Shanghai Court Rejects Landlord’s $34K Claim in Rent Case

A Shanghai court has ruled that a tenant who rented an apartment for 18 years must pay approximately 60,000 yuan (about $8,300) in compensation to the landlord — a fraction of the nearly 250,000 yuan ($34,500) initially demanded. The ruling, delivered by the Shanghai Changning District People’s Court, clarifies a critical legal distinction between natural wear and tear and man-made damage in long-term tenancy disputes.

The Dispute

The case, widely reported by Legal Daily and other Chinese media, began in June 2006 when tenant Mr. Zhang signed a one-year lease with landlord Ms. Liu for an apartment in Shanghai. The contract required the tenant to use the property as-is, obtain consent for renovations, and restore the property to its original condition upon termination.

After the initial year, no written renewal was signed, but Mr. Zhang continued living in the apartment for another 17 years, paying rent adjusted annually by oral agreement. Over the course of his tenancy, Mr. Zhang painted the white walls yellow and converted the three-bedroom layout into four rooms.

When Mr. Zhang vacated the property in July 2024, Ms. Liu discovered wall mold, altered room layouts, worn flooring, and a damaged stove. She demanded the property be restored to “like-new” condition and sued for 140,000 yuan in repair costs, 100,000 yuan in vacancy losses, and 5,000 yuan in late rent penalties.

The Court’s Reasoning

Presiding Judge Liu Xihua of the Civil Trial Division explained the court’s reasoning, citing Article 733 of China’s Civil Code. According to NetEase News, the judge stated that the core dispute was how to distinguish between natural wear and tear and man-made damage when a contract requires “restoration to original condition.”

“Under normal circumstances, if the lessee uses the property normally according to its nature, even if the property shows functional or appearance degradation over time, this should be considered natural wear and tear, and the lessee shall not be liable,” Judge Liu said. “If damage occurs due to the lessee’s intentional acts, negligence, or improper use, the lessee shall bear the liability for damages.”

The court found that Mr. Zhang was responsible for the structural modifications he made — painting walls and changing the room layout — since he could not provide evidence that the landlord had consented. However, the court rejected Ms. Liu’s claims regarding wall mold, worn flooring, and the damaged stove, noting that after 18 years of use, some deterioration is expected.

The Ruling

The court ordered Mr. Zhang to pay approximately 30,000 yuan in repair costs and 30,000 yuan in vacancy losses, totaling about 60,000 yuan. Meanwhile, Ms. Liu was ordered to return 6,600 yuan of the 11,600 yuan security deposit, after deducting 5,000 yuan for late rent payments. The judgment has taken effect.

As Sina Finance reported, the court also noted that Ms. Liu had waited nearly a year before filing the lawsuit, failing to mitigate losses as required under Article 591 of the Civil Code.

Legal Implications

Legal experts cited by Beijing Time emphasized that the case highlights a common misconception in China’s rental market. Under Articles 710 and 711 of the Civil Code, tenants who use property reasonably are not liable for natural wear and tear or aging losses. Only man-made damage caused by intentional acts, negligence, or improper use requires compensation.

The ruling establishes important guidance: landlords bear the risk of natural depreciation, tenants are only responsible for damage beyond normal wear and tear, and the burden of proof falls on the landlord to demonstrate improper use.

What This Means

For China’s vast rental market, this case provides much-needed clarity. The court’s message is clear: “restoration to original condition” does not mean “like-new.” After years of normal use, some deterioration is the landlord’s cost of doing business — not the tenant’s liability. Both parties are advised to document property conditions at move-in and move-out and to put any renovation agreements in writing.