The global financial downturn has caused a skyrocketing number of real estate disputes in court, as various parties fight it out over deals gone bad with land sales, construction materials and housing contracts.

Chinese courts handled 67,294 cases of property disputes in the first six months of this year, up 10.6 percent over last year.

"As the number of cases grows, so does the number of difficult, complicated and sensitive ones," according to a guideline on the handling of property disputes issued by the Supreme People's Court.

A fall in housing prices has led to a number of cases in which buyers request the cancellation of their contracts, asking for a refund. Such disputes easily develop into group lawsuits, it said.

For example, last November, buyers of Sangtai Danhuafu, a housing project in Shenzhen, requested a refund after the price dropped from 20,000 yuan ($3,000) per sq m at the end of 2007 to 16,000 yuan in March last year.

As a result, the developer had to refund the aggrieved property owners in different ways, and the rebate package reportedly cost the developer almost 30 million yuan.

Qiu Baochang, dean of Beijing-based Huijia Law Firm, called the new guideline "timely and reasonable."

"Lawsuits of real estate disputes involve both large amounts of money and sometimes a number of litigants, so it is extremely important to maintain an orderly real estate market to secure its healthy development," Qiu said.

"House buyers should remain sober-minded and try to make rational judgments before making the purchase. Refund should not be allowed every time there is a price decline," Qiu said.

On the other hand, real estate developers need to be fair and sincere, instead of promoting sales with false advertisements, he said.

Courts are also seeing more disputes involving real estate financing.

More than 70 percent of the financing for real estate comes from bank loans.

A small number of real estate developers cheat by mortgaging a house in several banks. Also some construction developers ink one contract for bidding and a different one for real construction.