Lease agreement
Conclusion of a lease agreement
- The Civil Act or the Commercial Building Lease Protection Act applies when a lease agreement for the store space needs to be signed for the start-up and operation of a skin care salon. For cases that are subject to the Commercial Building Lease Protection Act, the provisions of the said Act shall take precedence over provisions under the Civil Act, which shall be applied in a supplementary manner. However, the Commercial Building Lease Protection Act shall only apply to agreements entered into with deposits less than the amounts set forth below for each region (Article 2(1) of the Commercial Building Lease Protection Act and Article 2(1) of the Enforcement Decree of the Commercial Building Lease Protection Act).
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Region
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Amount of deposit
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Seoul Metropolitan City
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KRW 610 million
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Overpopulation control area prescribed in the Seoul Metropolitan Area Readjustment Planning Act (excluding the Seoul Metropolitan City) and Busan Metropolitan City
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KRW 500 million
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Metropolitan city (excluding areas included in the overpopulation control areas prescribed in the Seoul Metropolitan Area Readjustment Planning Act, Guns, and Busan Metropolitan City), Sejong Special Self-Governing City, Paju City, Hwaseong City, Ansan City, Yongin City, Gimpo City and Gwangju Metropolitan City
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KRW 390 million
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Other regions
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KRW 270 million
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※ Conversion of the amount of deposit
- When determining the amount of deposit pursuant to the Commercial Building Lease Protection Act, it must include the amount obtained through multiplying the monthly rental value by 1/100 (Article 2(2) of the Commercial Building Lease Protection Act and Article 2(2) and (3) of the Enforcement Decree of the Commercial Building Lease Protection Act).
Term of lease
- As for lease agreements that fall under the Commercial Building Lease Protection Act, a lease, the period of which has not been determined or period of which has been determined for not more than 1 year, shall be deemed to have a period of 1 year. However, a tenant may assert that such period determined for less than 1 year is valid (Article 9(1) of the Commercial Building Lease Protection Act).
- Where a tenant requests for renewal of a contract between six months and one month before the expiration of period of lease, a landlord shall not refuse such request without justifiable grounds to the extent that the whole period of lease including the period of initial lease does not exceed 10 years. However, the landlord may be permitted to refuse such request under certain circumstances (Article 10(1) and (2) of the Commercial Building Lease Protection Act).
※ The Regulations on the period for contract renewal request by lessee shall apply to leases first signed or renewed after October 16, 2018 [Article 2 of Addenda of the "Commercial Building Lease Protection Act"]
- In cases where the Commercial Building Lease Protection Act does not apply, such cases shall be subject to the Civil Act, and if no period for a lease has been fixed, either party may give notice to the other party at any time to rescind the lease for the future. If the lessor has given notice of rescission of the lease to the lessee, the rescission of the lease shall be effective after six months have elapsed, whereas in the case where the lessee has given notice of rescission of the lease to the lessor, such rescission shall be effective after one month elapses (Article 635 of the Civil Act).
Preferential payment right
- A tenant equipped with prerequisites for counterclaim under Article 3(1) who has obtained a certificate of a fixed date on the lease contract from the competent head of tax office has a right to be reimbursed with his or her security deposit in preference to posterior creditors or other creditors from the realized amount of leasehold building at the time of auction or public auction (Article 5(2) of the Commercial Building Lease Protection Act).
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※ Preferential payment right of tenants with small amount of deposit - A tenant with a small amount of deposit that falls within the following scope shall be entitled to reimbursement of the amount equivalent or below the set criteria corresponding to the scope of his or her preferential payment right in preference to other creditors if he or she satisfies the counterforce conditions prior to registration of application for the auction of a building (Article 14(1) of the Commercial Building Lease Protection Act and Articles 6 and 7 of the Enforcement Decree of the Commercial Building Lease Protection Act).
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Region
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Amount of security deposit
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Scope of the preferential payment right
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Seoul Metropolitan City
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KRW 65 million
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KRW 22 million
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Overpopulation control area prescribed in the Seoul Metropolitan Area Readjustment Planning Act (excluding Seoul Metropolitan Area)
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KRW 55 million
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KRW 19 million
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Metropolitan City (excluding areas included in the overpopulation control areas as prescribed in the Seoul Metropolitan Area Readjustment Planning Act and Gun areas), Ansan City, Yongin City, Gimpo City and Gwangju Metropolitan City
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KRW 38 million
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KRW 13 million
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Other regions
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KRW 30 million
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KRW 10 million
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※ What is a premium?
“Premium” refers to a price, such as money, paid to a lessor or a lessee, other than deposits and rents, as a price for transfer or use of tangible or intangible property value, including business facilities, equipment, customers, credit, business know-how and business benefits generated from the location of a commercial building, which is paid by a person who conducts or who intends to conduct a business in a commercial building, the subject matter of the lease (Article 10-3(1) of the Commercial Building Lease Protection Act).
No lessor shall obstruct any lessee in receiving any premium pursuant to a premium contract from a person arranged by the lessee to become a new lessee from 6 months prior to the expiry of the lease period until the end of the lease (Article 10-4(1) of the Commercial Building Lease Protection Act).