Luan Jimin and some other householders voluntarily went about the detailed procedure of setting up a property owners’ committee. They were bound by law to confirm a 50 percent or more occupancy of the residential district, and that more than two years had elapsed since the first resident moved in. They accordingly drew up the relevant documents and delivered them in person to each household. In April 2007, members of the property owners’ committee were duly elected. Their first task was to get rid of the existent property management company and, after inviting public bidding, to take on the Jiahao Company. The next step was to bring a lawsuit against the property developers requiring them to fill in the wells they had sunk in the community. The Beijing Water Authority eventually made an investigation that ended in its sealing the wells and imposing a fine on the developers.

Langqinyuan property owners are satisfied with the new property management company, which has reduced service fees from RMB 2.5 to RMB 2.2 per square meter, and halved the parking fee. As Mr. Zhu pointed out, “Our community has a pleasant environment, and residents from outside often come here for a stroll or to walk their dogs. People would use it as a shortcut, dropping litter and causing disturbances before we set up our committee. Since the Jiahao Company set up enclosing walls, it’s much safer and cleaner.”

Luan Jimin was at work as he spoke to us, distributing information sheets. “The contract with the Jiahao property management company is due for renewal, so we’ve scheduled the fifth owners’ committee meeting to discuss whether or not to take on a new company,” he explained.

Lean Legislation

At the moment, the Property Law; the Regulations on Property Management; and the Regulations on Management of Residential Building Maintenance Funds are the only guidelines available to property owners’ committees through which to administrate their communities. This absence of legislation has created a dilemma for Fengdan Lishe neighborhood in Beijing’s Haidian District. As vice chairperson of the property owners’ committee, now in its third term, Ms. Pei pointed out, “These three laws don’t cover every aspect of our daily problems. Residents who take advantage of the communal space to construct prohibited additions to their homes are a common example. All the committee can do is to try to persuade them to demolish these extensions. But they generally refuse, and the damage these infringements cause to other residents’ interests results in their refusal to pay management fees the following year. As a lawsuit drags on for as long as six months to a year before the ruling is made, there is nothing we can do in the meantime.”

This is an all-pervasive problem. On average, just 70 percent – downward to 30 percent – of Beijing residents pay their property management fees, according to incomplete statistics. Property owner Shu Kexin has been active in protecting his rights and is now an expert in this field. He commented that refusing to pay these fees signifies property owners’ dissatisfaction with the property management company, but it may result in even worse service and the start of a vicious circle.

What’s more, current laws and regulations make no mention of supervision of fees imposed either for management or maintenance, or of public revenues, such as income from advertisements on elevators, generated on the premises of residential districts.

The owners’ committee, moreover, is still nascent. The Regulations on Property Management, released in 2003, first established the concept, and The Property Law legalized it in 2007. But considered as a whole, relatively few residential districts have property owners’ committees, despite longstanding unresolved problems between residents and property management companies/developers. Local governments, however, are bringing local regulations into effect that will provide more rounded legal recourse.

New Management Modes

When Langqinyuan Community first appointed the Jiahao Property Management Company it put a trust mode into operation. It consists of building a trust system and a platform for individual owners, the owners’ committee, and the property management company. Their expectations are that broader participation by more individuals with various interests will enable more effective management of the community as a whole.

Shu Kexin pointed out that although China’s present management modes require property owners to pay fees, they do not give them the right as individuals to complain directly to the property management company. All property owners can do is to raise suggestions and offer advice that the owners’ committee take up and negotiate with the property management company. There is hence a clear imbalance between owners’ rights and obligations. The trust system, however, endows upon the individual owner the rights and means to advise, supervise, and obtain information.

For the past four years, Langqinyuan residents have had access to the community accounts through the financial supervision team that property owners have appointed. Team member Ms. Pan confirmed that the team oversees audits and accounting processes and carries out a monthly check of revenues, such as advertisement fees and rent for public space. After deducting costs, the revenues are divided among the property owners. In 2011, they added up to RMB 582,300.