Bank Wins Eviction Case Against Commercial Tenant in Western China

A major bank has successfully recovered possession of its commercial property after a prolonged dispute involving subletting arrangements. The case highlights the legal boundaries of sublease agreements and the rights of original landlords.

In 2005, a commercial bank in a major western Chinese city leased two floors of office space in a building near a central transportation hub to a construction materials company. The annual rent was set at 420,000 yuan for a five-year term ending in August 2010. The lease prohibited the tenant from subletting the property without consent.

In 2006, the original tenant transferred the lease rights to a trading company without executing a new written agreement with the bank. The bank continued accepting rent payments from the trading company, which effectively created an indefinite-term tenancy under Chinese contract law.

In 2010, the trading company sublet the premises to a small business operator, Ms. K, for an annual rent of 130,000 yuan. The sublease term ran from October 2010 through September 2011. When the sublease expired, Ms. K refused to vacate the property and continued operating without paying rent.

The bank sent formal eviction notices through certified mail, demanding that Ms. K vacate by September 30, 2011. The notices were delivered and verified through notarization. Despite the clear deadline, the tenant remained in possession.

Ms. K argued that she had been unaware of the bank’s ownership and claimed a right of first refusal for continued tenancy. She also stated that the bank had violated its own obligations by leasing portions of the property to other parties.

The court found that the original lease agreement between the bank and the first tenant was valid. Because no new written agreement was signed when lease rights transferred to the trading company, the relationship became an indefinite tenancy. The court also noted that the bank had not objected to the sublease within six months of learning about it, effectively acknowledging the arrangement.

However, once the bank issued formal notice to recover the property, the subtenant was obligated to return possession. The court ordered Ms. K to vacate the premises and pay occupancy fees calculated at the prevailing commercial rental rate of 3.94 yuan per square meter per day from October 2011 until actual departure.

The court dismissed the bank’s claim for 20,000 yuan in additional damages due to insufficient evidence.

This case demonstrates that subtenants must verify the original landlord’s consent and the terms of sublease agreements. Commercial tenants who overstay their lease terms risk significant financial liability.

Disclaimer: This article summarizes a court judgment for educational purposes only and does not constitute legal advice.