Conclusion of a lease agreement
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 nail salon, provided that 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 after deliberation by the Commercial Building Lease Committee pursuant to Article 14-2 of the Commercial Building Lease Protection Act (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 900 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 690 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 (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 540 million
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Other regions
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KRW 370 million
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※ Conversion of the deposit amount
- 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
- 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. The cancellation of the lease for the future shall be effective upon the expiration of six months if the lessor has given notice of cancellation of the lease to the lessee, and in one month if the lessee has given notice of cancellation of the lease to the lessor (Article 635 of the Civil Act).
- As for lease agreements that fall under the Commercial Building Lease Protection Act, a lease, the period of which has not been determined or the period of which has been determined for not more than one year, such period shall be deemed one year. However, a tenant may assert that such period determined for less than one 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 it without justifiable grounds. The tenant's right to request renewal of the contract may be exercised within the extent that the whole period of lease including the period of initial lease does not exceed ten years (Article 10(1) and 10(2) of the Commercial Building Lease Protection Act).
Preferential payment right
- This refers to the right for a tenant under the Commercial Building Lease Protection Act to be reimbursed security deposit in preference to posterior creditors from the price paid at a successful bid in the event where the leased commercial building has been put up for auction or public tender (Article 5(2) of the Commercial Building Lease Protection Act).
- To obtain the preferential payment right, a tenant subject to the Commercial Building Lease Protection Act must ensure that ① the building has been transferred, ② his/her business has been registered, and ③ a certificate of a fixed date on the lease contract has been obtained. Therefore, a nail beautician must both register his/her business and report the fixed date to the competent tax office thereafter (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 to 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 requirement of counterforce prior to registering an application for the auction of a building (Article 14(1) of the Commercial Building Lease Protection Act and Article 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 the Seoul Metropolitan City) and Busan Metropolitan City
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KRW 55 million
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KRW 19 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 (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 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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Premium
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).
Preservation of the premium
- 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 three 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).