Real Estate Perspective... The scope of the lessor's rental obligation in commercial property leasing.

Article 708 of the Civil Code stipulates the lessor's obligation to rent, that is, the lessor shall keep the leased property in line with the agreed purpose during the lease term, while the specific purpose of the leased property shall be agreed upon by the lessor and the lessee, which is the embodiment of the autonomy of both parties. Usually, the use of the leased property is for the contractual purpose of the lessee, who leases the leased property from the lessor for a specific purpose, such as renting a house for residential purposes, renting a shop for the operation of a restaurant, etc. When the purpose of the lessee's lease is different, the lessor's rent obligations are also different. If the lessor's rent obligations are excessively restricted, it is not conducive to protecting the interests of the lessee, and the lessee may not be able to use the lease for the agreed purpose. If the lessor's rent obligations are arbitrarily expanded, the lessor's burden will be increased and part of the risks that the lessee should bear will be transferred to the lessor. Therefore, the scope of the rental obligation will directly affect the balance of interests between the lessor and the lessee.

Commercial property leasing is different from other real estate and movable property leasing, commercial property is more complex, the lessor's rental obligations are different from other leases. For example, in the case of leasing residential housing, the lessor only needs to ensure that the housing it rents has residential properties and conditions in accordance with the lease contract. However, in the case of commercial property lease, because the purpose of the lessee's contract is different, the lessor's rental obligation is more complex, at this time to explore the scope and connotation of the lessor's rental obligation is particularly important, it is necessary to combine the judicial practice of the case to explore.

In some commercial property leases, the lessor and the lessee do not agree on the purpose of the lease in the lease contract, or only the agreed purpose is commercial, and there is no explicit agreement on the specific commercial use, which is common in small-scale commercial property leases. As a contractual obligation, the rental obligation should be based on the agreement reached between the lessor and the lessee in accordance with the autonomy of the meaning, when the two parties do not reach a specific agreement on the use of the lease, if the scope of the lessor's rental obligation is expanded, it will increase the burden of the lessor, resulting in an imbalance in the relationship between the rights and obligations of both parties. Moreover, the lessee, as a specific operator, has a relative understanding of its business industry and has a certain duty of care to determine whether the commercial property can be used for its intended commercial purposes, rather than requiring the lessor to guarantee it.

The Guangzhou Intermediate People's Court held in the civil judgment (2019) Yue 01 Min Zhong No. 22680 that "the lease contract involved between the two parties stipulates that the lease is for" lease according to the current situation of the property, only for business ", and there is no clear agreement for catering. The evidence submitted by the appellant is not enough to prove that the appellee explicitly promised that the shops involved can be used for catering before signing the contract, however, the appellant, as the operator of the catering business, did not perform the duty of careful examination on whether the shop in question had the conditions for use as a catering business, and did not specify the catering use in the lease contract signed with the appellee, nor did it specify the conditions that the shop in question should have as a catering use. The parties also agreed that the current status of the property is rough and that the leased property is in a leaseable state. Therefore, the appellant believes that there is no factual basis for the appellee's failure to fulfill the obligation to rent, and that the responsibility for the discharge of the breach of the commercial property lease contract should lie with the appellant." It can be seen that when the lessor and the lessee do not agree on the use of the commercial property or the agreement is unclear, the scope of the lessee's obligation to rent does not include the use for a specific commercial purpose.

So how to determine the scope of the lessor's rental obligation when there is no agreement or the agreement is unclear? Article 709 of the Civil Code provides a realistic solution, which stipulates: "The lessee shall use the leased property in accordance with the agreed method. If there is no agreement on the method of use of the leased property or the agreement is unclear, and it cannot be determined according to the provisions of Article 50th of this Law, it shall be used according to the nature of the leased property." According to the basic principle of good faith, the lessee needs to use the leased property according to the nature of the leased property, and the lessor should also ensure that the leased property can be used normally according to the nature of the leased property. Accordingly, if there is no agreement or unclear agreement in the lease of a commercial property, the lessor has an obligation to rent the commercial property for general commercial purposes, depending on the nature of the leased property. The general commercial uses here are commercial operations that do not require specific qualifications or conditions, and the uses that have specific requirements for the place conditions and surrounding environment of commercial properties in catering, Internet cafes, hotels and other industries should not be listed here. If the lessee is unable to apply for a specific license and cannot operate, the consequences shall be borne by the lessee.

