If the compensation and resettlement housing acquired through expropriation is sold separately, can the expropriated party claim double damages when seeking to terminate the agreement?

[Case Summary]

On May 30, 2003, Wu Qingzhi signed a “Demolition Compensation and Relocation Agreement” with Xinjiang Chuangtian Real Estate Development Co., Ltd. (hereinafter referred to as Chuangtian Company), under which Chuangtian Company agreed to demolish Wu Qingzhi’s 21 houses and provide him with resettlement in situ through property rights exchange. Specifically, Chuangtian Company was to allocate three residential units—each measuring 60 square meters—in the fourth unit of the resettlement building on Jianquan Street, along with one basement space for each unit, and also provide 20 square meters of non-residential space for Wu Qingzhi. After signing the agreement, Wu Qingzhi was required to vacate his houses within five days and hand them over to Chuangtian Company free of charge for demolition. By the end of 2006, once the resettlement building covered by the demolition agreement—the current Building No. 7 in Xiangyang Residential Community—was completed, Chuangtian Company sold the three units in the fourth unit—units 1, 2, and 3—allocated to Wu Qingzhi to other parties, failing to provide him with the promised resettlement. Subsequently, the two parties entered into two supplementary agreements, under which two of the units originally stipulated in the Demolition Compensation and Relocation Agreement were converted into monetary compensation, while the remaining unit—a 60-square-meter residential unit—was to be separately compensated and resettled. At the same time, Chuangtian Company paid Wu Qingzhi an additional transitional allowance of 10,000 yuan for the delayed relocation. However, since Chuangtian Company has yet to provide Wu Qingzhi with the third resettlement unit, Wu Qingzhi filed a lawsuit in court, requesting the termination of the compensation agreement and demanding that Chuangtian Company pay double the current market value of the house (currently valued at 280,000 yuan) as compensation, as well as payment of the overdue transitional allowance.

During the trial, both parties acknowledged that the current market value of the third unallocated property is 280,000 yuan. Additionally, the court found that Chuangtian Company has consistently paid Wu Qingzhi an overstay transition allowance at a rate of 125 yuan per person per month. From January 1, 2009, to the present, Chuangtian Company has failed to pay Wu Qingzhi the overstay transition allowance for the third property. Wu Qingzhi’s family consists of four members.

Relying on the provisions of Article 7 and Article 8 of the “Interpretation by the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Commodity Housing Sales Contracts,” the court of first instance ruled to terminate the “Demolition Compensation and Resettlement Agreement” between Wu Qingzhi and Chuangtian Company, ordered Chuangtian Company to pay Wu Qingzhi double compensation amounting to 560,000 yuan, and to pay Wu Qingzhi an overdue transition allowance of 11,500 yuan. Dissatisfied with the first-instance judgment, Chuangtian Company filed an appeal. However, the court of second instance dismissed the appeal and upheld the original judgment.

[Legal Analysis]

From the perspective of this case, the demolition compensation and resettlement agreement signed between Wu Qingzhi and Chuangtian Company genuinely reflects the true intentions of both parties and is binding on both sides. Both parties should fulfill their obligations in accordance with the agreement. As the person being demolished, Wu Qingzhi’s house constitutes his most basic means of livelihood. The act of Chuangtian Company selling the compensated and resettled housing to others already constitutes a fundamental breach of contract. According to Article 7 and Article 8 of the “Interpretation by the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Commodity Housing Sales Contracts,” if the housing provided as compensation and resettlement is sold separately to another party, the expropriated person enjoys a special priority claim. Therefore, if the person being demolished requests priority in obtaining the compensated and resettled housing, such request should be supported. Furthermore, if the expropriated person terminates the compensation and resettlement agreement, he or she may claim double the current market value of the proposed compensation housing as damages.

According to Article 11 of the "Guiding Opinions on Housing Demolition and Compensation on State-Owned Land in Kunming City," if residential housing is provided beyond the transitional period, and a similar case occurs in Kunming, the relocated persons may claim temporary relocation compensation from the demolisher at twice the originally agreed-upon standard.

[Relevant Laws]

Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Adjudication of Disputes over Commodity Housing Sales Contracts

Article 7: The demolisher and the demolished party shall enter into a demolition compensation and resettlement agreement based on property rights exchange, clearly stipulating that the demolisher will provide compensation and resettlement to the demolished party by means of a specific property with a defined location and intended use. If the demolisher subsequently sells this compensated and resettled property to a third party, the request by the demolished party for priority acquisition of the compensated and resettled property shall be supported.

If the person subject to demolition requests termination of the demolition compensation and resettlement agreement, the matter shall be handled in accordance with Article 8 of this Interpretation.

Article 8: If any of the following circumstances occurs, making it impossible to achieve the purpose of the commodity housing sales contract, the buyer who is unable to obtain the property may request termination of the contract, return of the paid purchase price together with interest, and compensation for losses. Furthermore, the buyer may also request the seller to assume liability for damages not exceeding one times the amount of the purchase price already paid:

(1) After the conclusion of the commodity housing sales contract, the seller, without informing the buyer, mortgages the property to a third party.

(2) After the real estate sales contract has been concluded, the seller subsequently sells the same property to a third party.

Guiding Opinions on the Expropriation and Compensation of Houses on State-Owned Land in Kunming City

Article 11: The temporary relocation allowance for those who choose the property rights exchange method shall be calculated and paid based on the floor area of the property selected for exchange. The calculation shall commence from the date when the relocated party has vacated and handed over the premises, and such allowance shall be paid at least once every six months. The entity responsible for land acquisition and demolition shall pay the temporary relocation allowance to the relocated party according to the transition relocation period specified in the “Demolition Compensation Agreement.” During the transition period, the relocated party shall independently arrange temporary housing. For residential units arranged beyond the transition period, starting from the month following the expiration of the transition period and lasting until three months after the delivery of the exchanged property, the temporary relocation allowance shall be paid to the relocated party at twice the originally agreed-upon rate.

[Reference Materials]

Intermediate People's Court of Urumqi City, Xinjiang (2011) Wuzhong Min Si Zhong Zi No. 357 Civil Judgment

Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Adjudication of Disputes over Commodity Housing Sales Contracts

Guiding Opinions on the Expropriation and Compensation of Houses on State-Owned Land in Kunming City