[Direct answer]In the Beijing area, if a shop tenant fails to pay the rent for a long time, the breach of contract penalty that the lessor can claim shall be subject to the provisions of the contract; if the contract does not stipulate or the provisions are unclear, the lessor may claim compensation for the actual losses in accordance with Article 585 of the Civil Code, including the interest on the funds occupied during the period of arrears and reasonable expenses for protecting their rights. According to Article 722 of the Civil Code, if the lessee fails to pay the rent without a justifiable reason or delays in paying the rent, the lessor may request the lessee to pay within a reasonable period of time. If the lessee fails to pay within the time limit, the lessor may rescind the contract and request compensation for the losses. The amount claimed shall be commensurate with the actual losses. If the amount claimed is excessively high, the court or arbitration institution may adjust it. For more details, please refer to the following link:Legal services for corporate commercial and contract disputes.

I. Problem Background and Typical Scenarios

In commercial property leases, the most headache issue for landlords is when tenants start defaulting on rent payments after several months of payment, and even vacate the premises without notice. Typical scenarios include: tenants citing operational difficulties to delay payments for a long time, and landlords being reluctant to send formal notices due to maintaining good relations with them; contracts with unclear provisions regarding the standard and calculation basis of default penalties, leading to disputes where each party has different interpretations; tenants refusing to vacate the premises while owing rent and occupying the property, leaving landlords unable to collect payments or rent out the property to others; tenants going missing, leaving unpaid rent and occupancy fees unresolved. Such disputes are often accompanied by a lack of evidence and difficulties in eviction, and improper handling can lead to increased vacancy losses. The recovery of relevant payments can be combined with the following measures:Creditor-debtor relations and enforcement case servicesAdvance.

II. Key points of dispute

  • Standard and adjustment of the breach of contract penalty: If the agreed breach of contract penalty is lower or excessively higher than the losses, the parties may request an adjustment in accordance with Article 85 of the Contract Law. The party claiming the adjustment shall provide evidence of actual losses such as unpaid rent interest and vacancy losses.
  • Termination of the contract and eviction: According to Article 722, if the tenant still fails to pay the rent after being given a reasonable period of notice, the contract may be terminated. However, the eviction must be carried out through legal procedures. Changing the locks and evicting the tenant by oneself may easily lead to counterclaims for compensation for property damage.
  • Housing occupancy fee: If the tenant continues to occupy the house after the contract is terminated, they can claim the occupancy fee, the standard of which can be referred to the rent or market price, and it also needs to be supported by evidence.

III. Professional analysis by Henglue Law Firm

A case of arbitration involving a commissioned creation contract handled by Henglue Law Firm provides valuable reference for claims of liquidated damages. After the applicant completed the work as agreed and the other party accepted it, the other party delayed paying the remaining contractual amount. The applicant initiated arbitration, demanding payment of the contractual amount, liquidated damages for late payment, and reasonable expenses for safeguarding rights. The attorney systematically reviewed the contract terms, records of acceptance confirmation, and communication evidence, demonstrating that the payment conditions had been met and the responsibility for late payment was clear. The arbitration tribunal adopted the main arguments of the attorney, supporting the return of the contractual amount and compensation for the applicant's reasonable expenses for safeguarding rights, while adjusting the amount of liquidated damages for late payment based on actual losses. This case highlights that the higher the liquidated damages are set, the more secure the claim is not necessarily. What matters is that the evidence chain is complete and the losses can be verified. For cases involving the disposal of leased assets, this case can be used as a reference.Real estate sales and construction project servicesTheir disposal experience.

IV. Practical Suggestions and Legal Basis

At the legal basis level, Articles 703 to 722 of the Civil Code (effective January 1, 2021) establish rules for lease contracts. Article 722 grants the lessor the right to terminate the contract if the lessee fails to pay the rent on time without a valid reason and still refuses to pay after being reminded; Article 585 regulates the penalty for breach of contract and its adjustment; Articles 563 and 566 establish the statutory right of termination and the rules for return and compensation after termination. At the practical advice level: When signing the contract, clarify the rent payment time, the standard of penalty for late payment, the reminder and termination procedures, and the provisions on eviction and occupation fees; During the performance of the contract, establish a rent collection ledger, and immediately send written reminders with evidence upon overdue payment; If there are long-term arrears, send termination notices and evaluate the evidence of losses in a timely manner; For tenants who have lost contact, sue them as soon as possible and apply for property preservation. For daily text review, you can use relevant tools to assist you.Corporate legal services.

5. Henglue Law Firm's Reminder

The principles of dealing with disputes over shop rent are early reminders, clear terminations, preserving evidence, and following legal procedures. Many landlords delay sending letters out of politeness, which instead prolongs the period of rent arrears and increases the losses from vacancy; some people try to evict tenants quickly on their own, only to turn from claimants into defendants. A rational approach is to incorporate collection, termination, and eviction into a written process, and, if necessary, use judicial procedures to resolve rent arrears, penalties, and occupancy fees all at once. Henglue Law Firm has accumulated systematic experience in dealing with various contract debts and breach of contract remedies, and can assist in designing collection and litigation plans. For complex asset disposals, clients can also pay attention to it.Special services and other case services.

