Tenant Ordered to Restore Wall and Pay Occupancy Fees After Lease Expires: Eastern China Rental Dispute

Tenant Ordered to Restore Wall and Pay Occupancy Fees After Lease Expires: Eastern China Rental Dispute

Case Overview
A commercial tenant in Eastern China was ordered by an appellate court to restore a wall he had removed from a rented storefront and to pay the landlord occupancy fees for the period he remained in the property after the lease expired. The tenant had sought to continue the lease and demanded compensation for a transfer fee he paid to a previous tenant, but the court rejected these claims.

Case Background and Facts
The landlord, Mr. Feng, owned a storefront in Eastern China. In September 2003, he rented the property to a third party, Mr. Qi, for a clothing business. In early 2004, Mr. Chen and his business partners took over the lease from Mr. Qi with the landlord’s consent. After the initial lease term ended, Mr. Feng and Mr. Chen signed successive renewal agreements in September 2006, October 2007, and October 2008.

On October 10, 2009, the parties entered into another one-year lease agreement, covering the period from October 10, 2009, to October 9, 2010, with annual rent set at 43,000 yuan. During this lease term, Mr. Chen removed a wall separating the rented storefront from an adjacent property. On July 12, 2010, Mr. Feng notified Mr. Chen that the lease would not be renewed upon expiration. When the lease ended, Mr. Chen refused to vacate the premises, and the landlord filed a lawsuit.

Court Proceedings and Evidence
Mr. Feng filed a lawsuit in the local trial court on October 27, 2010, seeking an order for Mr. Chen to return the property, restore the removed wall to its original condition, and pay 20,000 yuan in damages. The trial court found the lease agreement valid and held that Mr. Chen had no right to remain after the lease expired. It ordered Mr. Chen to restore the wall and pay 10,750 yuan in damages, calculated as three months of occupancy fees based on the original rental rate.

Mr. Chen appealed to the intermediate court in Eastern China. He argued that the landlord had consented to the transfer of the lease from Mr. Qi and that local business custom required the landlord to compensate him for the transfer fee he had paid. He requested that the appellate court allow him to continue the lease. The landlord responded that his consent to the transfer only applied to the remaining term of the original lease, and that all subsequent contracts were directly between him and Mr. Chen. No new evidence was presented during the appeal.

Court Findings and Judgment
The appellate court affirmed the trial court’s decision. It held that the lease agreement was valid and binding. Because the landlord had given proper notice before the lease expired, Mr. Chen was obligated to vacate and restore the property. The court found that Mr. Chen’s delay in returning the property required him to pay occupancy fees calculated at the agreed rental rate for the period of overholding. Regarding the transfer fee claim, the court noted that the lease agreement contained no provision regarding such fees, and therefore Mr. Chen had no legal basis to demand compensation from the landlord. The court stated that although the trial court had miscalculated the exact amount of damages, the occupancy fees Mr. Chen actually owed had already exceeded the original award, so the parties could settle the specific amount based on the agreed rental rate during enforcement. The appeal was dismissed, and Mr. Chen was ordered to pay the appellate court costs.

Key Legal Principles
A lease agreement that reflects the true intentions of the parties and does not violate mandatory legal provisions is valid and enforceable. Upon expiration of a fixed-term lease, the tenant must vacate the property and restore it to its original condition unless a new agreement is reached. A tenant who remains in possession after the lease expires must pay occupancy fees at the rate specified in the expired lease. Transfer fees paid by a tenant to a previous tenant are matters between those parties and do not create obligations for the landlord unless expressly agreed in the lease.

Practical Insights
This case illustrates the importance of having clear lease terms regarding renewal rights, restoration obligations, and transfer fees. Landlords should provide written notice of non-renewal before the lease expires to establish a clear timeline for vacating. Tenants should be aware that occupancy fees after lease expiration are typically calculated at the same rate as the original rent. Any agreement regarding compensation for transfer fees or improvements should be documented in writing within the lease to be enforceable.

Legal References
Contract Law of the People’s Republic of China, Articles 107 and 235.
Civil Procedure Law of the People’s Republic of China (2007 Revision), Article 153, Paragraph 1, Item 1, and Article 158.

Disclaimer
This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for specific legal matters.