections and litigation concerning execution objections, and do not treat execution objections as a final remedy. An objection to enforcement is merely a procedural screening; the substantive dispute is ultimately resolved in an enforcement‑related lawsuit. Do not dwell excessively on the outcome of the opposition decision; instead, focus on preparing the substantive evidence for litigation.
3. Fully understand the differences among the provisions: Articles 29 of the “Provisions on Objections and Reconsideration,” Article 125 of the “Minutes of the Ninth National Judicial Conference,” and Article 11 of the “Judicial Interpretation on Actions for Enforcement Objections” apply at different stages and employ distinct review standards; they should not be cited or applied interchangeably.
4. In cases involving multiple liens, to the extent possible, include the first lienholder and the mortgagee as defendants, and list all known creditors holding subsequent liens as third parties, so as to resolve the matter in a single proceeding and avoid multiple lawsuits.
5. The claims in the lawsuit should be pragmatic: do not directly seek an order for the immediate issuance of the property ownership certificate, nor directly request a judgment to cancel the mortgage right. The issuance of certificates depends on the project’s completion and acceptance as well as the developer’s master property certificate; in principle, the cancellation of a mortgage requires the surrogate settlement of the underlying debt. Claims should be processed with conditions attached to avoid the risk of all claims being dismissed.
6. In preparing the evidence, retain complete copies of the sales contract, payment vouchers, documentation regarding the purpose of the purchase, your family’s housing situation, and all relevant materials pertaining to the project’s resumption of construction, so as to have a comprehensive set of evidence ready for the substantive trial of the objection lawsuit.
Conclusion
In the context of real estate developers defaulting on their obligations, consumers of pre-sale residential properties cannot simply rely on applying a single judicial interpretation to secure a favorable judgment. Procedurally, it is necessary to distinguish between the formal review of enforcement objections and the substantive review of objection lawsuits; substantively, one must clarify the different conditions for applying the rights to demand delivery and to request a refund. By taking into account the objective realities of multiple seizures and mortgages on construction-in-progress, we can best safeguard the housing rights of homebuyers.
Attorney Li Yuhuan
Senior Partner at Zhiheng Beijing
Director of the Department of Legal Affairs for Non-Performing Assets and Special Opportunities
Deputy Director of the National Committee on Compulsory Enforcement at Zhiheng
Provisional Member of the Zhiheng National Supervisory CommitteeBusiness areas
Non-performing asset investment and financing, corporate bankruptcy reorganization (including listed companies), private equity fund investments, real estate investment and financing, insurance fund investments
Attorney Profile
To date, he/she has been practicing law for over a decade and has held key positions such as General Counsel, Head of Compliance and Risk Management, and Head of Investment at both domestic and foreign-invested enterprises and funds, including Orient Asset, Fosun Group, and CapitaLand (China) Investments. Possesses extensive hands-on experience in corporate management, corporate governance, risk control, and internal control compliance.
Case Study:
Provided litigation and non-litigation services for asset disposal matters involving China National Machinery Industry Corporation, a Fortune China Top 100 enterprise, as well as several of its subsidiaries.
Serves as regular legal counsel to several insurance companies;
Served as special legal counsel for a state-owned cultural investment fund and its multiple sub-funds, as well as for the portfolio companies, playing a pivotal role in the deployment of a domestic and overseas fund with assets under management totaling hundreds of billions, and in risk control management.……