[Direct answer]The tenant needs to compensate, but the amount of compensation depends on the terms of the contract and the extent to which the losses can be proven. If the lease period has not expired and the lessor unilaterally takes back the property without any contractual or statutory grounds for termination, this constitutes a breach of contract. The tenant may, in accordance with the Civil Code of the People's Republic of China (effective January 1, 2021), demand continued performance of the contract, or agree to terminate the contract and request compensation. If the contract includes a penalty clause, the tenant may, in principle, claim compensation according to the agreed terms. However, if the penalty is obviously too high or too low, the tenant may request the court to adjust it. In the absence of a penalty clause, the compensation shall be based on the actual losses, which typically include the rental difference for finding a new property, moving expenses, agency fees, and the return of the paid rent and deposit. Each item must be supported by receipts, and the court strictly controls the calculation of the reasonable benefits.

I. Problem Background and Typical Scenarios

Early termination of the lease rarely begins with a formal letter, but often starts with a WeChat message. The typical timeline is as follows: The landlord sends a message halfway through the lease term, stating that the house has been sold, intends to reclaim it for personal use, or plans to renovate it, and demands that the tenant move out within one month. The tenant replies that the lease has not expired and disagrees with the landlord's demands. The two parties remain in a stalemate for weeks. Subsequently, the landlord sends a termination notice, or directly changes the locks, cuts off water and electricity, or shows the new buyer around the house. To avoid conflict, the tenant starts looking for a new place, pays the deposit and moving fees for the new home, but the security deposit and prepaid rent for the old home are delayed for weeks. After negotiations fail, the tenant considers suing. The landlord's reasons may seem reasonable, but they carry different legal weight: the sale of the house typically does not affect the validity of the existing lease, and the new owner should honor the original lease relationship; commercial considerations such as self-use, rent increases, or renting to others generally do not constitute a statutory ground for unilateral termination; only when the tenant defaults on the rent, sublets without authorization, changes the use of the property, or damages the house, or when there is an explicit termination agreement between the parties, can termination be justified. The scenarios differ greatly, and the losses structure varies significantly: residential tenants often face indirect inconveniences such as moving costs, rent differences, and children's school transfers; commercial tenants of shops, studios, or warehouses may also face business interruption losses, license relocation, renovation costs, and customer loss; tenants who have just completed renovations and those who are suddenly evicted face completely different claims. There are also several high-frequency variations: landlords repossess the property on the grounds of area demolition or group rental crackdowns; secondary landlords evict tenants after their upstream leases collapse; long-term rental apartments face financial chain disruptions and unilateral evictions; and landlords claim to want to sell the property while renting it out to others simultaneously. Many people's first reaction upon receiving the notice is to argue over who is right or wrong, failing to provide written responses to clarify their position or collect evidence of losses in a timely manner. By the time of the court hearing, they realize that they have not kept the termination notice, used cash for the move, or been able to compare the new lease with the original one. A complete framework for early termination and calculation of breach of contract penalties is provided by Henglu Law Firm.Property sales and construction projectsThere's also a phased disassembly of the special page.

II. Key points of contention

There are four key points that need to be clarified one by one. Firstly, whether the right of rescission is established: whether the contract stipulates rescission conditions, whether there are statutory grounds for rescission, and whether the landlord's claim of selling the house or self-occupation can override the unexpired lease agreement. This is the prerequisite for all compensation claims. If the rescission is not established and the landlord forcibly takes back the house, it constitutes a breach of contract. Secondly, the relationship between the breach of contract penalty and actual losses: if the contract stipulates a breach of contract penalty or a calculation method, the parties shall generally follow the agreed terms. If the agreed amount is excessively high or low compared to the actual losses, the parties may request the court to increase or decrease it as appropriate. If there is no agreement, the parties shall refer to the rules on damages for breach of contract in the Contract Chapter of the Civil Code of the People's Republic of China (effective January 1, 2021), calculating the damages based on foreseeable actual losses, and the lessee has the obligation to mitigate losses and cannot allow the house to remain vacant to increase the losses. Thirdly, the items of losses and evidence: the rent difference shall be compared with the old and new lease agreements and payment records; moving and storage shall require invoices; agency fees shall require receipts; the residual value of the decoration shall require written evidence of consent to decoration and appraisal or quotations; and operational losses shall require orders and customer information. Oral quotes are usually discounted. Fourthly, procedures and handover: whether to insist on continued performance or agree to rescission, when the house shall be returned, how to deal with disconnection of utilities and forced eviction, and how to defend against the landlord's counterclaim for eviction all affect the design of the lawsuit. Both parties' claims are relatively fixed. The landlord often claims that he/she has given advance notice, that the house has other uses, or that the lessee should have moved out anyway. The lessee, on the other hand, claims that the lease has not expired, that he/she has paid the rent regularly, and that the additional expenses were incurred due to the sudden taking back of the house. The court's determination logic is generally to first confirm whether there are grounds for rescission, then review the authenticity and relevance of the losses item by item, and finally determine the amount based on the evidence. Items without supporting documents will not be supported.

III. Professional analysis by Hengluo Lawyers

In practice, Hengluo Lawyers evaluate such claims by calculating three aspects first. The first is the contract account: the lease termination date, termination clauses, the amount or calculation method of the breach of contract penalty, the return agreement for the deposit and prepaid rent, and whether the tenant agreed to the renovation in writing. These determine the upper limit and path of the claim. For example, the contractual provision that the tenant must pay one month's rent as compensation for early termination is often more efficient than proving each item separately in court. The second is the breach of contract facts account: the delivery time and content of the termination notice, the landlord's records of taking possession or disconnecting utilities and changing locks, evidence of showing the property to other tenants and renting it out elsewhere, and the full communication between the parties. This helps identify the starting point of the breach and the degree of fault. If the notice was only sent on WeChat without saving a screenshot, the other party may later deny it. The third is the loss account: new leases for similar properties and rental payments, invoices for moving and temporary storage, brokerage fees, renovation contracts and payment receipts, and materials for suspending operations and transferring business licenses after the termination. These must be itemized and distinguished from normal operating expenses. Three common mistakes are: 1. Refusing to vacate the property and stop paying rent after receiving the notice, only to be caught by the landlord for breaching the contract first; 2. Submitting a claim that only requests compensation for losses without specifying the items and amounts, making it difficult for the court to form an enforceable judgment; 3. Including unrealized expected profits and mental distress in the claim, which not only inflates the claim amount but also reduces the support rate. The claim design follows two paths: - For those who want to continue living in the property, claim continued performance and removal of obstacles to possession; - For those who agree to move out, claim termination, breach of contract penalties or actual losses, and return of the deposit and unused rent, with property preservation applied if necessary. Mediation is also a practical option: negotiate and formalize a written agreement on compensation amounts, grace periods for removal, deposit refunds, and renovation discounts, which is often implemented faster than a court judgment. According to public judgments in Beijing, clear contractual penalties are generally respected, with limited discretionary adjustments; without such provisions, the court directly calculates actual losses based on documentary evidence, exercising considerable restraint in assessing potential profits and indirect inconveniences. Proving supporting evidence is more valuable than arguing over claim amounts.

IV. Practical suggestions and legal basis

In terms of legal application, the Contract Chapter of the Civil Code of the People's Republic of China (effective January 1, 2021) forms the main framework: liability for breach of contract, discretionary adjustment of the penalty clause, foreseeable rules for damages compensation, and the rule that changes in ownership of the leased property during the lease term do not affect the validity of the lease contract. These rules correspond to whether the termination is established, the amount of compensation, and the types of losses that can be claimed. For matters involving housing transactions and ownership, reference can be made to the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Disputes over Commercial Housing Sales Contracts (amended in 2020) and the relevant rules in the context of real estate transactions. If the lessee conducts renovations or alterations with the landlord's consent and disputes arise over the quality of the work and the residual value, the requirements of the Construction Law of the People's Republic of China (amended on April 23, 2019) will also apply. For procedural matters, the Civil Procedure Law of the People's Republic of China (amended on December 24, 2021 and effective January 1, 2024) stipulates that the case acceptance fee shall be prepaid in stages based on the total amount of the claimed penalty and damages, with the plaintiff making the advance payment first and the burden being determined according to the proportion of liability after the judgment. Operationally, the following four steps are recommended: First, fix the original records of the notice of termination and the act of taking possession of the property; Second, send a written reply indicating that the lessee does not recognize the termination or stating the compensation conditions for agreeing to the termination, and retain the proof of delivery, rather than responding with silence; Third, continue to pay the rent according to the contract or deposit the disputed rent while seeking another rental property as soon as possible to fulfill the obligation of mitigation, and retain all receipts; Fourth, list and calculate the items of penalty, price difference, moving expenses, and return of the property one by one, and then decide whether to negotiate, mediate, or sue. If the landlord has already cut off the supply of water and electricity and changed the locks, an application for preservation of the property may be filed simultaneously.

The supporting basis for the ownership and registration procedures is the "Urban Real Estate Management Law of the People's Republic of China" (amended on August 26, 2019) and the "Interim Regulations on Real Estate Registration" (implemented on March 1, 2015), which can be applied in conjunction with the aforementioned contract compilation rules.

5. Henglu Law Firm's Advice

There are three points you need to keep in mind in the first few days after receiving the notice of termination. Firstly, don't treat the landlord's intention to sell the property or live in it as a legal basis for eviction. If the lease term has not expired and there are no agreed or statutory grounds for termination, unilateral repossession of the property generally constitutes a breach of contract. The rule that "the lease agreement prevails over the sale" also favors the tenant. Before deciding whether to move out, you should first review the contract. Secondly, it's more important to respond to the notice in writing than to remain silent. If you don't agree with the termination, state the grounds and requirements for continued performance. If you're willing to negotiate, list the compensation, grace period, and deposit refund as conditions, and keep the proof of delivery. Staying silent and actively emptying the house may be interpreted as consenting to the termination by action. Thirdly, minimize losses while preserving evidence. Don't counter with actions like withholding rent or refusing to return the property, as this will give the landlord the upper hand. Instead, quickly find an alternative property with comparable conditions, keep the old and new leases, invoices, and payment records, and prepare evaluations and contractual evidence for the residual value of the renovation and business losses to avoid making verbal offers. By preparing these three items in advance, you'll have a stronger position in negotiations and better grounds for litigation.

VI. Frequently Asked Questions

Q1: If the contract doesn't specify a penalty for breach of contract, does the landlord still have to compensate if they take back the property early?

The tenant still needs to pay compensation, but the calculation method has changed from the agreed amount to the actual losses. According to the rules of compensation for breach of contract in the Civil Code of the People's Republic of China (effective January 1, 2021), if the lease term has not expired and the lessor unilaterally takes back the house without any agreed or statutory grounds for termination, the tenant may claim for continued performance of the contract, or agree to terminate the contract and request compensation; the sale or recovery of the house for self-use generally does not constitute a basis for termination by default, and changes in the ownership of the leased property do not affect the validity of the lease. In the absence of a penalty clause, the compensation shall cover the direct losses that can be substantiated, such as the rental difference for finding a new place to live, moving and storage fees, agency fees, unutilized rent payments and deposit refunds, and the agreed residual value of the decoration. In addition, the tenant must fulfill the obligation of mitigating losses and cannot allow the vacant property to cause further losses.

Q2: What receipts should be kept to claim for moving expenses and the loss of price difference?

The four types of documents are the most crucial and must be able to match each other in terms of time. The first type is a comparison of the old and new leases: the remaining term of the original lease and the monthly rent, the start date of the new lease and the monthly rent, and the payment records of the two leases, which are used to calculate the rental price difference. The second type is relocation expenses: invoices from moving companies, temporary storage receipts, and necessary accommodation receipts. The third type is replacement costs: receipts for agency fees, viewing the new property and paying the deposit for the new residence. The fourth type is renovation and operating materials: written evidence of the lessor's consent to the renovation, renovation contracts and payment receipts, residual value assessments or quotes, and, for operating leases, materials related to business suspension and license transfer.

Q3: Who should advance the acceptance fee for cases involving claims based on the remaining lease term?

The litigation fees are prepaid by the plaintiff at the time of filing the case, but they are not necessarily borne by the plaintiff in the end. According to the "Measures for the Payment of Litigation Fees" (effective from April 1, 2007), property cases are charged in stages based on the amount of the litigation request. The claimed breach of contract damages, the difference in rent, the moving fees, and the repayment of funds are all included. The higher the amount, the lower the fee rate; the plaintiff pays the fees upfront at the time of filing the case, and the losing party bears the fees after the judgment. If the plaintiff partially wins and partially loses, the fees are shared according to the proportion of responsibility. Applying for property preservation also requires paying application fees and providing guarantees. The attorney's fee is determined by the parties themselves. It's common to charge by case, by the amount of the dispute, or by the hours invested. There's no government-set pricing for it, and the judgment generally doesn't transfer the fee to the other party.

Q4: How long is the time limit for the first-instance ordinary procedure of the compensation case for taking possession of the house in advance?

Generally, it takes six months, and for cases with clear facts, it takes three months. According to the Civil Procedure Law of the People's Republic of China (amended on December 24, 2021 and implemented on January 1, 2024), the first-instance ordinary procedure usually concludes within six months from the date of filing the case, and the period may be extended according to law under special circumstances; the first-instance simplified procedure concludes within three months. For cases with small amounts of claims and clear rights and obligations, the small claims litigation procedure, which concludes with a first-instance final judgment, may also be used. If the case requires an appraisal and evaluation of the residual value of the decoration or the loss of business, or if one party appeals and enters the second instance, the period will be extended accordingly. The second instance usually takes three months.

Q5: On the day you receive the landlord's notice of termination, should you reply to the letter first or move out first?

First, send a written reply letter. Don't rush to move out. On the same day, take a screenshot of the original notice of termination and save it, recording the delivery time and the sender. Then reply with a WeChat message and a written letter: If you don't agree with the termination, state that the lease has not expired, that you have paid the rent according to the contract, and demand continued performance and reserve the right to hold the other party accountable; If you are willing to negotiate, list clear conditions such as compensation amount, grace period for moving out, refund of the deposit and unused rent, and depreciation of the decoration. Keep the proof of delivery. According to the Civil Code of the People's Republic of China (effective January 1, 2021), changes in ownership during the lease term do not affect the validity of the lease contract. Selling the property or occupying it for personal use usually does not automatically constitute grounds for termination.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretation in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with evidence materials, to avoid missing the statutory time limit. →Legal services for real estate transactions·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. If you encounter disputes, please consult a practicing lawyer in time.