Shanghai Weida Technology paid RMB 1.68 million to Henan Pushan Real Estate under an off-set housing arrangement for a project. Pushan never delivered, later disclosed that the unit was mortgaged and that Zhengzhou purchase restrictions prevented transfer, and refunded only RMB 500,000 of the RMB 1.18 million owed.

Outcome

The firm, as Weida’s permanent legal adviser, sued for the balance. The court found the off-set arrangement unperformable through the seller’s own default and concealment of the mortgage, ordered repayment of the balance with interest, and the judgment was enforced, with the funds recovered.

Note

Off-set (“抵款”) housing arrangements are common in construction contracts and carry a specific risk: the unit may already be mortgaged or unsaleable under local purchase restrictions. Verification before acceptance is essential.