Parking spaces may not be refused; Beijing is set to introduce new regulations on property management.

The term of the initial property management contract, the establishment of owners’ assemblies, and the prohibition of selling parking spaces without also offering them for rent—among many issues closely affecting residents—will now be addressed by law. On October 22, the revised “Beijing Municipal Regulations on Property Management (Draft)” (hereinafter referred to as the “Draft”) was officially released and opened for public consultation. Although the public notice of the draft is only a preliminary step and has not yet entered the enforcement phase, it nonetheless offers a useful reference for addressing many current issues, and the overarching framework for regulating property management has already been established.

A daily fine of RMB 10,000 for refusing to vacate the premises.

The Draft stipulates that the term of the pre‑property service contract shall not exceed two years, with the specific duration to be specified in the contract. Three months prior to the expiration of the term, the owners shall collectively decide whether to retain the current property management provider.

Li Song, a member of the Real Estate Law Committee of the Beijing Lawyers Association, explained that Chinese law does not impose specific requirements regarding whether the term of a property management service contract must be specified at the time of its conclusion; accordingly, the contract may either stipulate a fixed term or remain without a specified term. However, it is not the case that a property management contract may be terminated only upon the expiration of its agreed term. Meanwhile, the national-level Regulations on Property Management stipulate that, prior to the expiration of the agreed term, if the property management service contract entered into between the owners’ committee and the newly selected property service enterprise takes effect, the original property management service contract shall terminate automatically.

According to media reports, last August, during the process of establishing a homeowners’ committee in a residential community in Chaoyang District, ballot boxes were openly smashed and looted at the neighborhood committee. Last October, the Fangqun Apartment complex established a new owners’ committee, which simultaneously decided to terminate its contract with the property management company, Kangjia Xingye Property Management Co., Ltd. Yet even as of August this year, the handover between the old and new management firms remains incomplete…

With respect to the handover of property management, the Draft stipulates that if the owners collectively decide to terminate the appointment of the property manager, the property manager shall, within 30 days from the date of receiving notice, fulfill the following handover obligations and vacate the property management area. The former property manager shall not refuse to carry out the handover on grounds such as the owners’ arrears in property service fees or objections to the owners’ collective decisions, nor shall it, for any reason, obstruct, interfere with, or impede the new property manager from taking up duties. The former property manager shall maintain normal property management operations during the period from the handover to the withdrawal from the property management area. For those who refuse to hand over relevant materials or financial records, a fine of no less than RMB 10,000 and no more than RMB 100,000 shall be imposed. Anyone who refuses to vacate the property management area shall be subject to a daily fine of RMB 10,000, effective from the day following the expiration of the prescribed deadline.

Furthermore, with regard to property management fees, the draft explicitly establishes a mechanism for the dynamic adjustment of property service charges. Property service fees for commercial housing communities are subject to market‑determined pricing, and shall be negotiated by the owners and the property service enterprise in accordance with the principles of reasonableness, transparency, and value for money. Where property service fees are included in the government‑priced items catalog, the Municipal Development and Reform Commission, in coordination with the municipal housing and urban–rural development administrative department, shall adjust such fees in accordance with actual circumstances.

Overcoming the Challenges of Establishing a Property Owners’ Committee

At present, many residential communities in this city are facing difficulties in establishing owners’ assemblies and owners’ committees, with one of the main challenges being the need to secure a sufficient number of unit owners. The Draft stipulates that, within a property management area, if the exclusive portions already delivered to owners account for more than 50% of the building’s total floor area, at least 5% of the owners, or owners whose exclusive portions comprise more than 5% of the building’s total floor area, or the construction entity may submit an application to the street office or the people’s government of the township or town to establish an owners’ assembly. Additionally, the residents’ (or villagers’) committee may also organize owners or the construction entity who meet the aforementioned conditions to submit such an application.

The owners’ assembly, convened in the form of a meeting, may determine or adjust the property service model, service content, service standards, and service prices. Appoint or dismiss the property manager, or cease to accept de facto services; Raising, managing, and utilizing special repair funds; Apply for the alteration or reconstruction of buildings and their ancillary facilities; Decide on the operational methods for the property’s common areas, as well as the management and use of common funds, including the income generated from the operation of such common areas.

