Renewal Rights/Terms for Commercial Leases in Korea Under Amended Commercial Building Lease Protection Act of Korea

The Korean Commercial Building Lease Protection Act (“CBLP”) came into force on August 13, 2013. The Korean CBLP 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 being evicted by a landlord in Korea based on no apparent reasons. Please note a new law has come into effect and we shall be writing on this new law within the next couple of weeks. Please check back. The following post is a repost of any article, originally, posted in 2013. Another article on leasing that may be useful can be found at: Leery of lousy leases, landlords? Get a Lien.

Renewal/Terms for Commercial Tenants with Deposits over KRW 300million (Major Tenants)

Under the former Korean CBLP, tenants in Korea with deposits of over KRW 300,000,000 (For Seoul) were not protected with the right to renew a commercial lease. The Presidential Decree to the amended CBLP proscribed who was “major tenant” based on the location of the space. A Major Tenant in 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, is significantly lower than KRW 300,000,000.

The present CBLP specifics that all commercial leases in Korea under five 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 an 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.

__________

If you would like to schedule a call with an attorney, please: Schedule a Call with an Attorney in Korea.