Commercial Building Lease Protection Act


Published: 2013-08-13

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 Article 1 (Purpose)   print
The purpose of this Act is to guarantee the stability of the economic life of people by prescribing exceptions to the Civil Act concerning the lease of commercial buildings.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 2 (Scope of Application)   print
(1) This Act shall apply to the lease (including cases where the main part of the leasehold property is used for business purposes) of commercial buildings (referring to buildings subject to business registration under Article 3 (1)): Provided, That in cases of lease the amount of security deposit for which exceeds that prescribed by Presidential Decree, this shall not apply.
(2) The amount of security deposit under the proviso to paragraph (1) shall be prescribed according to area-based classifications in consideration of the economic circumstances in the relevant areas, scale of the leasehold property, etc., and the amount obtained by multiplying the rental value by the rate prescribed by Presidential Decree in consideration of interest rates charged on loans, etc. of banks under the Banking Act shall be included therein where rent in addition to security deposit exists. <Amended by Act No. 10303, May 17, 2010>
(3) Notwithstanding the proviso to paragraph (1), Article 10 (1), (2) and the main text of (3), and Article 10-2 shall apply to the lease exceeding the amount of security deposit pursuant to the proviso to paragraph (1). <Newly Inserted by Act No. 12042, Aug. 13, 2013>
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 3 (Counterforce, etc.)   print
(1) A lease shall become effective against third parties on the day following the date on which a tenant files an application for the transfer of the relevant building and business registration under Article 8 of the Value-Added Tax Act, Article 168 of the Income Tax Act or Article 111 of the Corporate Tax Act even when no registration of the lease exists. <Amended by Act No. 11873, Jun. 7, 2013>
(2) The transferee of a leased building (including the person who has succeeded to the right to lease) shall be deemed to have succeeded to the position of landlord.
(3) Where a building which is a leasehold property under this Act is subject to sale and purchase or auction, Article 575 (1) and (3), and Article 578 of the Civil Act shall apply mutatis mutandis.
(4) Article 536 of the Civil Act shall apply mutatis mutandis to the cases of paragraph (3).
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 4 (Perusal and Provision of Registration Matters, etc.)   print
(1) Any stakeholder involved in the lease of a building may request perusal or provision of the following matters to the head of tax office having jurisdiction over the address of such property. In such cases, the competent head of tax office shall not refuse to comply with such request without justifiable grounds:
1. Name, address and resident registration number of tenant and landlord (name of juristic person or name of organization, representative, juristic person registration number, address of main office and place of business, where tenant and landlord are a juristic person or an organization other than a juristic person);
2. Address of building, leasehold property and area thereof;
3. Date of application for business registration;
4. Security deposit and rent as of the date for application for business registration, and the period of lease;
5. Date when a certificate of a fixed date was obtained on the lease contract;
6. Date on which a lease contract was modified or renewed, security deposit, rent, period of lease, and the date on which a new certificate of a fixed date was obtained, where such lease contract was modified or renewed;
7. Other matters prescribed by Presidential Decree.
(2) Matters necessary for the perusal and provision of data under paragraph (1) shall be prescribed by Presidential Decree.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 5 (Recovery of Security Deposit)   print
(1) Where a tenant files an application for auction of a leasehold building on the grounds of a final and conclusive judgment on a lawsuit claiming the return of security deposit or execution title corresponding thereto, the performance of opposite obligation or offer of such performance shall not be prerequisites to commence execution, notwithstanding Article 41 of the Civil Execution Act.
(2) 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 security deposit in preference to posterior creditors or other creditors from the realized amount of leasehold building (including the site possessed by landlord) at the time of auction under the Civil Execution Act or public auction under the National Tax Collection Act.
(3) If a tenant fails to transfer a leasehold building to any transferee, he/she may not receive the security deposit under paragraph (2).
(4) Interested parties who are dissatisfied with the order of preferential payment and security deposit under paragraphs (2) and (7) may raise an objection to an auction court or an agency issuing disposition on default. <Amended by Act No. 12042, Aug. 13, 2013>
(5) Where an objection is filed to an auction court as prescribed in paragraph (4), the provisions of Articles 152 through 161 of the Civil Execution Act shall apply mutatis mutandis.
