The property management service has defects, and the claim for liquidated damages is not supported.

In residential communities, providing property management services is aimed at improving living quality. Property companies offer these services, and community residents pay for them, making property services a standard feature of community life. However, when the quality of the property services is flawed, can a property management company’s claim for late fees and liquidated damages be supported when suing residents for unpaid property fees? The People’s Court of Gangnan District, Guigang City, has heard a case involving a property service contract dispute and has legally ruled that the property company’s claim for damages due to service flaws is not supported.

Basic Case Facts

The plaintiff, a property management company in Guigang City, is the property service provider for a certain community, offering cleaning, landscaping, daily maintenance, and other management services, and collecting property management fees from the residents and users within the community. The plaintiff, Guigang City Property Management Co., Ltd., signed a “Property Management Entrustment Contract” with the community residents’ committee in October 2016, which stipulated the service period, fees, late payment penalties, and other terms. In December 2023, the plaintiff withdrew from managing the community and no longer provides property services there. During the service period, the defendant, Liang Moumou, owed the plaintiff property management fees from November 2021 to December 2023. The plaintiff repeatedly urged the defendant to pay, but to no avail. The plaintiff filed a lawsuit, requesting the court to order the defendant to pay the overdue property fees and liquidated damages.

Court’s Review

The court held that the contract signed between the plaintiff, Guigang City Property Management Co., Ltd., and the community residents’ committee reflects the true intentions of both parties and does not violate mandatory provisions of national laws and administrative regulations, thus it is a valid contract. Both parties should fully perform their obligations as stipulated. According to Article 1 of the “Interpretation on Several Issues Concerning the Application of Law in the Trial of Property Service Dispute Cases” by the Supreme People’s Court, the property management entrustment contract signed in October 2016 between the plaintiff and the community committee is binding on the community residents. The defendant, Liang Moumou, is a resident of the community, and the contract should be equally binding on him. The plaintiff provided property management and services to the community, which the defendant actually enjoyed. The plaintiff’s claim that the defendant should pay the overdue property management fees is supported by law.

Regarding the plaintiff’s claim for liquidated damages from the defendant, the court found that during the provision of property services, the plaintiff had flaws such as poor management of electric bikes, disorderly parking, and inadequate cleaning. Therefore, the court did not support the plaintiff’s claim for damages.

The court legally ordered the defendant, Liang Moumou, to pay the overdue property management fees to the plaintiff.

Judge’s Reminder

When fulfilling property management contracts, property companies should not only complete basic tasks but also pursue meticulous management that matches the quality and price, genuinely improving service quality. This is essential to solidify the foundation of performance, gain residents’ recognition, and reduce legal risks. It is hoped that property companies will take the flaws reflected in this case as an opportunity for improvement, proactively optimize service processes, strengthen communication and feedback with residents, and win residents’ satisfaction with visible, tangible, and credible service quality. This will fundamentally reduce disputes and safeguard their legal rights.

Legal Provisions

“Civil Code of the People’s Republic of China”

Article 939: Construction units that lawfully enter into preliminary property management contracts with property service providers, as well as property management contracts lawfully signed between residents’ committees and residents’ assemblies, are legally binding on residents.

Article 944: Residents shall pay property management fees to property service providers as agreed. If the property service provider has provided services according to the agreement and relevant regulations, residents cannot refuse to pay property fees on the grounds of not accepting or not needing the services.

If residents violate the agreement and delay payment, the property service provider may demand payment within a reasonable period. If payment is still not made after the deadline, the provider may initiate litigation or apply for arbitration.

Property service providers shall not suspend electricity, water, heating, or gas supply to compel payment.

Article 948: After the expiration of the property management period, if residents do not lawfully decide to renew or hire another property management company, the existing property management contract remains valid, but the service period is indefinite. Parties may terminate an indefinite contract at any time, provided they give a written notice sixty days in advance.

Source: People’s Court of Gangnan District, Guigang City; Guangxi High Court; Shandong High Court

[Source: Dongying Intermediate People’s Court]