CHINA Law and Practice Contributed by: Nancy Zhang, Xiaoying Tian and Liangqian Ying, JunHe LLP
6.17 Right to Occupy After Termination or Expiry of a Lease After the expiry or termination of a lease, the ten - ant generally has no right to continue occupying the leased premises. However, if the tenant continues to use the premises after the expiry of the lease with - out any objection from the landlord, the original lease shall be deemed as remaining in force but without a fixed term. Under such circumstances, either party can terminate the lease at any time, provided that the landlord gives the tenant reasonable prior notice of such termination. In addition, if the landlord intends to lease the premises after the expiry of the lease, the tenant shall have a right of first refusal under the same terms and conditions. 6.18 Right to Assign a Leasehold Interest A tenant may sublease part or all of the leased prem - ises to a third party with the prior consent of the land - lord. The sublease term should not be longer than the residual lease term of the original lease agreement. The tenant is liable for any damages caused by such third parties to the leased premises. 6.19 Right to Terminate a Lease The following circumstances are often seen in a lease as causes for termination by the tenant: • damage to the leased premises preventing the ten - ant from using the leased premises; • insolvency of the landlord; and/or • frequent interrupted supply of water, electricity, air conditioning or elevators. The PRC laws also give the tenant the right to termi - nate the lease in the event of: • the leased premises endangering the safety or health of the tenant; • the occurrence of any of the following circum - stances for reasons not attributable to the tenant, thus rendering the tenant unable to use the leased premises: (a) the leased premises being attached by judicial or administrative organs; (b) title claim to the leased premises; or (c) violation of the mandatory provisions of laws and administrative regulations in respect of the
to require the tenant to complete all the approval, filing and recording procedures required by the competent authorities (including but not limited to the planning, construction and fire-protection approvals and com - pletion acceptance) for such improvement or fitting- out at the tenant’s own cost. 6.15 Specific Regulations Leasing of various types of real estate are mainly gov - erned by: • the Civil Code of the PRC; • the Administrative Measures for Commodity Real Estate Leasing; and • the Interpretation of the Supreme People’s Court on Certain Issues Concerning Specific Application of Law in the Trial of Contractual Disputes over the Leasing of Urban Housing 2009 (as amended in 2020). 6.16 Effect of the Tenant’s Insolvency It is common practice to specify in the lease that the landlord is entitled to terminate the lease should the tenant become insolvent. Failing explicit agreement, the Enterprise Bankruptcy Law of the PRC shall gov - ern. If the court accepts the tenant’s application for bankruptcy, the tenant’s bankruptcy administrator decides whether to rescind or continue to perform the lease agreement. Failure by the bankruptcy adminis - trator to notify the landlord of its decision within two months from the date when the bankruptcy applica - tion was accepted, or to reply to the landlord within 30 days after receiving the landlord’s exhortation, will result in the rescindment of the lease agreement. Where the lease agreement is so rescinded, the tenant shall reinstate and return the leased premises, and the landlord is entitled to declare its claims to the court, in accordance with the bankruptcy proceedings, for the damages incurred thereunder. Where the admin - istrator decides to continue the performance of the lease agreement, the landlord must comply. However, the landlord has the right to request the administrator to provide security. The lease agreement will then be deemed rescinded if the administrator fails to provide security.
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