In fact, many residential communities in Beijing have already established owners’ committees. The Hualongyuan Beili community, located on the south side of Huilongguan East Street and the east side of Huangping Road, is one such example. With the assistance of the third-term owners’ committee, the community has resolved longstanding, intractable issues, including the transition between old and new property management companies and the replacement of municipal water pipes.

However, the development of homeowners’ committees also requires the involvement of qualified professionals; otherwise, it could backfire. According to Wang Cuijuan, secretary of the Party branch of the Hualongyuan Beili community, in 2008 the residents voluntarily established the first homeowners’ committee. However, at that time, the committee had a weak awareness of relevant laws and regulations; during its term, it leased the equipment floor on the first level of the basement of Building No. 1 to a third party without obtaining approval from a general owners’ meeting, partitioned it into more than 60 sublet units, and even entered into a ten-year lease agreement with no rent for the entire duration.

Regarding the reasons why it is difficult to establish homeowners’ committees, Bi Wenqiang, an attorney at Beijing Shengting Law Firm, analyzes that in many residential communities, the costs of setting up such committees are prohibitively high, and that these communities often have large populations and extensive scales, while residents’ organizational capacity remains weak. Furthermore, there are certain shortcomings at the level of government governance. For instance, insufficient attention and professionalism are given to the management of homeowners’ committees, which is reflected in inadequate institutional structures and staffing arrangements, leading to either passive inaction or arbitrary and misguided actions.

Parking spaces are prioritized for rental to property owners.

Faced with a situation where there are many residents but few parking spaces, how to make the most of the available parking spots within the community has become a major concern. The Draft explicitly stipulates that parking spaces and garages designated in the property management area for vehicle parking shall be allocated to meet the needs of the owners. Items intended for sale may not be sold to any person other than a homeowner within this property management area. Units that have not yet been sold or leased shall be given priority for rental to owners within the same property management area, and landlords may not refuse to rent on the grounds of “sale only, no rental.” Any surplus units remaining after meeting the owners’ needs may be temporarily rented out on a monthly basis to parties outside the property management area.

According to Zhang Xiaoli, an attorney at Beijing Jingyun Law Firm, Article 74 of China’s Property Law stipulates that within a residential community’s designated building area, parking spaces and garages planned for vehicle parking shall be allocated to meet the needs of the property owners. Within a building’s designated area, the ownership or allocation of parking spaces and garages intended for vehicle storage shall be determined by the parties through methods such as sale, gratuitous transfer, or lease. Parking spaces occupying roads or other areas jointly owned by the property owners are jointly owned by the owners.

In other words, parking spaces within a residential community are part of the building’s master plan and, prior to sale, gratuitous transfer, or lease, generally remain the property of the developer. The developer and the owners shall separately negotiate and agree on the method for transferring ownership or assigning usage rights, but such arrangements must first prioritize meeting the needs of the owners. Accordingly, if a developer sells parking spaces designated in the development plan to individuals or entities other than the residents of the community, thereby infringing upon the owners’ rights, or if the developer unilaterally disposes of parking spaces that are jointly owned by the owners, thereby harming their rights, the owners may hold the developer liable for tort.

If a parking space is leased to anyone other than the owner, pursuant to the provisions of the Draft, the district housing and urban–rural development or housing administrative authority shall order rectification within a specified time limit, confiscate any illegal gains, and impose a fine of no less than RMB 5,000 but no more than RMB 10,000 for each illegally leased parking space. Those who refuse to make corrections shall be subject to a fine of RMB 2,000 per illegal taxi parking space per month.

Meanwhile, at the national level, the Regulations on Property Management stipulate that residential‑community garages and parking spaces must be allocated first to the community’s own owners and may not be sold exclusively without being rented out. If the violation is not rectified within the prescribed time limit, a fine of up to RMB 100,000 may be imposed. Meanwhile, in first-tier cities, parking spaces in residential complexes currently cost around RMB 200,000 or more. Accordingly, an attorney who asked not to be named stated that the amount of this fine… It’s only superficial for developers. 。