In more commercial property leases, the lessor and the lessee will make a relatively clear agreement on the purpose of the lease. If the two parties agree that the purpose is to operate catering, hotels, entertainment venues and other specific industries, then the scope of the lessor's rental obligations should be expanded to provide housing use standards that meet the special specifications of catering, hotels and other industries?

The Intermediate People's Court of Huangshi City, Hubei Province held in the civil judgment (2022) E 02 Minzong No. 2292: "The operator who is being appealed as a lessee is a KTV operator who is not engaged in KTV operation for the first time. He should know the relevant rules of the industry. He failed to fulfill the relevant duty of prudence in the site selection process and has certain faults. In this case, the lease contract agreed that the purpose of the house in question was to operate KTV, but the house provided by the lessor as the appellant could not achieve the agreed purpose due to long-existing policy reasons, so the lessor failed to fulfill its obligation to pay the rent, and there was also a certain fault, that is, both parties were at fault. The responsibility for the termination of the lease contract shall be shared by both parties."

Shanghai Hongkou District People's Court held in (2021) Shanghai 0109 Minchu No. 13468 Civil Judgment: "The defendant, as the lessor, should have the obligation to pay the rent. The defendant is obliged to provide the house that meets the operating conditions agreed in the contract within the lease period. And the corresponding property right certificate and other certification materials required for the license, but when the two parties sign the contract, the land use is" non-commercial and catering land ", obviously can not meet the business purpose agreed in the contract, the defendant should have the duty of care, it did not fulfill the obligation of rent, should bear the responsibility. Secondly, the plaintiff, as the lessee, should also do the necessary duty of care when renting the disputed house. Due to his own negligence, he did not check and understand that the land where the disputed house is located is" non-commercial and catering land ", that is, he signed the contract and started to decorate and decorate, which has certain faults. To sum up, both parties are responsible for the failure of the disputed house to achieve the purpose of the contract, but the defendant's responsibility is greater."

It can be seen that in commercial property leasing, the scope of the lessor's rental obligation is to ensure that the commercial property conforms to the general purpose of the industry. If it fails to provide commercial property that conforms to the agreed purpose, it shall bear certain fault liability. The specific liability shall be comprehensively judged in combination with the lessee's fault liability, which shall be jointly borne by both parties.

Normally, the leased property has been checked and accepted by the planning, fire protection and other administrative departments before the license is issued, and the relevant use and the structure of the house have been specified before it is leased to the lessee. Moreover, the lessee usually inspects the leased property before leasing. The scope of this inspection includes not only the surrounding environment of the leased property and the potential passenger flow, but also whether the leased property can be used for the purpose of leasing. It should be reasonably foreseen that the commercial property to be leased may not meet the acceptance standard of a specific industry and thus suffer losses. At the same time, as the operator of a particular industry, the lessee itself has a certain duty of care, should be self-examination of the lease can actually achieve the commercial purpose of the lease and self-responsibility, the responsibility should not be borne by the lessor, otherwise the lessor's obligations, contrary to the principle of fairness.

In some commercial property leases, although the use of the commercial property is inconsistent with the lessee's lease purpose, or even does not meet the statutory lease conditions, the lessee will reach an agreement on the lease in order to obtain rental benefits and the lessee to achieve its commercial purpose. However, in this case, the lessor's rental obligations are not waived by the knowledge or commitment of the lessee.

