[Case Summary]This case involves a dispute over the creditor's subrogation right (relating to the property management fees of the foreclosed property). In January 2023, A Commercial Brokerage Company won the auction of three properties in Dongcheng District from Liu Shufen. However, when handling the handover in May, it was discovered that there was an outstanding property management fee of 180078.07 yuan, which A Company had paid on behalf of the original landlord. A Company believed that the original landlord and the lessee, B Company, had signed a lease agreement, and the fees should be borne by the lessee. Therefore, A Company exercised its subrogation right to recover the fees from B Company. B Company appointed Beijing Henglu Law Firm to handle the case.Zhu GuiyinThe lawyer team argued that the property fees were subject to the buyer's risk in the auction, that there was no basis for subrogation, that Company B had withdrawn from the case, and that the fees had been offset. The court accepted these arguments and ruled to dismiss all of Company A's claims, with Company A being ordered to bear all legal costs. The core disputes involved the establishment of subrogation rights, the responsibility for paying the property fees, and the identification of appropriate defendants. The applicable legal provisions included Article 67 and Article 147 of the Civil Procedure Law, as well as Article 14 of the Regulations on Online Judicial Auctions.

I. Review of the Case Facts

"Who should bear the property management fees for foreclosed properties?" and "Is the creditor's subrogation right established?" are common concerns among bidders. On January 13, 2023, A Commercial Brokerage Company won three properties in Dongcheng District owned by Liu Shufen through Taobao judicial auction, and completed the transfer of ownership on February 9. However, when handling the property handover on May 12, it was discovered that there was still an outstanding property management fee of 180078.07 yuan. The property management company required the payment of the arrears before the handover could proceed, and A Company had no choice but to pay on behalf of the buyer. A Company also found that B Company and Liu Shufen had signed a "Beijing City Housing Lease Contract" in 2019, with the lease term ending on June 14, 2025. According to the contract, the lessee was responsible for paying water, electricity, gas, heating, and property management fees.

Company A believes that both the original landlord and Company B should pay for the property services. Therefore, it sued Company B, claiming that it has a mature creditor's right against the original landlord, and that the original landlord has neglected to exercise its right to collect fees from Company B. It requested to exercise the right of subrogation against Company B to claim the advance payment of property fees and interest. Company B entrusted Beijing Henglu Law Firm to handle the case.Zhu GuiyingThe lawyer team filed a defense in response to the lawsuit.

II. The focus of the case

  • Focus 1: Whether the property fees claimed by Company A are part of the risks it should bear when conducting the auction.The auction notice clearly states that the buyer shall bear the unpaid fees, and the focus is on whether Company A can transfer the responsibility to the lessee.
  • Focus 2: Does this case meet the prerequisites for the exercise of the creditor's right of subrogation?The focus is on whether there is a due claim and negligence in exercising rights between Company B and the original landlord.
  • Focus 3: Has Company B already withdrawn and had its expenses offset?The focus is on the fact that Company B was liquidated in November 2022 and agreed with a third party to offset the breach of contract penalties and other payments with the property fees.

III. The professional intervention of Hengluo Law Firm

The plaintiff (the bidder) claimed that:Company A claimed that the property it purchased was still in a leased state before it acquired it, and both the original landlord and Company B were responsible for paying the service fees. However, the original landlord neglected to charge Company B, so Company A claimed that Company B should reimburse the property fees and interest on its behalf.

The defendant's (the lessee's) position:B Company argued that the property fees belonged to A Company's auction and should be borne by A Company itself, and that B Company was not a suitable defendant; that B Company had no due claims against the third party and did not have the right of subrogation; and that B Company had withdrawn from the property and agreed with the third party to offset the payments with the property fees, so there was no need to make further payments.

Hengluo Lawyer's Agency Opinion:Zhu GuiyingThe lawyer team formulated a clear strategy: First, the auction information states that the buyer shall bear the arrears, and Company A, as a commercial entity, was aware of the defects before bidding and had no basis to claim against Company B; Second, there is no mature creditor's right between Company B and the third party, and it does not involve negligence in exercising rights causing damages; Third, Company B withdrew from the project and stopped using it on November 26, 2022, and agreed orally with the third party to offset the breach of contract penalty, decoration losses, and the deposit of 213,146 yuan with the property fees, without the need to make additional payments.

IV. Outcome of the case

The court held that the auction notice clearly stipulated that the buyer shall bear the unpaid fees, and Company A, as the buyer, was aware of and accepted the terms and should bear the unpaid fees itself; its claim that it enjoys a due claim against a third party and exercises the right of subrogation to claim against Company B lacks basis and shall not be supported. In summary, in accordance with Article 67 and Article 147 of the Civil Procedure Law and Article 14 of the "Regulations of the Supreme People's Court on Several Issues Concerning Online Judicial Auctions by People's Courts", the court ruled to dismiss all of Company A's claims; and the case acceptance fee and announcement fee shall be borne by Company A.

5. Hengluo Law Firm's Advice

The hidden risk of historical arrears in judicial auctions requires rational assessment. This case was handled by Beijing Henglu Law Firm.Zhu GuijingAttorney (Practice License No.: 11101202011246828, subject to the document issued by the judicial administrative organ): Agent. Reminder: Before bidding, please read the auction announcement and the provisions on assuming debts carefully. If you know there are defects but still bid for the property, you will generally bear the responsibility yourself. For foreclosed properties, the debts are usually borne by the buyers. The creditor's subrogation right requires that the creditor's claim be due and the debtor has failed to exercise his right to claim. If these conditions are not met, the court will not support it.

VI. Common Questions and Answers about Property Management Fees Disputes for Foreclosed Properties

  1. Q: Who should pay the property management fees owed for the foreclosed property after it's purchased at auction?
    A:The auction announcement stipulates that the buyer shall bear the responsibility, and the bidder shall bear it himself after knowing it. In this case, Company A paid the deposit on behalf of the buyer, but its claim for reimbursement from others was rejected.
  2. Q: What are the conditions for the creditor's right of subrogation to be established?
    A:In this case, none of the following conditions are met: the creditor has a mature claim against the debtor; the debtor fails to exercise his/her mature claim against the sub-debtor, which causes damage to the creditor.
  3. Q: Do tenants need to pay the property management fees on behalf of the original landlord?
    A:The lease agreement stipulates that the lessee shall bear the responsibility, which is valid within the relationship between the original landlord and the lessee, but cannot be invoked against the buyer who has already paid the down payment and assumed the responsibility for the outstanding fees.
  4. Q: How to check for unpaid fees before purchasing a foreclosed property?
    A:Check the auction announcements, verify the arrears with the court and the property owner, and decide on the bidding amount after assessing the risk of defects.
  5. Q: How can a defendant respond to a claim of subrogation by a creditor who is being sued?
    A:Verify whether the plaintiff has a due claim, whether the debtor has neglected to exercise his rights, and whether the defendant is qualified. Gather evidence for defense against claims of repayment and offsetting.