Typical cases of housing lease contract disputes
In order to prevent and reduce disputes over housing lease contracts and promote the healthy development of the housing rental market, the Beijing Municipal Commission of Housing and Urban-Rural Development and the Beijing No. 2 Intermediate People's Court have strengthened the linkage between the "government" and the "court", established a long-term mechanism for the joint release of typical cases, and regularly selected typical cases in housing lease contract disputes for publication. The 5 typical cases released in this issue are highlighted"After one of the parties breaches the contract, the other party shall take appropriate measures to prevent the expansion of losses".This theme analyzes and suggests the responsibilities that the non-breaching party should bear, in order to achieve the effect of normative guidance, source management, and dispute reduction.
Case 1
If the tenant moves out of the house on his own and clearly abandons all the items in the house, the lessor shall take back the house in time to prevent the loss from expanding.
Basic facts of the case
On May 11, 2021, Mr. Zhao signed a "Housing Lease Contract" with Company A, leasing the stall involved in the case of Company A for the purpose of operating twist production and ice cream sales. Later, Zhao moved out of the stall involved in the case without authorization, and left some of the facilities and equipment in the stall involved in the case. In June 2021, Mr. Zhao filed a lawsuit, demanding that the contract be terminated and that the lessor compensate for various losses. Company A filed a counterclaim, demanding that Zhao return the stall involved in the case and pay the outstanding rent and occupancy fees. After the trial, it was ascertained that the stall involved in the case was not locked, and Zhao made it clear in the first-instance trial that he would give up all the facilities and equipment in the stall. According to the court's explanation, Company A did not take back the stalls involved in the case.
Adjudication Results
The effective judgment of the court held that the lessee Zhao did not have the right to terminate the contract, and his unauthorized move out of the stall involved in the case constituted a breach of contract, and his failure to handle the file connection with the lessor was deemed to have failed to return the subject matter of the lease, and he should continue to pay the rent before the termination of the contract and the occupancy fee after the termination of the contract. Regarding the period of payment of possession and royalties, although Zhao did not have the right to terminate the contract, he clearly expressed his intention not to continue to perform the contract and move out of the stall involved in the case, and Company A admitted that the stall leased by Zhao was not locked, and although Zhao left some items in the stall involved in the case, Zhao clearly stated at the trial on November 4, 2021 that he would give up all the items in the stall involved in the case. At this time, Company A, as the non-breaching party, should take appropriate measures to prevent the expansion of losses and promptly withdraw the stalls involved in the case. Company A failed to recover the stalls in a timely manner when Zhao clearly stated that he had given up all the items involved in the stall and had the ability to control the stalls involved in the case, and objectively allowed the loss to expand, and it was not allowed to claim compensation for the losses that were expanded thereafter. The court considered that it would take a certain amount of time for Company A to recover the stalls involved in the case, and determined that Zhao should pay a certain amount of house occupancy fees to Company A with reference to the rent standard agreed in the contract, and that the subsequent loss of vacant stalls was an enlarged loss caused by Company A's failure to take appropriate measures, and the court did not support it.
Takeaways
In the event that the lessee has actually moved out of the subject matter of the lease and has expressly waived the ownership of the items in the subject matter of the lease, the lessor shall take back the subject matter of the lease in a timely manner to prevent the loss from expanding, otherwise, it shall not claim compensation for the expanded loss.
Case 2
If the lessor requests to terminate the contract and require the lessee to move out of the premises on the grounds of the lessee's breach of contract, and the lessee actually moves out as required and notifies the lessor, the lessor shall take back the premises in a timely manner to prevent the loss from expanding, even if the handover procedures are not completed in accordance with the contract
Basic facts of the case
Liu rented the house involved in the case to Xue for residential use. Because Xue failed to pay the rent on time to meet the termination conditions agreed in the contract, Liu issued a notice of termination to Xue on September 3, 2021, and required Xue to move out of the house before September 10. After the negotiation between the two parties failed, Xue moved out of the house involved in the case on September 17 and informed Liu on WeChat, but did not go through the house handover procedures with Liu as required. Liu did not recover the house involved in the case on the grounds that Xue had not gone through the procedures for handing over the house, and it was not until the court presided over the case during the litigation that the house involved in the case was handed over in February 2022. Now Liu has filed a lawsuit, demanding that Xue pay the rent and occupancy fees before February 2022. Xue argued that he had moved out of the house on September 17 and should not pay the rent or occupancy fees thereafter.
