Commercial Lease in Korea for Foreign Business Owners: What to Check Before You Sign

Start with your status, the building and the owner

• Immigration status: whether you may run or work in the business depends on your status of stay. That is a separate question from tax registration, from owning a company, and from any trade or professional licence; registering a business with the tax office does not by itself authorise you to operate. Confirm it before you commit to rent.
• Business registration: the business is registered with the district tax office. Ask that office which application channel and identity documents apply to you.
• Building use and licences: a restaurant, bar or clinic needs a licence or report, and the authority will check that the building’s registered use permits the trade. Check the building register (건축물대장) before you sign, especially for upper floors, basements and extensions.
• Owner and charges: inspect the real-estate register (등기사항전부증명서). Confirm the landlord is the registered owner, or that the person signing has written authority, and note any mortgages already registered. A mortgage registered before your lease is protected generally ranks ahead of your deposit, and if the building is sold at auction under it your lease may not survive the sale. A limited small-deposit priority exists for qualifying small leases: under the current Seoul figures, a tenant with a converted deposit of ₩65 million or less may be paid up to ₩22 million ahead of earlier security rights, if possession and business registration were in place before the auction application was registered and remain in place, and a claim for distribution is filed by the court’s deadline (Article 14; Decree, Articles 6–7). No fixed date is needed for this, but the amount can be reduced by the cap of half the building’s value shared among such tenants, and against a mortgage registered before 1 January 2014 the lower amounts, and a one-third cap, then in force apply (Decree No. 25036, Supplementary Provisions, Article 4). Weigh the mortgage amounts against the building’s value.

Protection against a new owner (대항력)

You do not need to register the lease. It takes effect against third parties, including a buyer of the building, from the day after you have taken possession and applied for business registration (Article 3(1)), and a buyer steps into the landlord’s position (Article 3(2)). A company’s registration under the Corporate Tax Act counts. This applies whatever the size of the deposit (Article 2(3)).

The registration must stay valid and match the business actually operating at the premises. The Supreme Court has held that keeping a registration after the business has in fact closed, or after the premises were sublet and the tenant’s own business never started, is not enough; in a sublet, protection may depend on the operating subtenant registering in its own name. Closing the business and re-registering under the same name and number does not preserve the original protection (2005Da64002, 13 January 2006; 2006Da56299, 13 October 2006). Plan any change of operator, closure or sublet with this in mind, and keep the lease, the operating entity and the registration aligned.

The fixed date and deposit priority

For a lease within the regional threshold (₩900 million converted deposit in Seoul), deposit priority in an auction or public sale needs three things: possession, an application for business registration, and a fixed date (확정일자) on the lease from the district tax office (Articles 3(1), 4(1) and 5(2)). A fixed date is an official date certification, not the date you signed, and on its own it is not enough: the other conditions must be met and must continue, and in an auction you must claim distribution within the court’s deadline. Take advice before moving out or closing the business while a deposit is at stake.

The National Tax Service’s guidance says the fixed date is applied for at the tax office for the premises, and can be applied for together with business registration, with the original lease, a floor plan where you rent part of a building, and identification. If the lease is amended or renewed, the tenant may apply for a new fixed date (Decree, Article 3(3)); keep the original lease and fixed-date record, and treat any deposit increase as needing its own check on priority.

Before signing, you may ask the tax office, with the landlord’s consent, for the fixed-date information on the building, such as other tenants’ deposits and rents (Article 4(4)). Above the threshold, fixed-date priority does not apply; ask for separate security for the deposit and agree a deposit amount that reflects the risk.

• Which leases the Act covers

Taking over an existing business

• Make payment of key money conditional on the landlord signing your lease, and set out the rent, deposit and term you will accept. Stage payments: a modest down payment, with the balance when your lease is signed and the premises are handed over.
• Identify the structure: a new lease in your name, an assignment of the seller’s lease (which needs the landlord’s consent, Civil Act Article 629), or a purchase of shares in a tenant company. How renewal history, liabilities and registration are treated depends on the structure.
• Check the seller’s position: lease term left, renewal history, arrears and disputes. Ask for the lease and confirm the landlord’s position directly before you pay.
• List what is transferred: equipment, fixtures, licences that can be transferred, phone numbers, websites and social accounts, and supplier contracts. Ask the licensing office whether a licence can be taken over.
• Seller’s debts: if, on a transfer of the business, you continue to use the seller’s trade name, you can become liable to the seller’s business creditors despite a contrary clause between you (Commercial Act, Article 42(1)). This does not apply if you promptly register that you are not liable for the seller’s debts, or, as against a particular creditor, if seller and buyer promptly notify that creditor (Article 42(2)). Check liabilities before you keep the name.
• Non-compete: where the deal is a transfer of a business, the seller is by default barred for 10 years from the same kind of business in the same and adjoining city or county areas; an express clause can be agreed but has statutory effect only within that territory and for up to 20 years (Commercial Act, Article 41).
• Tax: confirm before payment whether you must withhold tax on the key money, whether VAT applies and whether the price includes it. National Tax Service guidance treats key money paid for a business right as other income subject to withholding in certain cases, and the answer differs for individuals, companies, non-residents and transfers of a whole business.
• The Ministry of Land, Infrastructure and Transport’s standard key money contract is a useful starting point (Commercial Building Lease Protection Act, Article 10-6), but its terms are not compulsory.

