Lease Dispute – Court Orders Eviction and Use Fee at CNY 130,000 Per Year
A court in Central China City has ruled in favor of a bank seeking to evict an occupant who refused to vacate a commercial property after a sublease expired. The bank, as the property owner, claimed the occupant had no legal right to remain and demanded possession along with payment for use of the premises. The court ordered the occupant to return the property and pay an annual use fee of CNY 130,000 from the date the sublease ended until the property is returned. The decision highlights the legal consequences of overholding and the importance of proper evidence for damage claims.
In 2005, the bank leased a ground-floor and second-floor commercial space in a Central China City building to a building materials company for a five-year term ending August 2010. The original tenant later transferred its lease rights to a third-party company, which the bank acknowledged. In October 2010, the third-party company subleased the property to the defendant, Ms. Kang, under a one-year agreement ending September 30, 2011. After the sublease expired, Ms. Kang continued to occupy the premises without paying rent. The bank sent a notice on September 28, 2011 demanding she vacate by September 30, but she refused. The bank then sued for eviction, use fees calculated at CNY 3.94 per square meter per day, and CNY 20,000 in additional losses.
The court held a hearing in March 2012 where all parties appeared with legal representatives. Evidence included three lease contracts, a property handover memorandum, the bank’s vacate notice with postal delivery records, a notarized document, and party statements. The bank’s attorney argued that the defendant’s continued occupation infringed on the bank’s ownership rights. Ms. Kang’s attorney claimed she was willing to renew the lease and asserted a right of first refusal, but also stated the bank had not proven its claimed losses. The third-party company confirmed it had informed the bank about the sublease and that the bank had allowed public bidding for new tenants.
The court found that the original lease between the bank and the building materials company was valid. When the original tenant transferred its rights to the third-party company, the parties did not sign a new written lease, making the arrangement an indefinite-term tenancy under Chinese contract law. The third-party company then subleased to Ms. Kang. The court noted that the bank did not object to the sublease within six months, which legally constituted acceptance of the sublease. After the sublease ended, the bank properly notified both the third-party company and Ms. Kang to vacate. Ms. Kang’s refusal to leave violated the bank’s property rights, so the court ordered her to return the premises.
On legal analysis, the court applied Article 215 of the Chinese Contract Law, which requires written leases for terms over six months, and treated the bank’s relationship with the third-party company as an indefinite lease. The court also relied on Article 18 of the Judicial Interpretation on Urban Housing Lease Disputes, which allows landlords to claim occupancy fees from overholding subtenants. The bank requested use fees at market rates but provided no evidence of comparable local rents. The court held that rental rates are negotiated, not standardized, and therefore adopted the rate of CNY 130,000 per year as stated in the sublease contract between the third-party company and Ms. Kang. The court rejected the bank’s claim for CNY 20,000 in other losses because the bank submitted no supporting evidence and had attempted to re-lease the property to a third party before recovering possession.
This case underscores that property owners must take timely action to challenge unauthorized subleases and should document market rental rates to support claims for use fees. Occupants who stay beyond a lease term face court-ordered eviction and payment for continued use. The decision also clarifies that without proof of specific damages, claims for additional losses