(6) When interested parties have verified to have instituted a lawsuit against a tenant, a financial institution having succeeded the preferential payment right pursuant to paragraph (7), etc. within seven days from the date an objection was filed, the agency issuing a default disposition that has received such an objection as prescribed in paragraph (4) shall reserve the return of the security deposit to the tenant, a financial institution having succeeded the preferential payment right pursuant to paragraph (7), etc. within the extent any objections were raised until the lawsuit is concluded, and allocate the remaining amount. In such cases, such reserved security deposit shall be allocated according to the result of such lawsuit. <Amended by Act No. 12042, Aug. 13, 2013>
(7) When the financial institution, etc, of the following subparagraphs has taken over the repayment of deposit of the tenant having obtained the preferential payment right pursuant to paragraph (2), Article 6 (5) and Article 7 (1) according to the contract, the preferential payment right shall succeed to it within the limit of the amount having been taken over. <Newly Inserted by Act No. 12042, Aug. 13, 2013>
1. The bank under the Banking Act;
2. The Small and Medium Industry Bank under the Industrial Bank of Korea Act;
3. The Korea Development Bank under the Korea Development Bank Act;
4. The Nong Hyup Bank under the Agricultural Cooperatives Act;
5. The National Federation of Fisheries Cooperatives under the Fisheries Cooperatives Act;
6. The communications agency under the Postal Savings and Insurance Act;
7. The insurance company having obtained permission as an insurance commodity with the guaranty insurance under Article 4 (1) 2 (d) of the Insurance Business Act;
8. In addition, the agency prescribed by Presidential Decree in accordance with subparagraphs 1 through 7.
(8) A financial institution, etc. (hereinafter referred to as “financial institution, etc.”) having succeeded the preferential payment right pursuant to paragraph (7) shall not exercise the preferential payment right in any of the following cases: <Newly Inserted by Act No. 12042, Aug. 13, 2013>
1. When a tenant has lost the requisites for counteraction under Article 3 (1);
2. When the registration of leasehold has been cancelled under Article 6 (5);
3. When the registration of lease has been cancelled under Article 621 of the Civil Act.
(9) A financial institution, etc. shall not cancel the lease by performing on behalf of or subrogating the tenant to exercise the preferential payment right. <Newly Inserted by Act No. 12042, Aug. 13, 2013>
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 6 (Order of Registration of Right to Lease)   print
(1) In cases where security deposit has not been returned after the lease terminated, a tenant may file an application for an order of registration of the right to lease to a district court, branch court of district court, Si court or Gun court having jurisdiction over the address of a leasehold building. <Amended by Act No. 12042, Aug. 13, 2013>
(2) When a tenant files an application for an order of registration of the right to lease, he/she shall include the following matters therein, and substantiate the grounds for filing an application and such fact being the cause for registration of the right to lease:
1. Purport of filing an application and grounds therefor;
2. Building which is the subject matter of lease (where the subject matter of lease is part of a building, drawings of such part shall be attached);
3. Fact which has become the ground for registration of the right to lease (where a tenant has obtained the counterforce under Article 3 (1) or right to preferential reimbursement under Article 5 (2), such fact);
4. Other matters prescribed by Supreme Court Regulations.
(3) Articles 280 (1). 281, 283, 285, 286 and 288 (1), main sentence of Article 288 (2), Article 289, part concerning Article 288 (1) among Article 290 (2), and Articles 291 and 293 of the Civil Execution Act shall apply mutatis mutandis to the judgment on an application for order of registration of the right to lease, landlord's raising an objection on the determination of order of registration of the right to lease and trial thereof, application for cancellation of order of registration of the right to lease and trial thereof, or execution, etc. of order of registration of the right to lease. In such cases, "provisional seizure" shall be deemed "registration of the right to lease," "creditor" as "tenant," and "debtor" as "landlord."
(4) A tenant may file a protest against a court ruling dismissing an application for order of registration of the right to lease.
(5) When registration of the right to lease following the execution of order of registration of the right to lease is made, a tenant shall obtain the counterforce under Article 3 (1) and right to preferential reimbursement under Article 5 (2): Provided, That in cases such tenant has already obtained the counterforce or right to preferential reimbursement prior to the registration of the right to lease, no change shall be made to the counterforce or right to preferential reimbursement, and such already obtained counterforce or right to preferential reimbursement shall not be lost after the registration of the right to lease even if prerequisites for counterclaim under Article 3 (1) are lost.
(6) A tenant who has leased a building (limited to part of a building where the subject matter of lease is part of a building) for which registration of the right to lease following the execution of order of registration of the right to lease was made shall have no right to preferential reimbursement under Article 14.
(7) Matters necessary for the implementation of order of registration of the right to lease, such as commissioning of registration of the right to lease, recording of registration of the right to lease by registrars, etc. shall be prescribed by Supreme Court Regulations.
(8) A tenant may request a landlord for costs incurred with regard to filing for an application for order of registration of the right to lease under paragraph (1) and registration of the right to lease incidental thereto.