The Guangzhou Intermediate People's Court held in the civil judgment (2021) Yue 01 Min Zhong No. 15710 that "the lease contract involved in the case is invalid because there is no evidence to reflect that the site involved in the case has gone through the planning and construction procedures. At the time of signing the contract and supplementary agreement, Company A, as the lessor, violated the legal rental obligation to lease the site involved in the case that did not meet the legal rental conditions to Company B, while Company B, as the lessee, leased the site involved in the case that the site did not meet the legal rental conditions, so both parties were at fault for the consequences of invalidation of the house lease contract. Although Company B undertakes to Company A that it has clearly defined the land, property nature and construction status of the above-mentioned property before signing all contracts and agreements for leasing the above-mentioned property, it undertakes not to use this as any basis to pursue any liability to the lessor. However, the above-mentioned commitment of Company B does not of course exempt Company A from the corresponding fault liability as a lessor for violating the statutory rental obligations." It can be seen that the lessor is obliged to provide a suitable rental housing, when the lease use or warrant can not meet the agreed use, even if the lessor prior disclosure or special instructions, can not completely exempt its liability. Specifically, in practice, the people's court generally defines the responsibilities of both parties according to the actual situation such as the lessor's prompt and the duty of care. If the lessor fulfills the relevant prompt and explanation obligation, the lessor's responsibility can be reduced to a certain extent.

In commercial property leasing, especially in the commercial complex format, the lessor directly manages the contents of public areas such as elevators, lobbies, and air conditioners, and the public areas will affect the normal use of the commercial property by the lessee. At this point, it would be reasonable and in line with the principle of efficiency to extend the scope of the lessor's leaseability obligation to the public area.

Guangzhou Intermediate People's Court held in (2023) Yue 01 Min Zhong No. 503 Civil Judgment: "In the lease dispute in this case, Company A, as the lessor, needs to provide cleaning, security, operation management, maintenance of public equipment and facilities in public areas in addition to providing suitable rental space. From the contents of WeChat chat records, it can be seen that Company A has mismanaged behaviors such as failing to open the door in time, failing to open the elevator, failing to provide cleaning and security services, and being cut off from water and electricity, which has affected the normal use of the leased store by Company B as the lessee. Obviously, Company A has not fulfilled its obligation to rent and needs to bear the responsibility."

The Foshan Intermediate People's Court held the same view in the civil judgment (2021) Yue 06 Min Zhong No. 8926: "The tenant and Company A signed a lease contract for the lease of the shop involved, the purpose of which is to lease the shop involved for business activities. According to the contract, the tenant has the right to use the public parts of the mall, including but not limited to stairs, passageways, toilets, elevators, etc., with all other tenants in the same mall according to their normal business needs. It can be seen that in addition to ensuring the normal use of the shops involved by the tenants, Company A also has the obligation to ensure that the tenants reasonably use the ancillary facilities and equipment of the public part of the mall and the smooth operation of the center as a whole. However, Company A has failed to properly solve the problems existing in the ancillary facilities and equipment of the public part, resulting in the failure of the normal operation of the mall and affecting the normal operation of the tenants, and shall bear the responsibility for failing to fulfill the obligation of rent."

It can be seen that in commercial property leasing, the scope of the lessor's rentable obligation includes not only the commercial property itself, but also the public area. If the lessor who has the obligation to manage the public area fails to properly manage the public area, which affects the normal and reasonable use of the commercial property by the lessor, it shall be deemed as failing to fulfill the obligation of rent.

First, in a commercial property lease, if the lessor and the lessee have no agreement on the use of the lease or the agreement is not clear, the leased property should conform to the general commercial use and not need to conform to the specific commercial use. Secondly, if the two parties have a clear agreement on the use of commercial property, the lessor has the obligation to guarantee the agreed use, and when the lessor violates the obligation to rent, it should also consider the lessee's fault and bear the responsibility according to the proportion of responsibility. Finally, the lessor who has the management responsibility for the public area shall fulfill the obligation to rent the public area that affects the normal and reasonable use of the commercial property by the lessee, such as elevators, air conditioners, pipelines, etc.

Therefore, our lawyers put forward the following suggestions on how the lessor can avoid legal liability for failing to meet the rental obligations in commercial property leasing: