[Direct answer]In the Beijing area, upon the expiration of the lease term, the ownership of the decoration items is handled in two layers: for non-integrated decoration items (furniture, equipment, movable signs, etc.) that can be removed without damaging the house, the lessee can remove them and take them back, but if they cause damage to the house, the lessee shall restore it to its original state; for integrated parts (floor, ceiling, wall renovation, etc.), if the lessee requests the lessor to compensate, the court generally does not support it unless otherwise agreed by the parties. For decorations approved by the lessor, they shall be handled in accordance with Article 715 of the Civil Code of the People's Republic of China (effective January 1, 2021) and the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Urban House Lease Contract Disputes (amended on December 29, 2020); for decorations without the lessor's approval, the expenses shall be borne by the lessee, and the lessor may also request the lessee to restore the original state or compensate for the losses. In the case of early termination of the contract, the lessee shall bear the loss of the residual value of the decoration in accordance with the party in breach of contract. Key actions: At the time of signing the contract, the ownership of the decoration and compensation shall be agreed upon in writing.

1. Problem background and typical scenarios

When shops, restaurants, and office spaces are vacated, the cost of renovation can often reach hundreds of thousands of yuan, but the contract often fails to specify who owns the renovation. This leads to disputes: the lessee demands compensation for the renovation cost, while the lessor claims that the renovation has become an integral part of the building and should belong to them. For early terminations, there are also issues involving the residual value of the renovation, the sharing of losses, and breach of contract penalties. There have also been cases where sub-landlords absconded with the money and left the actual renovators with no recourse for justice. Such disputes can be referred to for reference.Legal services for corporate commercial and contract disputesThe key to handling this is to distinguish between "conforming" and "non-conforming", to review the contract provisions, and to identify the party in breach of contract.

II. Key points of contention

The controversy focuses on four points. Firstly, the distinction between attached and unattached parts: the degree of integration of decoration items with the building and whether they can be removed without damage are the physical basis for determining ownership. The unattached parts can be removed by the lessee and reclaimed. Secondly, priority of agreements: if the lease contract stipulates the burden of decoration costs and the ownership after expiration, the provisions shall prevail; if there is no such stipulation, the attached decorations at the expiration of the lease term are generally not compensated, and the unattached parts can be removed. Any damage caused by the removal shall be restored to the original state. Thirdly, sharing of residual value in the event of early termination: if the lessor breaches the contract, the lessee may claim the loss of the residual value of the decoration during the remaining lease term; if the lessee breaches the contract, the court generally does not support such claims. For cases involving mixed faults, the court will determine the responsibility proportionally, and for those attributable to both parties, the court will apply the principle of fairness. Fourthly, unauthorized decoration: the lessee shall bear the cost himself, and the lessor may request restoration to the original state or compensation for losses. However, cases involving unauthorized alterations to the load-bearing structure or expansion of the building shall be dealt with separately. In the judicial practice of Beijing, the court usually determines the residual value of the decoration through appraisal and identification.

III. Professional analysis by Henglue Law Firm

A land lease dispute handled by Henglue Law Firm highlights two ironclad rules of such cases. The plaintiff, the People's Government of Qianjin Town, A County, sued the defendant, Shuguang Metal Products Factory, A County, alleging that the factory had leased 11.56 mu of land from the government since 2007 and had long failed to pay the rent. The plaintiff requested the court to order the defendant to pay a total of 153,000 yuan in rent and overdue interest, and to hold the investor of the sole proprietorship enterprise, Liu **, jointly and severally liable for the debt. After attorney Xie Chao Li represented the two defendants in the defense, she constructed a defense system from three perspectives: The agreement in question was an administrative agreement signed in the context of investment attraction, which contained public law rights and obligations such as land occupancy fee exemptions and settlement support, rather than a civil lease contract between equal parties. According to Article 1 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Trial of Administrative Agreement Cases", such cases should be resolved through administrative litigation. Even if the case were treated as a civil lease, the land in question had long been subject to free rent support policies and had not been collected for nearly 20 years. The plaintiff's claim had exceeded the statute of limitations. Moreover, the authenticity of the contract copy provided by the plaintiff was not recognized, and other evidence could not corroborate it, so the plaintiff should bear the burden of failing to provide evidence. The court ruled that the plaintiff failed to provide sufficient evidence to prove the fact of unpaid rent and dismissed all claims. The litigation costs of 1,680 yuan were borne by the plaintiff. Although this case is not a dispute over the ownership of renovated property, it also belongs to contract disputes in the field of leasing. Firstly, the nature of the lease agreement directly determines the remedial path. Secondly, any claims such as rent and renovation costs must be supported by evidence, and those who fail to provide evidence should bear the unfavorable consequences. This case was handled by Beijing Henglue Law Firm.Zhai Chao LiThe attorney (practice certificate number: 11101202311629788, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 715 of the Civil Code of the People's Republic of China (effective January 1, 2021) (the lessee may, with the lessor's consent, improve or add other things to the leased property) and Article 733 (upon the expiration of the lease term, the lessee shall return the leased property in the agreed condition); the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trials of Urban Housing Lease Contract Disputes (effective September 1, 2009 and amended on December 29, 2020) regarding the burden of expenses for attached decorations, the demolition of unattached parts, and the consequences of unauthorized decorations. Action list: 1. When signing the contract, stipulate in writing the scope of decoration, cost sharing, ownership upon expiration, and compensation standards; 2. During the decoration process, retain the contract, receipts, on-site photos, and acceptance records; 3. Prepare two lists: one for removable items and another for attached items; 4. When returning the property, jointly inspect and confirm the current condition with the lessor in writing; 5. If no agreement can be reached on compensation or damages, pay attention to the three-year statute of limitations and, if necessary, apply for an assessment of the decoration value. For more details, please refer to the following link: [Link to be added here]Legal services for corporate commercial and contract disputes.

