If a new house leaks and is not accepted, who pays the property management fees?
Compiled from: Guangzhou Intermediate People's Court, Zhejiang Tianping
A homeowner refused to accept a new house due to leaks, but was sued by the property management company for overdue fees. In this case, does the homeowner need to pay? How should they protect their rights?
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Case review
In June 2020, Mr. and Mrs. Li purchased an apartment in a residential community in Zengcheng, Guangzhou. In October of the same year, they received a notice from the developer to take delivery of the property. During inspection, they discovered extensive water leakage on the walls and therefore refused to take delivery, demanding that the property management repair the apartment.
In June 2021, Xiao Li and his wife went to inspect the property again and found that the water leakage problem had still not been resolved. After that, they did not receive any further notice from the property management company stating that the repairs had been completed and the property was ready for handover, nor did they go to inspect it again.
In early 2022, the property management company filed a lawsuit against Xiao Li and his wife, demanding payment of property management fees and shared electricity charges totaling 5,179.30 yuan for the period from November 2020 to December 2021, along with corresponding liquidated damages for overdue payment.
[5] The property management company argued that, according to relevant legal provisions, the preliminary property service contract signed by the developer and the property service provider in accordance with the law is legally binding on the owners. The property in question was deemed to have been delivered to the Li couple for use from the date the developer notified them to take possession, so the Li couple should pay the relevant property service fees and shared electricity fees on time as per the "Preliminary Property Service Contract" signed between the property management and the developer.
[6] The Li couple argued that after inspecting the property, they found extensive water leakage, and the house has not yet been successfully delivered, so they are not required to pay the fees.
[1] Court Opinion
[2] In this case, the defendants, Mr. and Mrs. Li, signed a "Pre-sale Commercial Housing Contract" with the developer, and the developer signed a "Pre-property Service Contract" with the property company. However, the property service contract and the commercial housing sales contract pertain to different legal relationships. The determination of the conditions for the delivery of the property in question falls under the scope of review in disputes over commercial housing sales contracts. Whether the property in question should be deemed as delivered and used does not fall within the scope of review in disputes over property service contracts.
This case concerns a property service contract dispute. Based on the statements made by the plaintiff and the defendant at trial and the corresponding evidence, the property management company's claim that the property in question was deemed delivered and put into use on the date the developer notified the owners to take delivery lacks sufficient grounds. Furthermore, it is an established fact that the property in question had extensive water leakage when Xiao Li and his wife inspected it in October 2020. Given that the property has not been actually taken delivery of to date and has not been registered under the names of Xiao Li and his wife, the court does not support the property management company's claims for property service fees, shared electricity charges for common areas, and liquidated damages for late payment.
[4] The Zengcheng District People's Court of Guangzhou City rendered a first-instance judgment: dismissing all claims of the plaintiff property company. The property company, dissatisfied, filed an appeal.
[5] The Guangzhou Intermediate People's Court rendered a second-instance judgment: dismissing the appeal and affirming the original judgment.
The [1] The People's Republic of China Civil Code
[6] Article 208: Principle of Publicity of Property Rights
The creation, alteration, transfer, and extinguishment of real property rights shall be registered in accordance with the law. The creation and transfer of personal property rights shall be delivered in accordance with the law.
Article 209 Effect of Registration of Real Property Rights
The creation, alteration, transfer, and extinguishment of real rights in immovable property shall take effect upon registration in accordance with the law; without registration, they shall not take effect, unless otherwise provided by law.
Natural resources that are owned by the state in accordance with the law may be exempted from registration.
[1] The author's perspective
Generally, an owner shall pay property service fees from the date of signing the delivery documents of the house, but errors may occasionally occur, leading to incomplete delivery. It is noteworthy that as real property, the creation, alteration, transfer, and extinguishment of a house must be registered, rather than taking effect merely through a contract, which is also the key point in the judgment of this case.