(9) A financial institution, etc. may file an application for an order of registration of the right to lease under paragraph (1) by subrogating the tenant. In such cases, “tenant” under paragraph (3), (4) and (8) is deemed to be “financial institution, etc.” <Newly Inserted by Act No. 12042, Aug. 13, 2013>
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 7 (Validity, etc. of Registration of Right to Lease under Civil Act)   print
(1) Article 6 (5) and (6) shall apply mutatis mutandis to the validity of registration of lease of buildings under Article 621 of the Civil Act.
(2) Where a tenant holding a counterforce or right to preferential reimbursement files an application for the registration of lease in cooperation with landlord as prescribed in Article 621 (1) of the Civil Act, he/she shall state the following matters in addition to the matters prescribed in subparagraphs 1 through 5 of Article 74 of the Registration of Real Estate Act in the application form, and attach documents (where the subject matter of lease is part of a building, drawings of such part shall be included) verifying such facts: <Amended by Act No. 10580, Apr. 12, 2011>
1. Date when an application for business registration was filed;
2. Date when such leasehold building was occupied;
3. Date when a certificate of a fixed date was obtained on the lease contract.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 8 (Termination of Right to Lease by Auction)   print
Where an auction under the Civil Execution Act has been implemented on a leasehold building, the right to lease shall be terminated when such leasehold building is sold: Provided, That in cases of the right to lease with counterforce for which security deposit has not been paid in full, this shall not apply.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 9 (Period of Lease, etc.)   print
(1) 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: Provided, That a tenant may assert that such period determined for less than one year is valid.
(2) Even after the lease is terminated, the relationship of lease is deemed to continue to exist until a tenant's security deposit is returned.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 10 (Request, etc. for Contract Renewal)   print
(1) 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: Provided, That in cases falling under any of the following subparagraphs, this shall not apply: <Amended by Act No. 12042, Aug. 13, 2013>
1. Where such tenant has been in arrears with an amount equivalent to three period of rent.
2. Where such tenant has entered lease by deceit or other fraudulent means;
3. Where such landlord has provided such tenant with substantial compensation by mutual consent;
4. Where such tenant has subleased all or part of the leased building without the consent of such landlord;
5. Where such tenant has destroyed all or part of the building intentionally or by gross negligence;
6. Where the purpose of lease is frustrated because all or part of a leasehold building has been severely damaged;
7. Where such landlord needs to recover possession of the building in order to demolish or reconstruct all or part of the building for any of the following grounds;
(a) Where, at the time of entering into the lease contract, such landlord notifies such tenant of a plan for demolition or rebuilding specifically stating the time and period of construction, etc., and complies with the plan;
(b) Where there are safety hazards due to decrepitude, damage, partial destruction, etc. of the building;
(c) Where there has been demolition or rebuilding pursuant to other Acts or subordinate statutes.
8. Where such tenant has substantially violated the responsibilities of tenant or grave reasons for which the continuation of lease is difficult exist.
(2) 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 five years.
(3) A renewed lease shall be deemed to have been renewed under the same conditions as those of the former lease: Provided, That rent and security deposit may be increased or decreased within the extent under Article 11.
(4) Where a landlord has failed to notify a tenant of a denial to renew or modify conditions within the period under paragraph (1), lease under the same conditions as those of previous lease shall be deemed to have been made when such period expires. In such cases, the period during which such lease continues to exist shall be deemed one year. <Amended by Act. No. 9649, May 8, 2009>
(5) A tenant may notify a landlord of the cancellation of contract at any time in cases of paragraph (4), and it shall become effective three months after the date such landlord is notified of such fact.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 10-2 (Exception on Renewal of Contract)   print
Where the renewed lease contract exceeds the amount of security deposit under the proviso to Article 2 (1), the parties to the contract may claim an increase or decrease in the rent and security deposit in consideration of taxes and public imposts on commercial buildings, rents and security deposit of the surrounding commercial buildings, other burdens, fluctuations in economic conditions, etc.
[This Act Newly Inserted by Act No. 12042, Aug. 13, 2013]
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 Article 11 (Right of Claim for Increase or Decrease of Rent, etc.)   print
(1) Where rent or security deposit has become insufficient due to taxes, public imposts, other increase or decrease in the burden on such leasehold building or fluctuations in economic conditions, interested parties may claim an increase or decrease in the future rent or security deposit. However, in cases of an increase, it shall not exceed the rate set according to the standards prescribed by Presidential Decree.
(2) No claim for increase under paragraph (1) shall be made within one year after the lease contract or agreed increase in rent, etc. is made.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 12 (Restriction on Calculation Rate when Converting into Monthly Rent)   print
Where all or part of security deposit is converted into monthly rent, such monthly rent shall not exceed the extent of monthly rent obtained by multiplying an amount to be converted by a rate which is lower between the following subparagraphs. <Amended by Act No. 10303, May 17, 2010; Act No. 12042, Aug. 13, 2013>
1. A rate prescribed by Presidential Decree in consideration of the interest rate on loans of banks under the Banking Act, the economic conditions of the relevant areas, etc.
2. A rate obtained by multiplying the basic interest rate officially announced by the Bank of Korea by the multiple prescribed by Presidential Decree.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 13 (Application, etc. to Sublease Relationship)   print
(1) The provisions of Articles 10 through 12 shall apply to the sublease relationship between a sublessor and a sublessee.
(2) A sublessee who has concluded a sublease contract with the approval of such landlord may exercise a right to request renewal of lease to such landlord on behalf of such tenant within a period during which the right to request renewal of contract can be exercised by the tenant.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 14 (Protection of Certain Amount among Security Deposit)   print
(1) A tenant shall have a right to be reimbursed a certain amount among security deposit in preference to other holders of a real right granted by way of security. In such cases, such tenant shall satisfy the conditions under Article 3 (1) before registering an application for the auction of a building.
(2) The provisions of Article 5 (4) through (6) shall apply mutatis mutandis to cases under paragraph (1).
(3) A tenant who is to be reimbursed preferentially, and the extent of a certain amount among security deposit and standards therefor under paragraph (1) shall be prescribed by Presidential Decree considering the economic conditions of relevant areas, security deposit, rent, etc. within the extent of 1/2 of the price of leasehold building (including the price of site possessed by landlord). <Amended by Act No. 12042, Aug. 13, 2013>
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 15 (Mandatory Provisions)   print
Any agreement in violation of the provisions of this Act which is unfavorable to a tenant shall be null and void.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 16 (Lease for Temporary Use)   print
This Act shall not apply to any lease evidently for temporary use.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 17 (Application to Unregistered Lease on Deposit Basis Mutatis Mutandis)   print
This Act shall apply mutatis mutandis to contracts of lease on a deposit basis of buildings unregistered. In such cases, "security deposit for lease on a deposit basis" shall be deemed "security deposit of lease".
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
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 Article 18 (Application to Trial of Small Claims Act Mutatis Mutandis)   print
Articles 6, 7, 10 and 11-2 of the Trial of Small Claims Act shall apply mutatis mutandis to a lawsuit claiming the return of security deposit, instituted by a tenant against a landlord.
[This Act Wholly Amended by Act No. 9361, Jan. 30, 2009]
ADDENDA
(1) (Enforcement Date) This Act shall enter into force on November 1, 2002.
(2) (Applicability) This Act shall apply beginning from the first lease concluded or renewed after this Act enters into force: Provided, That the provisions of Articles 3, 5 and 14 shall apply to any lease in existence at the time this Act enters into force, however, such provisions shall not be effective in relation to third parties who have acquired real rights before this Act enters into force.
(3) (Transitional Measures concerning Application for Obtaining Fixed Date by Existing Tenant) A tenant at the time this Act enters into force who intends to have the protection of preferential reimbursement of security deposit under the provisions of Article 5 may request the head of the tax office having jurisdiction over the address of buildings to issue a certificate of a fixed date on the lease contract as prescribed by Presidential Decree before this Act enters into force.
ADDENDUM <Act No. 6718, Aug. 26, 2002>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 7358, Jan. 27, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDUM <Act No. 9361, Jan. 30, 2009>
This Act shall enter into force on the date of its promulgation.
ADDENDUM <Act No. 9649, May 8, 2009>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 10303, May 17, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 10 Omitted.
ADDENDA <Act No. 10580, Apr. 12, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 5 Omitted.
ADDENDA <Act No. 11873, Jun. 7, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2013.
Articles 2 through 19 Omitted.
ADDENDA <Act No. 12042, Aug. 13, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 12 and 14 (3) shall enter into force on January 1, 2014.
Articles 2 (Cases of Application)
This Act shall begin to apply with the first lease contract entered into or revised.
Article 3 (Application concerning Preferential Payment Right of Financial Institutions, etc.)
The amended provisions of Article 5 (4) and (6) through (9), and Article 6 (1) and (9) shall apply to the lease subsisting at the time of the enforcement of this Act, and apply from the time of taking over the repayment of deposit for the first time after this Act enters into force.
Article 4 (Application concerning Limit of Calculation Rate in Transferring Monthly Rents)
The amended provisions of Article 12 shall apply to the lease subsisting at the time of the enforcement of the amended provisions, and apply from the time of transferring the whole or a part of security deposit into monthly rent for the first time after the amended provisions enters into force.
Article 5 (Application concerning Protection of Small Amount of Security Deposit)
The amended provisions of Article 14 (3) shall apply to the lease subsisting at the time of the enforcement of the same amended provisions, but are inapplicable to any third party who has obtained a real right before the same amended provisions enter into force.