Ten authoritative cases on disputes over property service contracts
1. After the property service enterprise fails to eliminate the potential safety hazards in the residential area in time, it shall bear the liability for breach of contract and compensate the owners for their losses-Chen Mou Hao v. Nanjing Wuning Real Estate Development Co., Ltd. and Nanjing Qinghe Property Management Co., Ltd. [the Supreme People’s Court Gazette, No.5, 2013].
Essence of the case: The property service enterprise has the obligation to maintain the common part of the community, and the potential safety hazards of the common part of the community that may cause damage to the property of the owners should be eliminated in time, otherwise, the property service enterprise should bear the liability for breach of contract and compensate the owners for their losses. Even if the potential safety hazard is caused by a third party, the property service enterprise cannot be exempted from the liability for breach of contract. If the shared part of the community is damaged to the owner’s property due to the third party’s infringement, the property service enterprise can be responsible for the situation that the property service enterprise has fulfilled its maintenance obligations, and the third party’s infringement is unpredictable and inevitable. After being damaged, the property with greater value may be reduced not only in objective value but also in people’s psychology, which is called value depreciation. According to the theory of liability for breach of contract, the way to assume the liability for breach of contract is to restore the original state first, and restoration will definitely require compensation for the value depreciation of the property. As a seller of commercial housing, a real estate development enterprise has fulfilled its obligations to the owners of the residential area after selling the house and transferring the ownership of the house, and the residential area of commercial housing has been closed, provided that there are no quality defects in the houses sold and the common parts, and does not need to bear the responsibility.
2. In the absence of agreement, some of the profits generated during the property management of the property service enterprises belong to all owners, and the property service enterprises enjoy a certain proportion of profits-Wuxi Chunjiang Garden Owners Committee v. Shanghai Lujiazui Property Management Co., Ltd. and other property management disputes [the Supreme People’s Court Gazette, No.5, 2010].
Essence of the case: According to Article 72 of the Property Law of People’s Republic of China (PRC) (now Article 273 of the Civil Code), the owner enjoys the rights and undertakes the obligations for the common part other than the exclusive part of the building. A total of part of the income generated during the property management of property service enterprises (including pre-property management) shall belong to all owners without special agreement, and shall be mainly used to supplement the special maintenance funds of the community. Property service enterprises can enjoy a certain proportion of income if they manage the common parts.
3. The property service contract signed by the owners’ committee and the property service enterprise selected by the owners’ congress according to law is binding on all owners-Hangzhou Qiantang Property Management Co., Ltd. v. Wang Moufeng [Selected Cases of the People’s Court, No.4, 2015]
Essence of the case: The property service contract signed by the owners’ committee and the property service enterprise selected by the owners’ congress according to law is binding on the owners. The object of property service is all the owners of the community. The objection of individual owners to the performance of the property service contract cannot represent the opinions of all the owners, which is not enough as a reasonable reason for individual owners not to pay property fees.
4. Property handover is the collateral obligation of the property service contract-the case of property service between the owners’ committee of Dayonggu Building in Haicang, Xiamen and Xiamen Haitou Property Company [Selected Cases of People’s Court, No.3, 2010].
Essence of the case: Property handover is an obligation that the property management company must undertake after the termination of the property service contract, which is actually the "incidental contractual obligation" stipulated by law. If the property management company causes damage to the owner in order to fulfill this obligation, it should be liable for compensation. In the early stage of property management, before the establishment of the owners’ committee, the property company should still perform the handover obligation after the termination of the property service contract. At this time, it should hand over the property management to the client, that is, the developer.
5. After the termination of the property service contract, in terms of the return of the archives of the public maintenance fund, the industry committee has the qualification of litigation subject-the case of the property service contract of Xiamen Yihe Building Owners Committee v. Xiamen Haiyi Building Management Co., Ltd. [Case published in "A Summary of Trial Cases in China].
The gist of the case: while safeguarding the interests of all owners, the industry committee can manage and receive the archives of the public maintenance fund on behalf of all owners, and because the archives of the public maintenance fund belong to all owners, the recovery of these archives by the industry committee is to safeguard the owners’ rights and also a manifestation of all owners’ exercise of their rights. In addition, when the property management service contract is terminated, the archives will be handed over to the industry committee for custody, which is also conducive to the transfer of these materials to the new property management company for custody when hiring a new property management company. Therefore, the industry Committee should have the qualification of litigation subject.
