China: Renting An Apartment In China: Know Your Rights

Last Updated: 4 January 2018
Article by IPO Pang Xingpu

Many foreign nationals have flocked to China's largest cities in recent years, only to find that both the property market as well as Chinese landlord-tenant law are substantially different than in other jurisdictions. By typing "renting an apartment in China" into any Internet search engine you will find that the first results are stories about how different the experience of renting an apartment in China is different than in Sydney, London, Tokyo or New York. Usually, the comparisons are unfavorable and contrast an expatriate's experience renting an apartment in their home country of Australia, Britain or the United States with China.

However, despite whatever horror stories an expatriate may have heard about the difficulties of renting an apartment in China, China's property market is simply different than in most Western countries. The legal regime is completely distinct and the sources of landlord tenant law are different as well. Custom also is simply different. It is not a system like the United States where a tenant has to pass a background check, pay a security deposit and the first and last month's rent like New York, Los Angeles or Miami. Instead, rent is usually required to be paid up front for months.

"The comparisons are unfavorable and contrast an expatriate's experience renting an apartment in their home country"

Considering that there exists no separate legislation concerning the landlord-tenant relationship in China, the court and arbitration institutions refer to the Civil Law, the Contract Law and related Interpretation of the Supreme People's Court when it comes to conflicts. Similarly, Chinese law does not offer many of the tenant protections that are available in certain Western jurisdictions. For instance, rent control laws do not exist in China and many landlords prefer to receive large portions rent payments in Shanghai it is not unusual for a landlord to require up to three months' rent in advance. Landlords in China can get away with these kinds of practices due to the high demand in big cities. This may leave a Western expatriate feeling quite exposed, and queasy about parting with so much money, even if it is pursuant to a written lease agreement.

"The aspect of the Chapter 13 of the Contract Law will likely come as the greatest surprise to expatriates"

Nonetheless, and despite some misconceptions about property law in China, Chinese landlord-tenant law does protect tenants in some meaningful ways. For instance, landlords are required to repair the leased premises and landlords who refuse a tenant request to repair a leased premise can find themselves receiving less than the agreed-upon rent if the tenant ends up having to repair the premises him or herself. Finally, a tenant is free to pursue legal remedies against an unscrupulous landlord who refuses to live up to his or her obligations under the written lease. In addition, lease longer than six months are required to be in writing. This means that tenants have traditional contractual remedies, like the ability to pursue breach of contract claims against a landlord who breaches a written lease agreement. However, even these remedies are not as powerful as some of the breaches of contract that a landlord can pursue legal action against a tenant over. Therefore, a wise tenant in China will always insist on a written lease and take all necessary steps to ensure that their landlord adheres to that lease as closely as possible lest China's generally unfavorable landlord-tenant law be used against the tenant by the landlord.

Sources of Chinese Landlord-Tenant Law

The main source of property law in the PRC as it relates to residential lease contracts is the Contract Law of the People's Republic of China (the Contract Law). Chapter 13 of the Contract Law specifically governs leasing contracts in the PRC.

According to Article 215 of the Contract Law, if the lease is for six months or more it must be in written form or else it is considered an "unfixed lease." Where the lease term is above 6 months, the lease contract is required to be in written form. Under Article 221, a tenant may request that a landlord repairs the leased premises when the property is in need of repair. The landlord is then required to repair the premises within a reasonable time period and, if the landlord fails to do so, the tenant can pay for the necessary repairs him or herself and then deduct that amount from the rent. Under Article 233 of the Contract Law, "where the leased property endangers the safety or health of the lessee, even if the lessee knows the leased property does not meet the quality requirements when concluding the contract," a tenant may rescind the lease agreement at any time. Finally, if a tenant holds over at the end of his or her lease term, and the lessor does not raise an objection, the original lease contract shall remain effective, provided that the lease becomes a non-fixed term lease.

The aspect of the Chapter 13 of the Contract Law that likely will come as the greatest surprise to expatriates renting an apartment in China for the first time is that, in the absence of a contrary provision in the lease, the rent shall be paid at the expiration of the lease term if the lease term is less than one year, or shall be paid at the expiration of every one full year if the lease term is more than one year. Therefore, tenants better have saved up their money, or else they may find themselves short a substantial amount when it comes time to pay the landlord for that year's rent.

Fundamental and Non-Fundamental Breaches of Chinese Lease Contracts


As a general principle as laid out in Article 107 of the Contract law, in the case of a breach of contract by a party to a contract, which includes residential leases, the other party to the contract may sue to request the breaching party for performance of the breaching party's obligations under the contract or damages. In particular, Article 109 of the Contract Law provides that where a party fails to pay contract price or remuneration, the other party to the contract shall have the right to ask the breaching party to pay.

Under China's Contract Law, breaches of contract are classified into basically two categories according to the severity of the breach: fundamental breaches, and non-fundamental breaches. Fundamental breaches of contract render the purpose of the contract unable to be fulfilled the non-breaching party. A fundamental breach gives the non-breaching party the power to terminate the contract and claim damages suffered from such breach.

In the landlord-tenant relationship, so long as the landlord provides a habitable apartment to the tenant, generally speaking, the tenant is required to pay the rent. Though the landlord has the obligation to fix any problems with the equipment or appliances in the apartment, failure to fix such problems does not constitute a fundamental breach so long as the apartment is still generally considered to be in livable condition. Thus, for example, if the heating system stops working in the middle of the summer, then tenant likely cannot claim a fundamental breach of the lease has occurred if the landlord refuses to fix the heating system for system. In such a case, the tenant would not be permitted withhold rent payments because the landlord has not committed a fundamental breach of the lease agreement. Unless expressly stipulated in the leasing contract, a tenant's refusal to pay any rent will make the tenant in more serious breach of contract than the landlord's failure to repair appliances.

Renting an Apartment in China: Make Sure to Take Adequate Protections

The PRC's rental laws are very pro-landlord. Landlords have more rights than tenants do and can control not only the amount of rent that is charged but how much the rent increases on an annual basis and when the rent payments are due. They can also control what term payments are made as well as a host of other issues relating to the renting of apartments in China. As is the case in any city in the world, having a well-drafted residential lease agreement is an absolute must when renting an apartment or other property in China. Although China's Contract law does provide tenants certain protections under Chapter 13, those rights are not as strong as they seem at first glance. Instead, landlords are often able to breach leases in ways that are in contravention of China's Contract Law but tenants do have some recourse. Therefore, the Chinese expatriate who rents an apartment should follow the old Roman saying and caveat emptor, or in this case let the tenant beware.

July 25, 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions