On October 1, 2009, two sets of judicial interpretations issued by the Supreme Court of the PRC came into effect to address certain issues in applying Property Law in handling disputes concerning property management services and condominium ownership.
Judicial Interpretations on Disputes Concerning Property Management Service (???? ?????????????????????, the Judicial Interpretations on Property Management)
Some articles of the Judicial Interpretations on Property Management are concerned with protecting the rights of property management companies. For example, they clarify that not only the property management service contract entered into by the owners’ committee with a property management company binds the property owners, but so does the preliminary property management service contract entered into by the developer and property management service company. Under this provision, property owners can no longer rely on an argument that they are not party to a property management contract as grounds for refusing to pay property management fees or comply with other terms of the contract. Moreover, the Judicial Interpretations on Property Management expressly state that when a user – such as a tenant or authorized occupant - of a property is responsible for paying the property management fees under an agreement with the owner, courts will support a property management company’s claim of the owner’s joint liability.
On the other hand, the Judicial Interpretations on Property Management also emphasize the liabilities of the property management companies in several regards. Firstly, they describe the situations in which courts will rule a property management service contract to be void in whole or in part. For instance, provisions that exempt the property management company from its liabilities, or increase the liabilities of the owners or the owners’ committee, or deprive owners or the owners’ committees of their principal rights will be declared void. In addition, if the property management company contracts out all or a portion of its management service work within a service area to a third party, the contract is void. Secondly, the Judicial Interpretations on Property Management specify that public undertakings and detailed rules made by a management company regarding its management service constitute an integral part of a management contract. Thirdly, these interpretations state that courts will support owners in the event that the property management company improperly charges property management fees.
Fourthly, a property management company is required to issue a written demand to any owner who fails to pay the management fee before the court can decide to support its claim for such management fee. Finally, the Judicial Interpretations on Property Management provide some guidance regarding proper action by the property management company following termination of a management contract, which includes refunding the management fee to the extent its management services have not been provided, to remove its own movable property from the property management service area, to handover the management service premises and facilities, the related materials in relation to and necessary for management of the property and the maintenance fund it held in trust.