Foreign owner costs tenant millions

A businesswoman has been fined 3.59 million yuan ($565,066) in a rent dispute over a foreign-owned store in Chaowai SOHO, Chaoyang district.

Chen Chuanjie, 41, from Beijing, was sued for unpaid rent and other fees, however, she countered that she had rented the store under false pretenses, and never saw a penny in profits.

In a second trial last Friday at Beijing Second Intermediate People's Court, the judgment went against Chen. But Chen told the Global Times on Wednesday that she still plans to take the case to a higher court on further appeal.

Chen rented a store in Chaowai SOHO, from a woman called Zhang Ting in 2008 to open a restaurant, and invested 2 million yuan for renovations.

She only discovered that the store's owner was a foreign national and Zhang was his agent when she was refused a business license from the Beijing Administration for Industry and Commerce later that year.

"When I applied for the license, I was told that foreigners, as individuals, are not allowed to rent out their property to others," she said.　

Confronted with a potential huge economic loss, Chen approached Zhang, who said the parties could try to negotiate a solution, and meanwhile, Chen would not be liable for rent.

"Zhang told me the landlord, Chen Anshen, a Chinese-Austrian, who was doing business in Austria, planned to register a company in China and then he could rent the store to me in the name of the enterprise," she said. Chen Anshen was born in China, but now has Austrian citizenship, which means he is subject to Chinese laws as a foreigner.

Chen was shocked when the owner sued her in 2010 for rent, property management fees and heating costs.

"Since Beijing has the policy that when foreigners buy property, they should promise that they would never rent it out or transfer it, Zhang knowingly concealed the truth and finally made my business be in vain," alleged Chen.

Although Chen's lawyer stated that the landlord violated the policy by renting his property out, the court found for the plaintiff, and said that forbidding foreigners to rent property is a policy but not a law. This means that the rental agreement cannot be invalidated.

Wang Jiahong, a lawyer specializing in foreigner-related property disputes at Beijing Jinghua Law Firm, echoed the court's verdict.　

"According to the rental contract between Zhang and Chen, Chen had to pay the rent," she said.

"But as the foreigner also violated the policy, he will face an administrative punishment, such as a fine or warnings," Wang noted.

On the sixth floor of Chaowai SOHO, the Global Times found that the store in question has a new tenant, and is now Baby Star International Brand Management Co Ltd, a child fun center.

A member of staff said they did possess a business license, but refused to show it to the Global Times.

Jia Nan, a specialist property lawyer from the Union of Beijing Lawyers, said that foreigners can rent a property out so long as it is registered as part of an enterprise. But if a foreigner attempts to rent it in the name of an individual instead, it may be connected with tax evasion.

"If the property is part of the enterprise, then tax must be paid, but if it's a private residence which is rented out, they may get away without paying tax," she said.