Taiwan developer spectacle! After signing a reservation contract, they backed out, only refunded the deposit, and sold to someone else. Court orders compensation of 28.22 million yuan.

A woman surnamed Tseng in Taiwan agreed to buy a house from Jingcheng Construction for NT$18.1 million, paying a NT$100k deposit to sign a reservation contract. However, the builder later reneged and only offered to refund NT$120k to settle the matter. After more than three years of litigation, the builder sold the same unit for NT$46.22 million. The Taiwan Qiaotou District Court ultimately ruled that the builder was at fault and ordered it to pay compensation for lost profits plus the deposit, totaling NT$28.22 million.

(Background: A series of unfinished buildings! A builder in Chiayi absconded, leaving NT$24 million in down payments lost. What are the loopholes in Taiwan's pre-sale housing system?)
(Background supplement: Taiwan's housing market Q1 transaction volume hit the third-lowest in history! A sales agent bluntly said, "Housing prices won't skyrocket anymore.")

Table of Contents

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• Conditions on the Builder's Reservation Order
• Court Calculated the "Lost Price Difference"
• Gained NT$28 Million, Ultimately Returned in Full

Key Summary

• Woman surnamed Tseng agreed to buy a house for NT$18.1 million, paid a NT$100k deposit, but the builder reneged.
• During litigation, the builder sold the same unit, with the price surging to NT$46.22 million.
• Court ordered Jingcheng Construction to pay lost profits plus the deposit, totaling NT$28.22 million.

When the price difference of a house reaches over NT$28 million, would a builder choose to sell according to the contract or renege? Jingcheng Construction chose the latter.

According to Taiwan Qiaotou District Court Civil Judgment No. 112-Nian-Du-Zhong-Su-Zi-159, the story begins with a "reservation" (reservation order). A woman surnamed Tseng took a liking to a new house built by Jingcheng Construction. Both parties agreed on a total price of NT$18.1 million (including a parking space). The woman paid a NT$100k deposit and signed a reservation, preparing to enter the formal signing process.

Unexpectedly, the builder reneged. Jingcheng Construction likely thought the price was too low and refused to perform the main contract, only offering to refund the NT$100k deposit plus an additional NT$20k to settle the matter. The woman surnamed Tseng disagreed and directly sued in court, a case that lasted over three years.

Conditions on the Builder's Reservation Order

In court, Jingcheng Construction argued that the reservation order clearly stated: "This price is subject to company approval; otherwise, the paid deposit will be refunded without interest," and "This price is subject to company approval before sale; if not approved, the original amount will be refunded without interest, and the contract will be unconditionally canceled." The builder claimed the company had the final say on the sale and was justified in reneging.

Legally, a reservation is a contract "agreeing to sign a formal sale contract in the future," which is different from the main contract (formal sale agreement). In plain terms, signing a reservation does not give the builder 100% room to back out; breaking the reservation and failing to sign the main contract also incurs responsibility.

The court looked not at the fine print on the reservation order but at the substance. Since Jingcheng Construction accepted the deposit and signed the reservation, it had an obligation to proceed with signing the main contract. The builder's subsequent sale of the house to another party, causing the contract to be unfulfillable, was deemed an event attributable to the builder.

Both the first and second trials ruled in favor of the woman surnamed Tseng, but the builder appealed again. However, before the lawsuit was concluded, the builder sold the house at a higher price, effectively providing evidence that "the original price was indeed too low."

Court Calculated the "Lost Price Difference"

The woman surnamed Tseng's loss was not the NT$100k deposit but the "lost profit." This falls under civil law damages, which calculate not only actual losses but also unrealized gains.

The woman's side directly used the price at which the builder sold the unit during litigation as evidence of market value. During the lawsuit, Jingcheng Construction sold the same house plus parking space to someone else for NT$44.52 million plus NT$1.7 million, totaling NT$46.22 million. Deducting the original agreed price of NT$18.1 million, the difference was NT$28.12 million, which became the lost profit the woman failed to gain.

Most people think that if a builder backs out, at most they have to refund double the deposit. But the court directly calculated lost profits, an amount nearly 30 times the deposit.

Adding the original NT$100k deposit, Jingcheng Construction had to pay the woman surnamed Tseng a total of NT$28.22 million, plus interest at 5% per annum from July 17, 2024, until the date of full payment. Litigation costs were also entirely borne by the builder. (The woman could apply for provisional execution after providing NT$9.41 million as security; Jingcheng Construction had to provide the full NT$28.22 million as security to avoid provisional execution.)

Gained NT$100k, Ultimately Returned in Full

Jingcheng Construction had originally calculated the difference as merely an extra refund of NT$20,000. To save that NT$20k, the builder gambled on litigation and ended up with a judgment requiring payment of NT$28.12 million in lost profits plus a NT$100k deposit. The profit from selling to another party was almost entirely returned, and the builder also bore over three years of litigation costs.

This is a very unique civil real estate case. If the builder had not sold the property during the lawsuit, the outcome might have been different.

Frequently Asked Questions

If a builder reneges after signing a contract and only refunds the deposit, is that legal?

Not necessarily. The court determined that the builder had an obligation to sign the main contract. If the contract cannot be fulfilled due to reasons attributable to the builder, the buyer can claim lost profits, not just the deposit. In this case, the builder was ultimately ordered to pay NT$28.22 million.

What is "lost profit"?

Lost profit is a type of civil damages, referring to profits that could have been obtained but were not. The court used the builder's resale price of NT$46.22 million as the market value, deducted the original agreed price of NT$18.1 million, and calculated NT$28.12 million.