In recent years, conflicts between property owners and property service providers have occurred frequently and are characterized by easy recurrence and difficulty in resolution. The Supreme People's Court (SPC) recently released five typical cases involving property service contract disputes, responding to issues of public concern in the property sector, such as methods for collecting property fees and the "difficult handover" after a property service contract is terminated. This aims to fully leverage the demonstrative and guiding effect of typical cases, unify adjudication rules, and effectively prevent and resolve property disputes. The SPC is actively responding to public concerns, guiding people's courts at all levels to properly handle new situations and new problems in the property sector, substantially resolving civil disputes, including property service contract disputes, and striving to promote the resolution of urgent and difficult issues for the public.

Property Service Provider Cannot Use Restrictions on Access Control Systems to Urge Payment of Property Fees

[Case Summary] Zhang, an owner in a certain residential community, discovered that he was prohibited from using the elevator and the access control system of his unit due to his failure to pay property fees to the property management company. After unsuccessful negotiation with the property management company, Zhang filed a lawsuit with the court, demanding the restoration of his access to the elevator and access control system.

[Court Findings] The court held that although Zhang was in arrears with property fees, the property management company should not use methods such as refusing to activate the owner's access card, preventing normal entry to the unit building, and restricting the use of the elevator access control system to urge payment of property fees. The property management company could separately seek legal recourse for Zhang's breach of contract regarding the non-payment of property fees. After the court clarified the law, the property management company restored Zhang's access to the access control system.

[Legal Principle] The Civil Code stipulates that a property service provider shall not adopt methods such as stopping the supply of electricity, water, heat, or gas to urge payment of property fees. A property service provider restricting an owner's access by not activating their access card or limiting the use of elevators to collect property fees is essentially an improper restriction on the owner's building division ownership rights based on its creditor's rights under the property service contract, which lacks a legal basis and exceeds the necessary and reasonable limits.

The SPC cautions that property service providers should adopt reasonable and lawful methods for collecting property fees. If an owner still fails to pay the property fees within a reasonable period after being urged, the property service provider can legally protect its legitimate rights and interests through mediation, filing a lawsuit, or applying for arbitration, but should not use methods that affect the owner's normal life for collection.

Property Company Refuses to Withdraw; Cannot Demand Owners Pay Property Fees After Contract Termination

[Case Summary] The owners' committee of a certain community informed the property management company by letter that they would select a new property service provider after the expiration of the original property service contract and invited the company to participate in the bidding process. The property management company responded that the original contract would automatically terminate upon expiration. Subsequently, the community selected a new property service provider and signed a new contract. The owners' committee notified the original property management company to promptly complete the handover, but the company failed to withdraw within a reasonable period, resulting in the new service provider being unable to commence services for an extended time. The original property management company sued an owner, He, for non-payment of property fees incurred after the original contract terminated.

[Court Findings] The court held that the property management company, after the termination of the original property service contract, failed to fulfill its handover obligations to the new service provider as required by the owners' committee, and refused to withdraw from the property service area even after being clearly informed of the legal consequences. Therefore, it was not entitled to request the owner to pay property fees after the termination of the property service contract. The court ultimately ruled to dismiss the property management company's claim.

[Legal Principle] The Civil Code stipulates that when a property service contract terminates, the original property service provider shall vacate the property service area within the agreed or a reasonable period, hand over property service premises, relevant facilities, and necessary materials for property services to the owners' committee, the owners who decide to self-manage, or the person designated by them, cooperate with the new property service provider in the handover, and truthfully inform them of the usage and management status of the property. If the original property service provider violates the preceding provisions, it shall not request the owner to pay property fees incurred after the termination of the property service contract; if losses are caused to the owner, it shall compensate for the losses.

Due to conflicts of interest between the old and new property service providers, some original property service providers disregard the common will of the community owners, continue to occupy property premises, and refuse to hand over relevant materials, "exercising forceful occupation in the name of service," making it difficult for the new service provider to smoothly start work. The judgment in this case, dismissing the original property management company's claim, helps guide property service providers to withdraw on time and fulfill their handover obligations according to law, which is of positive significance for standardizing property service behavior and building a harmonious and livable community environment.

Original Property Service Provider Has No Right to Sue Over the Owners' Assembly's Decision to Appoint a New Service Provider

[Case Summary] A property management company was the initial service provider selected by the community's developer. Later, the community's Owners' Assembly held a meeting and passed a resolution to dismiss the company and select a new property service provider. The owners' committee subsequently signed a new property service contract. The original property management company argued that the Owners' Assembly's decision to select a new property service provider did not comply with the legal provisions regarding the proportion of exclusive area and the number of owners required for voting on common matters of the owners, and filed a lawsuit requesting the court to confirm the decision as invalid.

[Court Findings] The court held that the property management company was not an owner of the community, was not bound by the Owners' Assembly's decision, and did not have a direct vested interest in the contested Owners' Assembly decision. Therefore, it had no right to file a lawsuit requesting the revocation of the Owners' Assembly decision or confirmation of its invalidity. The court ultimately ruled to dismiss the property management company's lawsuit.

[Legal Principle] According to the Civil Code, the hiring and dismissal of a property service enterprise shall be decided jointly by the owners. Decisions made by the Owners' Assembly or the owners' committee are legally binding on the owners. The Owners' Assembly's decision is an important way for owners to exercise their co-management rights over major community matters and implement owner self-governance. A decision made by the Owners' Assembly is legally binding on the owners but does not directly bind subjects other than the owners. Therefore, the property service provider has no necessity or practical effect in requesting the people's court to rule on the validity of the Owners' Assembly's decision. If the original property service provider believes the termination of the property service contract caused it losses, it can claim those losses separately.

The SPC states that this case clarifies that the property service provider cannot file a lawsuit against the Owners' Assembly's decision to select a new property service provider, which serves as a rule guide. This is conducive to maintaining the validity of the Owners' Assembly's decisions and legally ensuring the owners' exercise of their co-management rights.