In furtherance to the article posted on the webpage of www.foreignercn.com (http://www.foreignercn.com/index.php?option=com_content&view=article&id=1557:contract&catid=43:housing-a-finance&Itemid=86) talking about points in the rental contract in China. While it is a useful guide for alien people, however it is far from enough to safeguard your peaceful and tranquil enjoyment of your leased property.

 

Here are more tips for you to take into consideration when entering into a lease contract with the landlord. Please note, this article does not intend to be comprehensive and please seek legal advice when you get involved in any specific leasing transaction.

 

1. Concurrent ownership

In many cased, the leased properties in question is co-owned by more than one person, in particular, in the case of the marital property. Frequently I received inquiries about whether a lease contract signed by one spouse is valid or not. The answer is clear: no. According to laws regarding marital property, sale and lease of the co-owned property shall be subject to the consent of both spouses, and otherwise such lease and sale contract, absent the signatures of both spouses, are very likely to be held invalid. To avoid this, make sure all owners shown on the Property Ownership Certificate shall sign the contract or otherwise give effective and adequate authorization to the signatory to the contract.

 

 

2. Earnest Money

After you inspect the apartment and before the conclusion of the formal lease contract, the landlord often asks you to pay a sum of earnest money to secure the final conclusion of the lease contract. While it is reasonable, you have got to be cautious when you make payment thereof by insisting that a provision to the following effect is written into the Earnest Money Agreement that property will be delivered and decorated and furnished at the time and in the manner to your expectation. Otherwise, that earnest money will be an easy prey of the landlord.

 

 

3. Deposit

As always, landlord will insist on you paying a sum of deposit (often equal to two-month rental) upon execution of the lease contract. Such deposit is often forfeited upon your breach of the contract. So it is very important to make it clear in the contract that under what circumstances (i.e. what kind of breaches) the landlord may have the right to seize the deposit. For instance, if the contract has stipulated that delay of payment of rental will give rise to delay penalty in an amount of twofold the daily rental, the landlord shall not be allowed to seize the deposit unless such breach reaches an unreasonable degree.

 

 

4. Unfixed Term

The law requires that a lease contract of a term of over 6 months shall be made in writing, and otherwise such lease contract shall be deemed a lease contract without a fixed term. Similarly, where the lease contract has expired, and both parties continue the lease deal without renewing their lease contract, then the expired lease contract is still deemed a valid contract but without a fixed term. In the case of an unfixed term lease contract, the contract is susceptible to unilateral termination by both parties thereto since the law has expressly provided for such right of unilateral termination for both parties. In case that the landlord initiates to exercise such unilateral termination right, he has to give notice thereof to the tenant in reasonable advance.

 

 

5. Landlord not to lock the door

Frequently, upon the breach of contract by the tenant, the landlord chooses to lock the door without prior consent of the tenant. Absent a clear clause authorizing the landlord to take such action, it may be too much for the landlord to do so. However, to ensure that such overreaction against a slight breach of contract will not happen to you, you need to put a clause in your contract prohibiting the landlord to act that way. Further, even if the landlord can successfully establish his right to lock the door, the contract shall make clear that the landlord shall not lock your personal property in the house upon whatever breaches of the contract.

 

 

6. Right of first refusal

There are two types of such right of first refusal, namely, the right of first refusal for purchasing the property and the right of first refusal for renewing the lease of the property. The PRC Contract Law has provided that if the landlord sells his property, he shall inform the tenant of the sale and the sale offer in advance, and the tenant shall have the pre-emptive right to buy the property on the same sale terms offered to the third party. However in Shanghai, to successfully realize the right of first refusal in the context of lease deal, the tenant shall make sure that the lease contract be registered with the real estate authority, and otherwise the court will prefer to protect the third party over the tenant. 

In the case of right first refusal for renewing the lease of the property, it is a local provision by Shanghai government. Under that provision, when the original lease contract is coming to an end, the tenant shall have the pre-emptive right to renew the lease on the same terms offered to third parties.