In addition, owners should note that if the house is in good condition and the developer issues a delivery notice, but the owner fails to complete the handover procedures in a timely manner due to their own reasons, the collection of property fees will not be affected.
In June 2020, Mr. and Mrs. Li purchased an apartment in a residential community in Zengcheng, Guangzhou. In October of the same year, they received a notice from the developer to take delivery of the property. During inspection, they discovered extensive water leakage on the walls and therefore refused to take delivery, demanding that the property management repair the apartment.
In June 2021, Xiao Li and his wife went to inspect the property again and found that the water leakage problem had still not been resolved. After that, they did not receive any further notice from the property management company stating that the repairs had been completed and the property was ready for handover, nor did they go to inspect it again.
In early 2022, the property management company filed a lawsuit against Xiao Li and his wife, demanding payment of property management fees and shared electricity charges totaling 5,179.30 yuan for the period from November 2020 to December 2021, along with corresponding liquidated damages for overdue payment.
[5] The property management company argued that, according to relevant legal provisions, the preliminary property service contract signed by the developer and the property service provider in accordance with the law is legally binding on the owners. The property in question was deemed to have been delivered to the Li couple for use from the date the developer notified them to take possession, so the Li couple should pay the relevant property service fees and shared electricity fees on time as per the "Preliminary Property Service Contract" signed between the property management and the developer.
[6] The Li couple argued that after inspecting the property, they found extensive water leakage, and the house has not yet been successfully delivered, so they are not required to pay the fees.
[1] Court Opinion
[2] In this case, the defendants, Mr. and Mrs. Li, signed a "Pre-sale Commercial Housing Contract" with the developer, and the developer signed a "Pre-property Service Contract" with the property company. However, the property service contract and the commercial housing sales contract pertain to different legal relationships. The determination of the conditions for the delivery of the property in question falls under the scope of review in disputes over commercial housing sales contracts. Whether the property in question should be deemed as delivered and used does not fall within the scope of review in disputes over property service contracts.
This case concerns a property service contract dispute. Based on the statements made by the plaintiff and the defendant at trial and the corresponding evidence, the property management company's claim that the property in question was deemed delivered and put into use on the date the developer notified the owners to take delivery lacks sufficient grounds. Furthermore, it is an established fact that the property in question had extensive water leakage when Xiao Li and his wife inspected it in October 2020. Given that the property has not been actually taken delivery of to date and has not been registered under the names of Xiao Li and his wife, the court does not support the property management company's claims for property service fees, shared electricity charges for common areas, and liquidated damages for late payment.
[4] The Zengcheng District People's Court of Guangzhou City rendered a first-instance judgment: dismissing all claims of the plaintiff property company. The property company, dissatisfied, filed an appeal.
[5] The Guangzhou Intermediate People's Court rendered a second-instance judgment: dismissing the appeal and affirming the original judgment.
The [1] The People's Republic of China Civil Code
[6] Article 208: Principle of Publicity of Property Rights
The creation, alteration, transfer, and extinguishment of real property rights shall be registered in accordance with the law. The creation and transfer of personal property rights shall be delivered in accordance with the law.
Article 209 Effect of Registration of Real Property Rights
The creation, alteration, transfer, and extinguishment of real rights in immovable property shall take effect upon registration in accordance with the law; without registration, they shall not take effect, unless otherwise provided by law.
Natural resources that are owned by the state in accordance with the law may be exempted from registration.
[1] The author's perspective
Generally, an owner shall pay property service fees from the date of signing the delivery documents of the house, but errors may occasionally occur, leading to incomplete delivery. It is noteworthy that as real property, the creation, alteration, transfer, and extinguishment of a house must be registered, rather than taking effect merely through a contract, which is also the key point in the judgment of this case.
In addition, owners should note that if the house is in good condition and the developer issues a delivery notice, but the owner fails to complete the handover procedures in a timely manner due to their own reasons, the collection of property fees will not be affected.