6. If the property service enterprise manages the parking spaces shared by the owners of the residential area based on the property service contract, it will not naturally get the right to charge parking fees because of the management behavior-Haian Tianbao Property Co., Ltd. v. Xu Moshu and Yuan Moli [People’s Justice. Case No.29, 2018]
Essence of the case: If the ground parking spaces in the commercial housing community, whether planned or temporary, are set on the ground of the community jointly owned by the owners, there is no special agreement between the developer and the owners, and exclusive property rights cannot be registered. According to the third paragraph of Article 74 of the Property Law (now Article 275 of the Civil Code), they should belong to the owners of the community. It is a contractual obligation for property service enterprises to manage parking spaces in residential areas based on property service contracts, and they are not entitled to collect parking fees because of management behavior. If the charges are neither based on the property service contract nor authorized by the parking space owner, the people’s court shall support the owner’s defense on the grounds of expanding the scope of charges without authorization or charging illegally.
7. When the owners’ meeting is not established, the price standard of property fees unilaterally applied for filing and adjustment by the property service enterprise without consulting the owners is not binding on the owners-Qujing Jiaheng Property Service Co., Ltd. v. Wang Momin and Chen Mou Property Service Contract Dispute Case [People’s Justice. Case No.5, 2018].
The gist of the case: the owner does not directly participate in the conclusion of the preliminary property contract. According to Article 25 of the Property Management Regulations, the house sales contract should include the contents of the preliminary property contract, so the preliminary property contract is transformed into a sales contract and has effect on the owner. At the same time, based on the publicity of property services, the owners usually accept the property services in fact. Before the dispute occurs, the owners may actually pay the property fees, which can be regarded as the owners’ recognition of the contractual relationship with the property service enterprises by their actions. The adjustment of the property fee price belongs to the change of the contract content. Any party who needs to change the contract content must reach an agreement with the other party to the contract through consultation. In the case that the owners’ meeting is not established, the property service enterprise has not consulted with the owners, and the price standard of property fees unilaterally applied for filing and adjustment is not binding on the owners.
8. If the owner has repeatedly parked the vehicle without reasonable persuasion and refused to sign a commitment to abide by the management convention, the property has the right to manage the illegally parked vehicle according to the management convention, and delete the automatic identification information of the vehicle-Zhou et al. v. the property service contract dispute case of the property company [People’s Court reported the 3rd edition on July 23rd, 2020].
Essence of the case: In order to solve the parking dispute caused by too many cars, the property management company formulated a vehicle management convention on the basis of combining the suggestions of the owners and the mediation opinions of relevant departments, and after collecting opinions, it was approved by more than two-thirds of the owners, and the vehicle management convention was binding on the owners of the community. The vehicle driven by the owner has repeatedly failed to park according to the regulations, refused to listen to reasonable and civilized persuasion, and refused to sign a commitment letter to abide by the management convention. In order to ensure the fire safety of the community, the property has managed the illegally parked vehicles according to the management convention and deleted its automatic vehicle identification information. There is no obvious misconduct. The people’s court will not support the owners’ request for the community to restore their right to freely enter and leave the community.
9. The payment of property fees does not depend on the existence of a physical house —— A property service company v. Zhang [People’s Court Daily, 7th edition, December 01, 2011]
The gist of the case: when there is no house on the land occupied by the original house, whether the real estate right holder registered with the real estate registration agency still has the obligation to pay the property fee should be considered from three aspects. First, whether the actual absence of the house affects the owner qualification of the registered right holder; Second, whether the property service contract between the property service enterprise and the owner exists in the relevant period; Third, whether the property service enterprise completes the property service content according to the contract. Although there was no housing entity on the land of the original house involved in the case, Zhang knew it and registered it as the right holder when buying a house. The responsibility was not in the property service enterprise, and the service obligation of the property to the owner did not disappear because the house did not exist. The reduction of property fees is based on the premise that the service is defective. The property company has properly fulfilled its property service obligations, and Zhang, as the owner, should pay the corresponding property fees. The absence of a housing entity cannot constitute a reason for exempting the owner from paying the property fees.
10. How to correctly apply the judgment rule of "the same case and the same judgment" to the group arrears lawsuit filed by the court against the property company after the property company won the "selective arrears lawsuit"-Guangzhou Kequan Property Management Co., Ltd. v. Liu Moujun and Li Mouling [Selected Cases of the People’s Court, No.1, 2012].
Essence of the case: Although "the same case and the same judgment" requires the judicial decision to maintain the horizontal balance and vertical continuation of the decision on the premise of adhering to the concept of integrity, every case should be based on facts and take the law as the criterion, so as to achieve judicial justice. Because the specific circumstances of the litigation before and after the property management company are different, in the trial of a case, we should not be completely bound by the effective judgment, but accurately analyze the specific circumstances of the case, with the main goal of solving problems and resolving contradictions, so as to ensure that the trial of the case has good legal and social effects.
Source | Approaching the Civil Code and the House of Law and Business.
Original title: "10 authoritative cases about property service contract disputes"
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