Adjudication Results
The effective judgment of the court held that under the circumstance that Liu clearly requested to terminate the contract and asked Xue to move out of the house involved in the case, Xue had actually moved out of the house involved in the case and informed Liu in a timely manner, although the two parties had not gone through the handover formalities, Liu, as the non-abiding party, should also take appropriate measures to prevent the expansion of losses after Xue moved out and recover the house involved in the case in a timely manner. He refused to take back the house involved in the case on the grounds that Xue had not handed over the property in accordance with the agreement, and objectively allowed the expansion of the losses, and he was not allowed to claim compensation for the expanded losses. Accordingly, the court comprehensively considered the fact that Xue did not handle the formal handover with Liu and the time that Liu should be given a reasonable time to take back the house, and determined the house occupancy and use fees that Xue should pay as appropriate. The court did not support Liu's claim that the excessively high occupancy and use fees were the enlarged losses caused by Liu's failure to take appropriate measures.
Takeaways
In the event that the lessor expressly requests to terminate the contract and requires the lessee to move out of the subject matter of the lease, if the lessee has actually moved out and informs the lessor of the move-out, the lessor shall take back the subject matter of the lease in a timely manner to prevent the expansion of losses, even if the handover procedures have not been completed in accordance with the agreement.
Case 3
If the lessor sues to require the lessee to vacate the premises, and the lessee agrees to vacate the premises during the litigation period, the lessor shall take back the premises in a timely manner to prevent the expansion of losses.
Basic facts of the case
Zhang leased Zhu's house involved in the case for residential use, and because Zhang failed to pay the rent on time to meet the termination conditions agreed in the contract, Zhu issued a notice of termination to Zhang on January 12, 2022, requiring Zhang to vacate the house involved in the case and pay the arrears of rent and occupation fees. Later, Zhang continued to occupy the house involved in the case, and Zhu filed a lawsuit, demanding that Zhang vacate the house involved in the case and pay the rent arrears and occupation fees. After trial, the court of first instance made a judgment on October 30, 2022: the contract between the two parties was terminated, and Zhang vacated the house involved in the case and paid the arrears of rent and the occupancy and use fees before actually vacating the house involved in the case. After the first-instance judgment was rendered, Zhang contacted Zhu four times through WeChat and text messages, requesting that the house involved in the case be returned on November 30, 2022, but Zhu ignored them. On November 30, 2022, Zhang vacated the house involved in the case and contacted Zhu again for handover, but Zhu still ignored it. In the second instance, Zhu claimed that he did not agree to accept the house because the house did not meet the standard of receiving the house agreed in the contract.
Adjudication Results
The effective judgment of the court held that Zhu, as the non-breaching party, should take back the house involved in the case in a timely manner to prevent the further expansion of losses when Zhang had vacated the house involved in the case and notified him to return the house several times, and if he believed that the standard for receiving the house agreed in the contract had not been met, he could resolve it by claiming losses separately, instead of blindly refusing to accept the house, otherwise he could not claim compensation for the expanded losses. The court gave Zhu a certain amount of reasonable time to collect the house, and determined the amount of the house occupation fee that Zhang should pay to Zhu with reference to the rent standard agreed in the contract, and the subsequent loss of vacancy was an enlarged loss caused by Zhu's failure to take appropriate measures, and he had no right to demand compensation from Zhang.
Takeaways
If the lessor agrees to vacate the premises, the lessor shall take back the premises in a timely manner to prevent the loss from expanding. If the lessor believes that the subject matter of the lease does not meet the standard of repossession, it may claim compensation for breach of contract from the lessee in accordance with the contract or in accordance with the law, and cannot refuse to take possession of the property solely on this ground.
Case 4
After the tenant moves out of the premises, the lessor cannot refuse to take possession of the premises on the grounds that the parties have not reached an agreement on the liability for breach of contract.
Basic facts of the case
In November 2019, Company B leased the premises of Company A for its operation. On May 23, 2022, Company B sent a termination letter to Company A on the grounds that the epidemic had caused its business difficulties, requesting that the contract be terminated, that Company A take back the leased space, and move out of the premises involved in the case. Company A replied that Company B did not enjoy the statutory or agreed right to terminate the contract and did not agree to terminate the contract, but in order to reduce the loss, Company A published an advertisement for rent. On 1 July 2022, Company A continued to demand rent payments from Company B. On July 16, 2022, Company A sent a Notice of Termination to Company B on the grounds that the overdue payment constituted a fundamental breach of contract, requesting it to terminate the contract, return the subject matter of the lease and bear the liability for breach of contract. Later, the two parties did not reach an agreement on the liability for breach of contract.
Adjudication Results
The court held that after Company B's breach of contract, Company A, as the non-breaching party, also had the obligation to avoid the expansion of losses and should take back the house as soon as possible, and it can be seen from the evidence on record that Company A clearly knew that Company B had moved out in May 2022 and began to rent to the outside world, and it should take back the house as soon as possible to avoid the expansion of losses, otherwise it should be liable for the expanded losses. Based on the performance of the contract and the circumstances of its fault, the court shall determine the amount of rent to be paid by Company B to Company A in accordance with the principles of fairness and good faith.
Takeaways
In the case that the tenant clearly states that it will not perform the contract, the lessor may claim to resolve the issues such as the liability for breach of contract for the termination of the contract, but it cannot refuse to take over the house solely on the grounds that the two parties have not reached an agreement on the liability for breach of contract, otherwise it shall not claim compensation for the expanded losses.
Case five
If the lessor's breach of contract results in the lessee's failure to achieve the purpose of the contract, the lessee shall return the house in a timely manner, and if the tenant fails to return it in time due to the lessee's reasons, the lessee still needs to pay a certain amount of rent or occupancy fee.
Basic facts of the case
On December 4, 2018, Chen and Restaurant A signed a "House (Booth) Lease Contract", stipulating that Chen would lease the house involved in the case to Restaurant A for the purpose of operating catering. After the contract was signed, Chen delivered the house involved in the case to Restaurant A, and Restaurant A paid Chen the rent from January 1, 2019 to December 31, 2019. Later, because Chen clearly stated that he could not assist Restaurant A in applying for the relevant licenses required for its operation, Restaurant A was unable to operate. The two parties confirmed that in 2019, Restaurant A actually operated for about one month, and Restaurant A actually occupied the premises involved in the case until March 2021. Now Restaurant A filed a lawsuit demanding that Chen return all the rent in 2019.
Adjudication Results
Restaurant A paid the rent to Chen in 2019, but because Chen was unable to cooperate with Restaurant A to re-apply for the business license and food business license in the house involved in the case, Restaurant A actually only used the house involved in the case for about one month in 2019. The rent is the consideration for the use value of the subject matter of the lease, and the lessor shall refund the corresponding rent to the lessee during the period during which the lessee is actually unable to use the leased object due to reasons attributable to the lessor. However, on the other hand, if the lessee believes that the purpose of the contract cannot be achieved due to the lessor's inability to use the leased premises, he, as the non-breaching party, shall also take timely measures to prevent the expansion of losses. Under the circumstance that Chen was unable to assist Restaurant A in applying for the relevant licenses, Restaurant A still occupied the premises involved in the case and was also required to pay the basic house occupation fees. Considering the above circumstances, the court determined that Chen should refund part of the rent of Restaurant A in 2019.
Takeaways
In the event that the purpose of the lease cannot be achieved due to the lessor's breach of contract, the lessee, as the non-breaching party, is also required to assert its rights in a timely manner, including taking appropriate measures to prevent the expansion of losses. If the lessee does not terminate the contract and does not return the subject matter of the lease, he still has to pay a certain amount of rent or occupancy fee.
*: Beijing Municipal Commission of Housing and Urban-Rural Development.
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