China Commercial Eviction Process: Contract Termination and Property Recovery

Effective 1 January 2021, this guide covers commercial eviction process china according to the latest Civil Code regulations in China.

Terminating a commercial lease and reclaiming possession in China relies primarily on the Civil Code's general contract provisions. Compared to residential evictions, commercial lease termination provides more scope for contractual terms to govern, but legal procedures must still be followed.

Commercial vs. Residential Eviction

Contractual Termination Grounds

Typical Tenant Breach Triggers

Statutory Termination Grounds Under the Civil Code

Article 563 - General Statutory Termination

1. Force majeure - Making the contract purpose impossible to achieve
2. Anticipatory breach - Clear indication before deadline that obligations will not be performed
3. Fundamental breach - Serious default making the contract purpose unachievable
4. Delayed performance - Failure to perform after demand and reasonable cure period

Article 722 - Non-Payment of Rent

• Tenant fails to pay or delays payment without justification
• Landlord demands payment within a reasonable period
• Contract may be terminated if tenant still fails to pay

Lawful Termination Procedure

Step 1: Confirm Grounds

• Verify contractual or statutory termination conditions are satisfied
• Gather and preserve evidence (payment records, inspection reports, correspondence)
• Obtain legal counsel to confirm the basis

Step 2: Issue Written Notice

• Formally notify the tenant of the breach and intent to terminate
• Specify the cure period (if applicable) and the move-out deadline
• Serve notice via registered mail or other verifiable methods

Step 3: Negotiate Exit

• Agree on a move-out date and plan
• Process property handover, financial settlement, and deposit return
• Execute exit confirmation documents

Step 4: Legal Enforcement (If Tenant Refuses)

1. Arbitration - If the contract specifies an arbitration clause
2. Litigation - File with the competent People's Court
3. Enforcement application - Apply for court enforcement of the judgment
4. Compulsory measures - Court may order vacating if the tenant does not comply

Prohibited Actions

Tenant's Priority Renewal Right

Under Civil Code Article 734:

• If, upon the expiration of the lease term, the lessee continues to use the leased property and the lessor does not raise any objection, the original lease contract remains valid, but the lease term becomes indefinite.
• Upon the expiration of the lease term, the lessee of a house has the priority right to lease it under equal conditions.

Special Considerations

Tenant Investment Protection

Commercial tenants typically invest heavily in fit-out and improvements:

• Non-renewal may trigger renovation compensation obligations
• Breach-based termination must address residual renovation value per contract
• Clear fit-out and improvement clauses should be included upfront

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