Zhang Mou v. Liu Mou Disputes over Housing Lease Contracts

[Key words]

Civil/Housing Lease/Rent

[Referee Points]
After subleasing without authorization, the lessee of a house lease contract fails to reach a new written agreement with the lessor. If the house is actually used by a third party, the original lessee shall perform his obligations and pay the rent in accordance with the contract.

[Relevant laws]
Article 93 of the Contract Law of the People's Republic of China
Article 96 of the Contract Law of the People's Republic of China
Article 97 of the Contract Law of the People's Republic of China
Article 107 of the Contract Law of the People's Republic of China

[Basic Case]
In June 2013, the plaintiff Zhang Mou (Party A) and the defendant Liu Mou (Party B) signed the Housing Lease Contract, which stipulated that the plaintiff would rent the disputed house to the defendant for warehouse management at a monthly rent of $20914, with a lease period from May 1, 2013 to April 30, 2015; the admission rent would be paid every six months, first paid and then used, and the first paid day of Party B. For the period of May 1, 2013, Party A shall pay 77,742 yuan (of which 15,000 yuan is deposit), the second payment date is July 30, 2013, and the payment amount is 62,742 yuan. If one party fails to pay the entrance rent within the prescribed time limit, Party A has the right to unilaterally terminate this contract and recover the disputed house without refund of the deposit. After the plaintiff delivered the house according to the contract, the defendant paid a deposit of 15,000 yuan according to the contract. The plaintiff has received the rent up to April 30, 2014. The actual rent payment method is $20,900 per month every three months. The plaintiff has not received any rent since 1 May 2014. The plaintiff then brought the case.

The defendant Liu Mou argued that the disputed house had been actually used by Shanghai Mou Paper Products Management Department. The business department was originally a sole proprietorship enterprise invested by the defendant. However, the defendant transferred the management department to Guanwei on February 24, 2014, so the disputed rental contract between the plaintiff and the defendant was terminated on February 24, 2014. In March 2014, Guan Mou transferred the business department to Xu Mou. Since February 2014, rents paid have been paid by Guan Mou and Xu Mou. The plaintiff knows the actual use of the disputed house and the transfer of the management department. It is argued that the items stored in the house are not those of the defendant.

[Judgment Result]
1. The house lease contract signed by plaintiff Zhang Mou and defendant Liu Mou on the 2nd floor of the courtyard of Gaoping Road, Zhabei District, Shanghai, was terminated on December 19, 2014.
2. The defendant Liu Mou shall return to the plaintiff Zhang Mou the 2nd floor house in the courtyard of No. XXX Gaoping Road, Zhabei District, Shanghai within 15 days from the effective date of this judgment.
3. The defendant Liu Mou shall pay the rent and use fee of the plaintiff Zhang Mou's house within 15 days from the effective date of this judgment (according to the monthly rate of 20900 yuan, from May 1, 2014, to the date when the defendant actually returns the house in dispute);
4. The defendant Liu Mou shall compensate the plaintiff Zhang Mou for the loss of interest on the overdue payment of rent within 15 days from the effective date of this judgment (based on the rent of 62700 yuan from May 1, 2014 to July 31, 2014, from May 1, 2014; based on the rent of 62700 yuan from August 1, 2014 to October 31, 2014, from August 1, 2014; From November 1, 2014 to December 18, 2014, the rent of the house is 53935.48 yuan, which is the capital, starting from November 1, 2014. All the rents are calculated according to the interest rate of the financial institutions in the same period stipulated by the People's Bank of China until the date of the defendant's actual payment.
5. The deposit paid by the defendant Liu Mou is owned by the plaintiff Zhang Mou.

[Reasons for Judgment]
The disputed house lease contract signed by the plaintiff and the defendant shall be valid in accordance with the law, and both parties shall comply with it. If the parties reach consensus through consultation, the contract may be terminated. The parties may agree on the conditions under which one party rescinds the contract. When the conditions for rescission of a contract are fulfilled, the person who rescinds the right may rescind the contract. The defendant does not pay the rent within the time limit, and the plaintiff has the right of rescission according to the contract. The date on which the defendant receives a copy of the complaint in this case is the date on which the contract is terminated. If, after the termination of the contract, the performance has not been fulfilled, the performance has been terminated and the performance has been fulfilled, the parties concerned may request to restore the status quo, take other remedial measures and have the right to claim compensation for the losses in accordance with the performance and the nature of the contract. According to the contract, the defendant shall pay the rent to the plaintiff for the period from 1 May 2014 to 18 December 2014 and return the disputed house to the plaintiff. Since the date of termination of the contract, the defendant has not returned the disputed house to the plaintiff. The plaintiff's claim that the defendant should pay the use fee and the use fee should be paid according to the rent standard is not inappropriate and can be supported. If the defendant fails to pay the rent within the time limit, he shall compensate the plaintiff for the corresponding loss of interest. With regard to the deposit section, the house lease contract between the plaintiff and the defendant is terminated, and the defendant requests the return of the deposit in the lawsuit. In order to avoid the burden of lawsuit, the Court shall also determine the disposal of the deposit in case the defendant has been found to be liable for breach of contract. According to the expression of "entry rent is paid every six months" in the contract, the so-called "entry rent" refers to each period of rent rather than the first period of rent, so the plaintiff has the right to confiscate the deposit and not refund it.