The pre-sale house loan failed, and the court decided to reduce the liquidated damages to 10%, triggering discussion on contract protection.

The purpose of finalized signing of pre-sale housing sales is to confirm rights and obligations. If the court can adjust the proportion of liquidated damages stipulated in the original contract, whether the builder can also obtain the same contractual protection is worthy of further discussion by administrative and judicial authorities. (Picture/schematic diagram, not the project)

If the house purchase loan is not approved, how should liquidated damages be calculated? In 2023, a woman from Hsinchu purchased unit F10 of the second phase of the "Yishan" project in Xinpu, Hsinchu, for NT$36.65 million. Before handing over the house, she had a dispute with the builder due to loan issues. The builder claimed a 15% liquidated damages in accordance with the contract. However, the court believed that the buyer did not breach the contract in bad faith, and ultimately reduced the liquidated damages from 15% to 10% of the total price of the house, awarding a compensation of NT$3.665 million.

According to the Hsinchu District Court’s Civil Judgment No. 368 of the 115th Year, the case obtained a use license in September 2025. The builder informed Ling Nu that she must contact the bank to apply for a loan within 20 working days, which should be completed by October 30 at the latest, but Ling Nu failed to complete it as scheduled. Ling Nu claimed that due to the influence of central bank policies, Yushan Bank refused to undertake the project until the end of November. Later, although the builder agreed to extend the time limit, it required a "delayed transfer and closing document" to be signed, and the two sides started to dispute again.

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The court found that Ling Nu expressed her willingness to sign the closing agreement on December 1, but she still did not sign it until December 8. The builder later shortened the deadline to three days. As for Ling Nu’s claim that Hsinchu Sanxin had agreed to loan approval, the court held that the relevant conversation records could only prove the “possibility of loan approval” and were not enough to prove that the loan application had been completed because loan application also included procedures such as valuation, determination of loan amount, and guarantee. However, considering that Ling Nu did continue to apply for loans from the bank during this period and it was not a malicious breach of contract, the liquidated damages were reduced from 15% to 10%.

He Shichang, CEO of Xinchuan Real Estate Think Tank, analyzed that judging from the content of the judgment, the builder notified the loan application from the end of September to around the end of November, and the actual time given was about 2 months. In the current environment where bank loan volume is tight, it is indeed not a long time. Therefore, Ling Nu’s claim that it was affected by the central bank’s policy should be possible.

He Shichang pointed out that after Ling Nu reported the loan problem, the builder actually agreed to extend it to the end of December, but the prerequisite was to sign the "Delayed Transfer Agreement". Ling Nu's failure to sign after the deadline may become the key to the builder's subsequent claim for liquidated damages. He believes that, Applying for a bank loan is indeed time-consuming and time-consuming. Builders and consumers should be considerate of each other. Builders can grant a longer loan application period at their discretion, but buyers must also tighten the clock. If they mistakenly believe that the deadline can be postponed again and again, they may end up having to spend money to pay tuition.

Lu Jingmin, president of "Residential Weekly", questioned whether the provisions of "What Should Be Recorded and Not Recorded in Contracts" can still be binding if the court repeatedly lowers the liquidated damages in similar cases based on the circumstances of the case. He said that the finalized contract for the sale of pre-sale houses by the Ministry of Interior between the buyer and seller is to confirm the rights and obligations. If the court can adjust the proportion of liquidated damages agreed in the original contract, whether the builder can also obtain the same contractual protection is worthy of further discussion by administrative and judicial authorities.