Case Type: Real Estate Contract Advisory & Dispute Prevention 

Result: Successful Execution of the Contract via Customized Special Clauses for the Client 

Case Details: 

With the recent volatile fluctuations in real estate values across major metropolitan areas, cases where inadequate preparation during the contract drafting stage leads to immense financial loss are rising frequently. The standard real estate sales agreements commonly used in practice have limitations, as their clauses are too simplified to fully encompass the scale of transaction values or complex underlying legal relations. A typical standard form consists of only around nine clauses, a significant portion of which pertains to brokerage fees, making it wholly insufficient to safeguard against risks involving asset value fluctuations or title defects. Accordingly, this attorney analyzed the primary dispute factors that may arise during actual transactions and provided legal counsel on reviewing customized contracts and establishing special clauses to prevent such disputes.

1. Mitigation of Risks Regarding Lawsuits for Return of Premises and Delay in Performance 

Situations may occur where the existing tenant fails to vacate the premises by the remaining balance payment date, or the seller’s moving schedule gets disrupted, resulting in a delay in the obligation to deliver the real estate. Standard agreements merely stipulate the principle that "relevant documents and the objective property shall be delivered simultaneously with the receipt of the remaining balance." Consequently, when the actual delivery is delayed, it is challenging for the buyer to prove and claim specific damages, such as financing costs (loan interest) or temporary housing expenses. To prevent this, the buyer's right of defense was secured by explicitly stating liquidated damages for delay or inserting specific penalty clauses at the contract stage.

2. Countermeasures Against Unilateral Contract Termination Due to Market Value Fluctuations 

If real estate prices skyrocket or plummet after the execution of a contract but prior to the remaining balance payment, one party may attempt to rescinded the contract by forfeiting the deposit or paying double the amount, severely undermining the stability of the transaction. This is because, under the termination fee clause of Article 565 of the Civil Act, unilateral rescission remains permissible until the intermediate payment is made. To supplement this, based on mutual agreement, special clauses were incorporated to prohibit rescission by termination fees after a specific point in time or to allow advance payment of the intermediate sum, thereby mitigating the risk of arbitrary contract termination.

3. Prevention of Additional Title Defects Before the Remaining Balance Date 

There is a risk that provisional attachments or collateral security may be additionally established on the asset due to the seller’s financial difficulties between the signing of the contract and the remaining balance date, or that an unannounced tax delinquency may lead to an attachment, causing the buyer to bear the damages. Standard forms contain only a declaratory clause stating that restrictive real rights shall be extinguished by the remaining balance date, lacking detailed procedures for the buyer to safely withhold payment or rescind the contract if a defect is discovered on that day. To resolve this, it was explicitly stated that the buyer shall be entitled to the right to rescind the contract and claim penalties immediately upon the discovery of any additional title defects, and the exposure period to risk was shortened by adjusting the payment schedule.

4. Specification of Liability for Serious Internal Property Defects Discovered After Delivery 

Conflicts frequently arise when structural defects of the building, such as severe water leaks or cracks, are discovered belatedly around the time of the remaining balance payment. Standard forms lack detailed provisions regarding liability for physical defects of the target property; rather, customary phrases like "contract under the current facility conditions" often lead to prolonged legal battles where the seller evades liability and the buyer bears the burden of proving the defect. Accordingly, internal facilities were thoroughly inspected in advance, and the party responsible for repairs and cost-bearing upon the discovery of defects was clearly defined. For older buildings, special clauses regarding unauthorized extensions or illegal changes in use were meticulously structured to prevent disputes.

In conclusion, most general principles in standard forms provided during real estate transactions are rights naturally recognized by the Civil Act even if omitted from the contract. The crucial factor is controlling the specific, exceptional circumstances that may arise in an individual transaction. Therefore, as the scale of the asset grows larger, it is safer to construct customized special clauses tailored to each situation and property characteristic through a thorough review by a legal expert.

Case Inquiry: Attorney Yu-mi Yang