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 beauty salon. 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).
|
Region |
Amount of deposit |
|
Seoul Metropolitan City |
KRW 900 million |
|
Overpopulation control area prescribed in the Seoul Metropolitan Area Readjustment Planning Act (excluding the Seoul Metropolitan City) and Busan Metropolitan City |
KRW 690 million |
|
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 city |
KRW 540 million |
|
Other regions |
KRW 370 million |
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 rescission of the lease for the future shall be effective upon the expiration of six months, if the lessor has given notice of rescission of the lease to the lessee, and one month, if the lessee has given notice of rescission of the lease to the lessor (Article 635 of the Civil Act).
- A tenant may request for renewal of a contract between six months and one month before the expiration of period of lease. In such a case, the landlord shall not refuse the request without justifiable grounds (Article 10(1) of the Commercial Building Lease Protection Act).
- 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(2) of the Commercial Building Lease Protection 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 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).
Preferential payment right- A tenant has the right 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 beautician must both register his/her business and report the fixed date to a competent tax office thereafter. (Article 5(2) of the Commercial Building Lease Protection Act).
￭What is the 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 three months prior to the expiry of the lease period until the end of the lease (main provision of Article 10-4(1) of the Commercial Building Lease Protection Act).