[Direct answer]In the Beijing area, when there are quality problems with the leased property, the lessee cannot automatically refuse to pay all the rent, but should claim corresponding rights according to the degree of the defects. According to Article 708 of the Civil Code of the People's Republic of China (effective January 1, 2021), the lessor shall deliver the leased property in accordance with the agreement and ensure that it meets the agreed purpose; Article 713 stipulates that the lessor has the obligation to maintain the leased property. If the quality defects result in the failure to achieve the contractual purpose, the lessee may request a reduction in the rent or the termination of the contract; for general defects, the lessee may claim the right of defense of simultaneous performance (Article 525) and refuse to pay the corresponding part of the rent. It is recommended to first fix the quality evidence, notify the lessor in writing to repair the property, and not to blindly stop paying all the rent to avoid constituting a breach of contract. For more details, please refer to the following link:Financial capital and cross-border services involving foreign affairs.

I. Problem Background and Typical Scenarios

Disputes over the quality of leased assets are very common in equipment leasing, plant leasing, vehicle leasing, and financial leasing. Typical scenarios include: frequent breakdowns of leased equipment affecting production, and the lessor delaying repairs; water leaks and substandard electrical circuits in the plant making it impossible to operate; hidden defects in the subject matter of financial leasing; and goods not conforming to the agreed specifications in cross-border leasing. When tenants face quality problems, they often mistakenly believe that they can refuse to pay if the goods are not good, only to be pursued for breach of contract by the lessor. Clarifying the nature of the defects and the remedies is the key to avoiding losses on both sides. For cross-border equipment transactions, it may be necessary to combine\nFinancial capital and foreign-related cross-border servicesThe evaluation can also be referred to for reference.Business and contract dispute resolution services for enterprisesClarify responsibilities.

II. Key points of contention

The focus of the dispute lies in three aspects. Firstly, the degree of defects: whether it is a general quality defect or a fundamental breach of contract that leads to the failure of the contractual purpose, which determines whether the lessee can refuse to pay or terminate the contract. Secondly, the matching of remedies: the lessee should claim for rent reduction, repair, or termination, which must be commensurate with the defects. Excessive refusal to pay may easily be regarded as a breach of contract. Thirdly, the burden of proof: the causes, timing, and impact of quality problems must be proven by the lessee. When handling similar cases in Beijing, the court pays attention to reviewing the delivery standards of the leased property and the chain of evidence of defects. Where the counterparty's creditworthiness is involved, reference can be made to relevant provisions.Creditor-debtor relations and enforcement case servicesCoordinate and plan things in an organized and systematic way to achieve a specific goal or complete a task effectively.

III. Professional analysis by Hengluo Lawyers

Based on practical observations in handling lease and financing disputes, the most common mistake in disputes over the quality of leased assets is using the refusal to pay the full rent to counter defects. According to the relevant rules of the Civil Code, the lessor should deliver leased assets that meet the agreed purpose and bear the obligation of maintenance, but the lessee's refusal to pay the rent must be based on statutory or contractual defenses, rather than unilateral judgment. In practice, the court will review whether the quality defects are genuine, whether they were notified in a timely manner, whether they affect the purpose of the contract, and whether the lessor neglected to repair them. If the lessee stops paying the full rent without notice, they will often be deemed to have defaulted on payment and bear breach of contract liability; conversely, if the lessee promptly fixes the inspection reports, maintenance notifications, and communication records, and only claims a rent reduction or suspension of payment for the defective parts, it is more likely to gain support. Therefore, Hengluo Lawyers usually advise lessees to first notify the lessor, then raise partial defenses, and finally consider terminating the contract if necessary, transforming quality objections into enforceable defenses rather than simply suspending payments.

IV. Practical Suggestions and Legal Basis

The core basis is Article 708 of the Civil Code of the People's Republic of China (effective January 1, 2021) (Delivery and Maintaining the Agreed Purpose), Articles 712 and 713 (Maintenance Obligations and Expenses), Article 721 (Payment of Rent), Article 525 (Right of Defense against Simultaneous Performance); as well as the provisions on evidence collection in the Civil Procedure Law. Practical suggestions: Upon receiving the leased property, conduct a timely inspection and leave a record; immediately notify the lessor in writing of any defects and grant a reasonable repair period; claim a rent reduction or suspend the payment of corresponding rent for the parts that have affected the use; if no agreement can be reached through negotiation, the lessee may sue for a rent reduction, repair, or termination of the contract; and pay attention to the claim object in financing lease contracts. For those involving the design of contract terms, relevant provisions may be combined with other laws and regulations to ensure legal compliance.Intellectual property and corporate legal servicesImprove risk control.

5. Henglu Law Firm's Reminder

The golden period for raising quality objections is to notify the lessor immediately upon discovery. It is recommended that lessees keep evidence of inspections, photos, communications, and repair requests during acceptance and use, and never resort to self-help measures such as suspending full rental payments, otherwise they may easily shift from being a party in compliance to a party in breach of contract. For fundamental defects, lessees should claim rescission and compensation within the statute of limitations; for general defects, it is advisable to raise partial defenses. For cross-border leases, attention should also be paid to the applicable law and dispute resolution clauses. If a case needs evaluation, legal assistance can be sought for further analysis.Special services and other case servicesCoordinate with the professional team.

VI. Frequently Asked Questions

Q1: If there are quality issues with the leased item, can I refuse to pay the rent?

Depending on the severity of the defects, it is not appropriate to refuse to pay the full rent without exception. If the quality defects prevent the achievement of the contractual purpose, the lessee may request a rent reduction or termination of the contract according to law; for general defects, the lessee may claim a defense of simultaneous performance and refuse to pay the corresponding rent. However, unilaterally stopping payment of all rent is likely to be deemed a breach of contract due to late payment. Whether the lessee can refuse to pay depends on whether the defects are genuine, whether they have been notified in a timely manner, and whether they affect the contractual purpose. It is recommended to raise a defense based on the actual part of the defects rather than stopping payment entirely.

Q2: If I claim that the quality of the leased property is unsatisfactory, what evidence do I need to prepare?

The core evidence includes: the provisions on quality and use in the lease contract; acceptance records, inspection reports, photos and videos proving the defects; written notifications of repair or quality objections sent to the lessor and delivery certificates; communication records proving that the lessor neglected to handle the issues; and evidence of damages caused by the defects. The evidence should form a chain of delivery non-conformity, notification, non-repair, and impact on use, and third-party inspection reports have higher evidentiary value.

Q3: How much does it cost to hire a lawyer to handle disputes over the quality of a lease?

The fees include attorney fees and litigation fees. Attorney fees are negotiated between the law firm and the client and are charged on a per-case or percentage basis, subject to the terms of the engagement contract. Generally, risk-based legal fees are applicable to contract disputes, but there are strict restrictions. Litigation fees are calculated in accordance with the "Measures for the Payment of Litigation Fees" based on the amount of the dispute and are borne by the losing party. It is recommended to understand the fee standards and weigh the costs and benefits based on the potential reduction in rent or the amount of the claim.

Q4: How long does it usually take to resolve a quality complaint?

It may take several weeks to send a letter or negotiate; the first-instance litigation is generally concluded within six months in the ordinary procedure and three months in the summary procedure, and the second-instance litigation takes three months; arbitration usually takes several months according to the rules. If it involves appraisal, inspection or cross-border evidence collection, the time will be extended. It often takes several months from quality objections to adjudication. It is recommended to notify and fix evidence in time after knowing the defects to avoid exceeding the statute of limitations or losing the opportunity to defend against the claim.

Q5: If I find that the quality of the leased item is unsatisfactory, what should I do first?

Here are the four steps recommended: 1. Document evidence of quality defects promptly during acceptance and use. 2. Immediately notify the lessor in writing and demand repairs within a reasonable timeframe. 3. Depending on the severity of the defects, claim a rent reduction or suspend payments for the corresponding portion. Never stop paying the full rent blindly. 4. If negotiations fail, hire a lawyer to sue for a rent reduction, repairs, or contract termination. Throughout the process, keep all notifications and communication records to convert quality disputes into legitimate defenses against contractual obligations.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudication guidelines in other regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are 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.Financial capital legal services·Beijing Henglu 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. In case of disputes, please consult a practicing lawyer in time.