Unjust enrichment refers to a situation one party gains some benefit without a legal justification, causing a loss to another party. Specifically, this benefit could be an increase in property or the retention of property that should have decreased; the corresponding loss refers to a decrease in property or the lack of an expected increase. There must be a direct causal relationship between the benefit and the loss, both arising from the same fact. According to Article 179 of the Civil Code, when unjust enrichment occurs, the benefiting party should return the obtained benefits.

Case Background

Xiao De is a landlord who has been renting out his shop to a well-known company for business use over the years. Due to personal planning issues, Xiao De decided not to renew the lease after it expired and actively discussed the return of the property with the company. However, the company delayed returning the shop to its original condition, and despite Xiao De sending a certified letter, there was no further action from the company. Left with no other options, Xiao De sought assistance from our firm.

Our Practical Experience

Upon our investigation, it was found that the lease had long expired, and Xiao De had no intention of renewing it. Despite this, the defendant continued to use the property for some time after the lease expired, constituting unauthorized possession and receiving unjust enrichment equivalent to a reasonable rental value during this period.

The tenant should use and benefit from the leased property in the agreed manner or, if there is no agreed manner, according to the nature of the leased property. The tenant should manage the leased property with the care of a good manager. Upon termination of the lease, the tenant should return the leased property, clearing all equipment and restoring it to its original condition, unless there is a specific agreement otherwise.

Restoring the property to its original condition means returning it in the state it was in under the lease, unless there are specific agreements otherwise. The condition of the property upon return should reflect the mutual understanding of the parties, considering depreciation and natural wear and tear from proper use and the tenant’s obligations for maintenance and care, as well as general commercial practices and principles of good faith.

In this case, before returning the leased property, the tenant should have restored the property to its pre-renovation state without waiting for the landlord’s notice after the lease expired. However, after the removal of modifications, some parts of the property remained unrepaired, with clear evidence supporting this.

Finally, the district court ruled in favor of our interpretation, ordering the defendant to return the rent for the period in question to Xiao De.

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