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April 7, 2011

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Developer sues home owners

A REAL estate developer is suing owners of units in a high-grade residential community it built in Changning District's Gubei area over a contract dispute that could be worth more than 100 million yuan (US$15.27 million).

Hutchison Whampoa Property (Shanghai) Gubei Co Ltd is suing 11 property owners in the Maison Des Artistes community after mediation by the Changing District People's Court failed. Hundreds of other property owners in the community have received bills and could also be sued.

The owners signed presale contracts in mid 2008 with Hutchinson Whampoa. The deals required all payments to be made within seven days.

Buyers all doubted the seven-day request would be enforced since they said it's impossible to get bank loan approval within seven days. The developer's sales representatives told them to ignore the clause, owners said.

However, hundreds of property owners began to receive bills demanding payment of overdue fines late last year, two years after the contracts were signed, as they had failed to pay all the money within seven days.

The overdue fines ranged from thousands of yuan to millions of yuan.

A man surnamed Shao from Wenzhou, Zhejiang Province, is being sued for more than 680,000 yuan.

Shao signed a presale contract with Hutchinson Whampoa, which is owned by Hong Kong billionaire Li Ka-shing, on July 17, 2008. Shao was asked to pay more than 3.8 million yuan for an apartment within seven days. He was required to pay a daily penalty of 0.03 percent on the unpaid amount that was overdue.

Another property owner said the contracts were like a "time bomb."

"The developer holds the detonator," said a property owner surnamed Ma. "As time goes by, when the penalties and interest accumulate, the bomb becomes more powerful."

Shi Zhenfei, a lawyer representing the property owners, said more owners were expected to be sued since they had received bills for overdue fines.

A saleswoman surnamed Zhu hung up when Shanghai Daily called the developer to find out more information.

Wu Dong, a lawyer at M&A Law Firm not involved in the case, said the developer was trying to make money.

"It is impossible for property owners to pay all the money within a week, but they had no right to change the contracts," Wu said. "The developer could have asked for the penalties sooner, but waited until now to collect more money, which the court shouldn't support."


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