The Commercial Building Lease Protection Act ("CBLP") came into force on August 13, 2013. The amendments, mentioned below, will solely come into force for leases entered into after August 13, 2013. The changes will assist those with large deposits from getting the boot by a landlord based on no apparent reasons.
Renewal/Terms for Commercial Tenants with Deposits over KRW 300million (Major Tenants)
Under the former CBLP, tenants with deposits of over KRW 300,000,000 (For Seoul) were not protected with the right to renewal of a commercial lease. The Presidential Decree to the CBLP proscribes who is a "major tenant" based on the location of the space. A Major Tenant is Seoul is deemed by a Presidential Decree to be a tenant with a deposit of over KRW 300,000,000. The amount, in many parts of Korea, are significantly lower than KRW 300,000,000.
The present CBLP specifics that all commercial leases under 5 years in length must be renewed if requested by the tenant unless the landlord is able to establish justifiable reasons for not renewing (e.g. non-payment of rent). The issue of the amount of rent and deposit will, however, still be a factor in coming to a agreement.
Additionally, the amended CBLP allows tenants to request an increase or decrease in rent or lease deposit based on a myriad of factors including the specific economic situation in the area.
Renewal/Terms for Commercial Tenants with Deposits under KRW 300million
All landlords of commercial properties with deposits under the amount specified in a Presidential Decree to the CBLP (KRW 300,000,000 in Seoul) are, additionally, prohibited from raising rent or deposit for a tenant more than 9%. The protection is not available for tenants with deposits over the amount specified in the Presidential Decree.
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.
Sean Hayes is co-chair of the Korea Practice Team and Entertainment Law Team at IPG Legal. He is first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.