Lease Dispute Over CNY 600 Deposit and Utility Fees

Ms. Wang leased an apartment to Mr. Zhang, but the tenancy ended early after a dispute with a previous tenant. Ms. Wang later sued Mr. Zhang for breach of contract, seeking a penalty of CNY 600 plus unpaid utility charges. The trial court ordered Mr. Zhang to pay the utility fees but dismissed the penalty claim. Ms. Wang appealed the decision. The appellate court upheld the original ruling, finding that Ms. Wang’s failure to resolve the prior lease caused the interference that forced Mr. Zhang to leave.

In 2010, Ms. Wang rented the apartment to Mr. Liu for one year at CNY 1,150 per month. Mr. Liu stopped paying rent in April 2011 and attempted to terminate early, but no agreement was reached. On April 30, 2011, Ms. Wang signed a new lease with Mr. Zhang for the same apartment from May 1, 2011, to April 30, 2012, at CNY 1,200 per month. Mr. Zhang paid a CNY 600 security deposit. Shortly after moving in, on May 17, 2011, a group of people came to the apartment looking for the landlord. Mr. Zhang’s roommate called the police. The disturbance was caused by Mr. Liu, who still had a dispute with Ms. Wang over the earlier lease. Mr. Zhang then vacated the property without paying utility bills.

At trial, both parties presented evidence. Mr. Zhang submitted the earlier lease agreement between Ms. Wang and Mr. Liu, the police incident report, and testimony from Mr. Liu. The police report confirmed the disturbance and that it involved people looking for the landlord. Ms. Wang admitted in court that she had been present at the scene to assist the police. The trial court also considered a utility bill from the property management company showing CNY 552.40 in unpaid water, electricity, gas, and management fees incurred during Mr. Zhang’s tenancy. Mr. Zhang acknowledged that these charges were for his period of occupancy and agreed to pay them.

The trial court found that Ms. Wang had failed to resolve the prior lease dispute before renting to Mr. Zhang. The court noted that Ms. Wang had not provided evidence that she had terminated the earlier lease with Mr. Liu. Therefore, the court held that Ms. Wang’s conduct violated the principle of good faith under contract law. The court also found that Ms. Wang’s actions interfered with Mr. Zhang’s right to quiet enjoyment of the property, breaching a specific term in their lease agreement. Consequently, Mr. Zhang had grounds to terminate the lease without penalty.

The appellate court reviewed the case and agreed with the trial court’s reasoning. According to the relevant law, a lessor must deliver the property free of any third-party claims that would affect the lessee’s use. Because Ms. Wang did not settle the conflict with Mr. Liu, the original tenant, Mr. Zhang could not live in the apartment peacefully. The evidence showed that the disturbance directly stemmed from Ms. Wang’s unresolved dispute. The court further clarified that the CNY 600 deposit was separate from the utility fees; it was meant to cover potential damage, not outstanding charges. Since Mr. Zhang admitted the utility amount, he was liable for that sum, but the deposit could not be used to offset it without mutual agreement.

This case illustrates the importance of resolving outstanding issues with prior tenants before entering into a new lease. Landlords must ensure that the property is free from legal or practical encumbrances that could disrupt a new tenancy. Lessees facing interference may lawfully terminate the lease without penalty. The ruling also confirms that security deposits serve a specific purpose and cannot be automatically applied to unpaid utilities unless the contract allows. Landl