This is a typical case of property service contract dispute, where the plaintiff is Branch A of a property management company in Shanghai, and the defendants are owners Cao and Guo of a residential community, with the case being a dispute over the property service contract.
Basic Facts of the Case
Owners Cao and Guo purchased Unit 1302 in a residential community in Foshan City, and accordingly, they signed a “Commercial Property Purchase Contract (Presale)” with the developer and a “Preliminary Property Service Agreement for Foshan City” with Company A, stipulating the terms of property management (abridged): Implementing a bundled fee system for property services (including common area utility costs), with property service fees collected based on a first-tier service standard, paid monthly by the owners according to the area of the property they own, with the payment due on the 5th of each month. The charge for high-rise residential buildings is 2.4 yuan/square meter/month; the parking space charge is 2.4 yuan/square meter/month. If an owner fails to pay the property management service fee as required, they should be urged to make the payment within a limited period, and if they still do not pay after the deadline, the owners’ committee or the property service company may publish the collection status of property service fees within the property management area, naming the owners who owe fees and their building and unit numbers for collection; if payment is still not made, legal action may be taken in the people’s court. Article 11 of the “Commercial Property Purchase Contract (Presale)” stipulates the handover date as June 30, 2021. The building involved in this case was completed and registered for acceptance on December 31, 2020. Cao and Guo received the acceptance notice and went to inspect the property on July 2, 2021, but did not complete the acceptance procedures; they later accepted the property on June 8, 2022. The property involved in the case had already been registered for real estate on April 20, 2022. Company A believes that Cao and Guo owe property service fees amounting to 3,039.37 yuan from June 30, 2021, to August 31, 2022, and filed a lawsuit after issuing a demand notice.
Disposition of the Case
The court ruled that owners Cao and Guo shall, within ten days of the effective date of the judgment, pay property service fees amounting to 3,039.37 yuan to the plaintiff Company A; other claims of the plaintiff were rejected.
Case Insights
The “two-faced” phenomenon is prevalent in the provision of services by property management companies. When entering into a property service agreement, the property management company promises a higher level of service to the owners (construction units) or the owners’ committee and agrees on the corresponding level of service charge standards. However, the actual property services provided cannot match the level of the charges, with a significant disconnect, which is referred to by owners as “high charges and low services.” In litigation, no evidence of service levels is provided, and the contract does not stipulate or stipulates a too high penalty for breach of contract, which is clearly insufficient to justify the request for the penalty from the people’s court. Low service levels also indicate that the property management company itself is in breach of contract. In cases of mutual breach, the court only supports the basic property management fees, which is more fair and reasonable. Therefore, property management companies should take this case as a lesson to reflect on themselves, strive to improve their own service levels, and then fulfill their burden of proof to reduce unpaid fees.
For owners, they should also clarify the parties to the contract and the responsible parties. Owners should not conflate the responsibilities of the developers and the property management companies. If the owner acknowledges receiving the acceptance notice and has inspected the property, but did not find any defects involving the main structure or safety quality issues, the property meets the agreed delivery standards, and the delivery notice is binding on the owner. If the owner finds defects that require general repairs or the gas pipelines are not yet opened upon receiving the property, the contract only stipulates the developer’s obligations for repairs and remedies, and does not grant the owner the right to refuse to accept the property, nor can it be used as a reason to refuse to pay property management fees. Owners must clearly understand the rights and obligations. Because the repair of the exclusive portion is a contractual dispute between them and the developer, and has nothing to do with the property management company.
Research Insights
The issue of pre-sale property disputes arising during the transaction of new residential properties is a common civil dispute. In such cases, due to the different responsibility and obligation relationships between the owners, property management companies, and developers, as well as the different legal effects arising from the time nodes such as the signing of the pre-sale contract, inspection and acceptance of the property, and real estate registration, owners often find it difficult to accurately define the boundaries of their own rights and obligations, and it is also easy for property management companies to have the “high charges and low services” phenomenon. This case has certain typical significance for promoting the standardized services of property management companies and for owners to perform their legal obligations and standardize their rights protection behaviors according to the law.