【 Reason for recommendation 】

This case is a typical lease contract dispute in the context of non residential relocation. Due to the fact that the leased property is within the non residential vacating scope and there is no legal provision that the lease term cannot exceed 20 years at the time of signing the contract, the lease term stipulated in the contract is as long as 50 years. Therefore, the lessee claims that there is a psychological expectation that the lease term exceeds the legal maximum period, and claims that it meets the standards of the eviction policy, demanding high compensation in accordance with the non residential eviction compensation policy.

After accepting the client's commission, the lawyer of our firm conducted a specific analysis of the case and believed that the portion of the lease contract that exceeds 20 years should be invalid. Even if the two parties later form an indefinite lease contract relationship, according to legal provisions, the cooperative can also request termination at any time. Our lawyers have also made a lot of preparations based on the fact that the two parties have not yet formed a compensation agreement for eviction. In the end, the court basically adopted the representative opinion of our lawyers, obtained a winning judgment, and achieved a result that satisfied the client very much.


[Client] (Plaintiff in the original trial, Defendant in the counterclaim, Appellee): Economic Cooperative of a Village in Chaoyang District, Beijing (hereinafter referred to as the "Cooperative")

[Counterparty] (Defendant in the original trial, Plaintiff in the counterclaim, Appellant): A limited liability company in Beijing (hereinafter referred to as "the Company")

[Client's Claim] 1. Terminate the Land Contract signed on October 6, 1995 and the Agreement signed in 1996; 2. A certain company vacates land and houses and returns them to the cooperative; 3. A certain company pays overdue rent and late fees to the cooperative, as well as occupancy and usage fees from the date of contract termination to the actual date of vacating.

[Counterclaim by the other party] 1. Order the cooperative to pay compensation to a certain company for the replacement of non residential houses at the new price according to the compensation standard for vacating non residential houses; 2. Order the cooperative to pay a one-time comprehensive subsidy for production and business suspension to a certain company; 3. Order the cooperative to pay relocation subsidies to a certain company.



【 Basic Case 】

On October 6, 1995, the cooperative, as the first party, signed a "Land Contract" with a certain company as the second party, agreeing that the first party would provide the right to use all of its construction land to the second party for a fee. The usage period is from October 1, 1995 to September 30, 2045. During the contract period, the land used by Party B can only be requisitioned in accordance with official documents or policy regulations at or above the city level. At that time, the house built by Party B shall belong to Party A. However, Party A shall pay Party B a discounted price based on the total cost of the house built by Party B minus the total depreciation amount of last year multiplied by the actual number of years of use. The house shall belong to Party A, and all compensation and other expenses shall belong to Party A. This contract shall terminate automatically.

In 1996, the cooperative, as the first party, signed an agreement with a certain company as the second party. The agreement stipulated that the first party would invest in the construction of the North Building and its surrounding wall in advance, and the second party would pay the total cost to the first party in one lump sum. The first party agreed to transfer the right to use the building and its surrounding wall to the second party. This property shall be used by Party B for fifty years. In case of national requisition, the compensation for this building belongs to Party B and has no relationship with Party A.
A certain company stated that apart from the 300 square meter house leased by the cooperative, the remaining houses were constructed with the company's investment.
Regarding the relationship between the Land Contract and the Agreement, both parties stated that the land under them is located and within the same scope.

[Opinion of our lawyer's representative]

1. According to the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Contract Law of the People's Republic of China (Part 1), if a dispute arises from a contract established before the implementation of the Contract Law and is brought to the people's court, except as otherwise provided in this Interpretation, the relevant provisions of the Contract Law shall apply. If there are no legal provisions at that time, the relevant provisions of the Contract Law may apply. At the time of signing the Land Contract and Agreement, there were no legal restrictions on the lease term of the contract. Therefore, the lease term of the contract should not exceed 20 years as stipulated in the Contract Law. After September 30, 2019, the two parties formed an indefinite lease contract relationship, and the cooperative has the right to request the termination of the lease contract and demand that a company return the land and houses under the Land Contract and Agreement, and pay the corresponding rent during the actual occupation of the land and houses.

2. The cooperative has not formed a relocation compensation agreement with a certain company, and the company has no right to demand that the disputed property be reset to a new price according to the non residential housing relocation compensation standard. After the contract is terminated, the issue of housing valuation compensation should be determined based on the contract agreement and the construction area and cost standards.

3. The one-time comprehensive subsidy for production and business suspension claimed by a certain company has no factual or legal basis, and the company cannot prove that it was unable to operate and suffered corresponding losses due to the actions of the cooperative.

Summary of the Judgment

1. The case involves the signing of the Land Contract and Agreement before the implementation of the Contract Law of the People's Republic of China, and the law has not yet imposed restrictions on the term of the lease contract. Although a certain company appealed and claimed that the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Contract Law of the People's Republic of China (Part 1)" had been abolished on December 29, 2020, and the 50 year lease term stipulated in the contract in question met the reasonable expectations of the parties, and the lease term should end on September 30, 2045, according to the provisions of Article 1 of the above interpretation, after the implementation of the Contract Law of the People's Republic of China, the lease term should be governed by the provisions of that law. Moreover, since the adoption of the Contract Law of the People's Republic of China and the occurrence of this lawsuit over 20 years ago, all parties involved should have a rational expectation of the corresponding legal consequences. After September 30, 2019, both parties continued to maintain an indefinite lease contract relationship. The cooperative requested the termination of the indefinite lease contract, which does not violate legal provisions. After the termination of the contract, the cooperative has the right to demand that a certain company return the land and houses involved in the lawsuit under the Land Contract and Agreement.   

2. Regarding the lawsuit filed by a certain company for the cooperative to pay compensation for resetting to the new price, as the two parties have never reached a demolition compensation agreement, and the involved "Land Contract" stipulates that "the house built by Party B belongs to Party A, and Party A shall deduct the total depreciation amount of last year from the total cost of the house built by Party B multiplied by the actual number of years of use", the corresponding situation refers to municipal expropriation. Although it is not completely consistent with the termination of the contract in this case, it can be referred to appropriately; Secondly, there are differences in cost amortization and residual depreciation between the construction of new houses and decoration and renovation activities. The property rights of the newly built house belong to the lessor, and the lessor benefits from it. This benefit does not conform to the nature and characteristics of the lease contract, so compensation is needed to balance the overall interests of both parties. In summary, when the land contract and agreement involved in the lawsuit are terminated, if the house built by a certain company belongs to the cooperative, the cooperative should pay the construction cost of the house to the company. Regarding the cost standards, both parties unanimously agree on the construction area and cost standards of a certain company, and the court has no objection.
3. According to the facts investigated in this case, it can be concluded that the cooperative has engaged in certain acts of harassment towards the use of land and houses by a certain company, which will inevitably result in certain business losses for the company. However, the company has not submitted sufficient evidence to prove the extent and specific amount of its losses. In addition, even if the cooperative engages in the aforementioned behavior, the corresponding period for calculating losses due to the lack of sustainability and the fact that the aforementioned behavior is not insurmountable to a certain extent should not be excessively extended. Based on the degree of proof provided by a certain company regarding the losses incurred from production and business suspension, and taking into account the performance of the litigation contract, support will be given at the discretion of fairness and good faith principles.

4. The court does not support a lawsuit filed by a certain company for the cooperative to pay relocation subsidies, as it lacks a contract and legal basis, and regardless of whether the contract is fulfilled for 20 or 50 years, relocation expenses will be incurred for the company.

【 Judgment Result 】

1、 Confirm that the "Land Contract" and "Agreement" signed between the cooperative and a certain company in 1995 and 1996 respectively will be terminated on October 16, 2020;

2、 A certain company shall vacate and return all land and houses under the Land Contract and Agreement to the cooperative within fifteen days from the effective date of the judgment;

3、 A certain company shall pay the cooperative a rent of * * * million yuan and subsequent occupancy fees for the period from October 1, 2011 to September 30, 2020 within 15 days from the effective date of the judgment.

4、 The cooperative shall pay a compensation of * * million yuan for resetting to the new price to a certain company within 15 days from the effective date of the judgment;

5、 The cooperative shall pay a business loss of * * million yuan to a certain company within 15 days from the effective date of the judgment.