This case is handled by Beijing Henglu Law Firm.Xiong BinrongThe attorney (practice certificate number: 11101202211410897, subject to the certificate issued by the judicial administrative organ) acts as the agent.

VI. Frequently Asked Questions

Q1: If a shop tenant defaults on the rent, how much breach of contract penalty can I claim?

The amount of the penalty shall first be determined by the contract: If the lease contract clearly stipulates the calculation standard for the penalty for late payment (such as 5 per thousand of the unpaid rent per day or monthly interest), the lessor may claim according to the contract; if the contract does not stipulate the penalty, the lessor may request compensation for the losses caused by the breach of contract in accordance with Article 585 of the Civil Code, mainly including the interest on the unpaid rent during the period of default, the vacancy losses caused by seeking new investors, and reasonable collection fees. It should be noted that the total amount of the penalty or compensation should be commensurate with the actual losses. If the agreed penalty is excessively high compared with the losses caused, the breaching party may request the court or arbitration institution to reduce it appropriately. Therefore, when claiming, the lessor should prepare evidence of the losses to avoid the penalty being reduced due to being excessively high.

Q2: If the agreed upon penalty for breach of contract is too high or too low, will the court adjust it?

Yes. According to Article 85 Paragraph 2 of the Civil Code, if the agreed penalty for breach of contract is lower than the actual losses caused, the people's court or arbitration institution may increase it upon the request of the party; if the agreed penalty for breach of contract is excessively high compared with the actual losses caused, it may be appropriately reduced. To determine whether it is excessively high, the court usually considers factors such as the actual losses, the performance of the contract, the fault of the parties, and the expected benefits, and measures it against the losses caused by the breach of contract. In judicial practice, it is often considered that the penalty for breach of contract should not exceed 30% of the losses. Therefore, both the lessor and the lessee can request adjustment of the penalty for breach of contract that is either excessively high or excessively low, but they need to bear the corresponding burden of proof. The party claiming an increase should prove that the actual losses are higher than the agreed amount.

Q3: If the tenant refuses to pay the rent and doesn't move out, can I evict them directly?

It is not recommended to forcibly evict tenants on your own. After the contract is terminated in accordance with Article 722 of the Civil Code, if the tenant continues to occupy the property, it constitutes unauthorized possession. The landlord has the right to request the tenant to vacate the premises and pay occupancy fees. However, the eviction should be carried out through legal means: first, send a letter of notice to the tenant and clearly state the intention to terminate the contract, and keep the evidence of delivery; if no agreement can be reached, the landlord can file a lawsuit with the court to request the termination of the contract, the payment of arrears and occupancy fees, and an order for eviction. After the judgment, the landlord can apply for forced execution. Changing the locks on the tenant's own and discarding the tenant's property may infringe their property rights, and the landlord may be sued for damages or even lead to public security risks. For tenants who refuse to vacate the premises, the landlord can apply for pre-execution or post-judgment eviction by the enforcement court in the lawsuit, which is a more secure procedure.

Q4: What evidence do I need to prepare to recover the rent and the breach of contract penalty?

Four types of evidence should be prepared: 1. **Contract-related evidence**: Lease contracts, supplementary agreements, and information about the parties involved to prove the lease relationship and the penalty clause. 2. **Performance-related evidence**: Rental payment records, reconciliation letters, collection notices, and delivery receipts to determine the unpaid rent amount and overdue period. 3. **Loss-related evidence**: Evidence of vacant space from alternative marketing efforts, market rental quotes, and reasonable collection notices to support claims for penalties or compensation. 4. **Occupation-related evidence**: Photos of the property still occupied by the other party after the contract termination and property records to assert occupancy fees. Evidence should be in written form whenever possible, with signatures or mailing receipts. WeChat collection records can also serve as supplementary evidence. The more complete the evidence, the higher the likelihood of obtaining support for penalties and occupancy fees.

Q5: If the tenant absconds and loses contact, can I still recover the unpaid rent and the breach of contract penalty?

Yes, but it's important to take prompt action. If the tenant goes missing, it won't affect the lawsuit. The landlord can, in accordance with Article 722 of the Civil Code, request to terminate the contract and demand the tenant to pay the rent arrears and breach of contract penalties on the grounds that the tenant has unreasonably defaulted on the rent. The court can serve the notice of trial through public announcement. After the contract is terminated and the house is vacant, the landlord can also claim occupancy fees. There are three key actions: First, immediately fix the lease contract, transfer records, and collection records to confirm the amount of rent arrears; Second, investigate the tenant's property clues, such as bank accounts, vehicles, and other properties. Apply for property preservation at the same time as suing to prevent the transfer of assets; Third, recover the house as soon as possible for re-letting to reduce vacancy losses and preserve evidence for attracting new tenants. After winning the lawsuit, if the other party has no assets, you can apply for forced execution and add them to the list of untrustworthy individuals to keep up the pressure for repayment.

The above answer is based on the judicial practice in Beijing. The adjudicative opinions 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 the evidence materials, to avoid missing the statutory time limit. →Corporate commercial legal services·Attorney Xiong Binrong·Beijing Henglue Law Firm