• Key money in Korea: refunds and legal protection
• Landlord blocking your key money
• Commercial Act (Korean text)

Restoration: who removes the fit-out at the end

When a lease ends, the tenant must restore the premises (Civil Act, Articles 615 and 654). The scope depends on the contract, how the lease came about, the condition of the premises when let and the changes made (2017Da268142, 30 August 2019). In that case, a tenant who had bought a franchise café from the previous tenant and signed a lease with a restoration clause was held responsible for removing fit-out installed by the earlier tenant, and the landlord’s removal costs were deducted from the deposit.

• Define the restoration standard in the lease, for example the condition at handover to you as shown in dated photographs attached to the lease.
• If you are taking over an existing fit-out, state expressly whether you assume the previous tenant’s restoration duty.
• A clause waiving reimbursement of improvement costs (Civil Act, Article 626) is generally effective, so read it before you invest.
• Separately, a tenant may ask the landlord to buy qualifying items attached with the landlord’s consent (Civil Act, Article 646). This covers tenant-owned items that are not part of the building’s structure and that objectively benefit the use of the building. Items attached solely for the tenant’s own special purposes are excluded, but the building’s objective use is judged from its structure, the use agreed in the lease and its location; in the case cited, fittings installed for a restaurant in premises let as a restaurant were held capable of qualifying (92Da41627, 26 February 1993). A clause excluding this right is void if it disadvantages the tenant (Article 652). It does not cover fit-out costs generally.

• Civil Act (Korean text)
• Supreme Court 2017Da268142 (Korean text)

Other clauses to read closely

• Permitted trade: a narrow trade clause limits who can take over from you later, and so the key money you can recover. Where no trade restriction had been agreed, a landlord who refused a new tenant because of the proposed trade without considering practical conditions was held liable (2019Da236392, 14 October 2021).
• Subletting and assignment: both need the landlord’s consent (Civil Act, Article 629). An unauthorised sublet is a ground to refuse renewal and removes the key money protection.
• Reconstruction: a demolition or rebuilding plan disclosed when you sign, with timing and duration, can later justify refusing renewal (Article 10(1)7(a)). Read any such clause before you invest in the fit-out.
• Management fees: for leases within the threshold signed or renewed from 12 May 2026, you can ask for an item-by-item breakdown; where the monthly fee is under ₩100,000, the landlord may list only the items included (Article 19-2; Decree, Article 8). Ask which items are included and how they are calculated before signing.
• Repairs: specify who repairs structural items, roof leaks, plumbing and air conditioning.
• Term and renewal: the statutory renewal right can secure up to 10 years in total, including the first term, if you demand renewal in time and no ground under Article 10(1) exists. Unpaid rent that reaches three periods’ rent at any point can cost you both renewal and key money protection (arrears covered by the temporary COVID-19 rule of 2020–21 are not counted, Article 10-9).
• Mandatory provisions: an agreement contrary to an applicable provision of the Act that disadvantages the tenant is ineffective (Article 15). Some provisions apply only within the threshold. Remove doubtful clauses at the drafting stage rather than relying on this later.

• The 10-year renewal right and the 5% rent cap

Language, signatures and agents

The lease will normally be in Korean. Ask for a full translation and agree in the contract which language prevails. If the landlord is represented by a relative, a manager or a broker, ask for written authority and identification. If you sign through your own representative while abroad, the landlord and the tax office will ask for a power of attorney and identity documents; check their requirements in advance.

Frequently asked questions

How the initial review works

• Send a short description, your current country and time zone, and any deadline. Please wait for document-transfer instructions before sending identity documents.
• The attorney checks the requested scope and any conflict of interest, then proposes the review, fee and expected delivery date by email. A video consultation in English can be arranged by appointment.
• The agreed initial review includes an English summary of the issues, missing documents and recommended next steps. Depending on the scope, it may also include a document checklist or a list of steps to take with each authority.
• Fees depend on the records and questions to be reviewed. Any filing, translation, certification, government charges or continuing work is identified separately in the proposal. Sending an inquiry does not start a paid engagement.

What this office can do

A legal review in English can check the lease and key money contract before you sign, explain each clause in plain English, propose amendments, and coordinate the documents needed for registration and the fixed date. Immigration status and tax calculation are outside this review and should be handled with the appropriate professionals.

General information on Korean law as at the date shown. Requirements of tax offices and licensing authorities change; confirm them with the office concerned.

• Key money in Korea
• Renewal right and rent cap
• Landlord blocking your key money
• English legal services
• About your Korean attorney