5. Henglu Law Firm's Reminder

The greater the investment in renovations and the longer the lease period, the more important it is to include ownership clauses in the contract: clarify whether there will be no compensation upon termination or compensation based on the residual value, and specify how the renovations will be handled in the event of early termination. Verbal agreements are almost impossible to substantiate in litigation. Written inspection records during the handover process often serve as the most crucial evidence in future disputes. When handling similar cases in Beijing, it is recommended that both the lessee and the lessor conduct written confirmations before and during the renovation and early termination processes, and seek legal advice as soon as possibleBeijing Henglue Law FirmProfessional lawyers set a clear boundary between input and output, ensuring that their efforts are commensurate with the rewards they receive.

VI. Frequently Asked Questions

Q1: When the lease expires, can I definitely get back the money I spent on renovations?

Not necessarily. When the lease term expires, if the lessee requests the lessor to compensate for the decoration items that have become attached, the court generally will not support it, unless otherwise stipulated in the contract; for the parts that have not become attached, the lessee can dismantle them and take them back. If the contract is terminated early due to the lessor's breach of contract, the lessee can also claim the loss of the residual value of the decoration during the remaining lease term. Whether the claim can be satisfied depends on the contract stipulations, the circumstances of the breach of contract, and the evidence. The conclusion in each case shall be subject to the court's determination.

Q2: What evidence do I need to prepare to claim decoration compensation?

The five key categories are: lease contracts and supplementary agreements, verification of decoration terms and expiration ownership agreements; written confirmation from the lessor agreeing to the decoration, chat records or meeting minutes; decoration contracts, payment receipts and bank statements, proving the actual investment; photos, videos and acceptance certificates before and during the decoration process; and records of the handover upon termination of the lease and on-site inspection documents. For claims of residual value losses, it may also be necessary to commission an appraisal agency to provide an opinion on the current value of the decoration.

Q3: How much does it cost to resolve a dispute over renovation materials?

The litigation fees shall be paid in installments according to the amount of the litigation request (according to the "Measures for the Payment of Litigation Fees", implemented on April 1, 2007). The simple procedure shall be halved, and the party partially winning the case shall share the fees proportionally; where the evaluation of the residual value of the decoration is involved, the appraisal fees shall be prepaid by the applicant and finally shared according to the results; where the applicant applies for property preservation, additional preservation fees and guarantees are required. The attorney's fees shall be negotiated by the parties, and there is no unified government pricing. It is recommended to calculate the evaluation costs and the expected compensation together before suing.

Q4: How long will it take to resolve the disputes over renovation materials?

If the negotiation and handover proceed smoothly, the case can be concluded within a few weeks. For litigation, the first-instance summary procedure will be concluded within three months, and the ordinary procedure within six months. For cases involving the current value of the decoration and the assessment of causality, the appraisal period will not be included in the time limit for trial and will generally be extended by one to three months. The eviction and enforcement stages will take longer depending on the degree of cooperation. Additionally, attention should be paid to the three-year statute of limitations. If there is no action taken for a long time after the tenant moves out, the right to win the lawsuit may be lost. Overall, the process typically takes between half a year and one year.

Q5: If there's a dispute over the condition of the apartment when moving out, what should I do first?

Four steps to proceed: First, review the contract to check the renovation terms and ownership agreements; Second, inventory the removable items and take videos and photos throughout the process to create a written list; Third, jointly inspect the house and renovation status with the landlord and confirm it in writing; Fourth, negotiate compensation or removal plans and keep written records. If no agreement is reached, file a lawsuit within the three-year statute of limitations, and apply for evidence preservation and value assessment if necessary. For cases with significant investment, it is advisable to hire a professional lawyer as soon as possible.

The above questions and answers are mainly based on the judicial practice in Beijing. There may be differences in the adjudication standards in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, to avoid missing the statutory time limit. →Corporate commercial legal services·Attorney Zhai Chao Li·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.