Korea’s Commercial Building Lease Protection Act: 10-Year Renewal Right and 5% Rent Cap

Which leases the Act covers

The Commercial Building Lease Protection Act applies to leases of buildings subject to business registration, including leases where the main part of the premises is used for business (Article 2(1)). It has no nationality condition. A lease clearly made for temporary use is outside the Act (Article 16).

Leases above a regional threshold, measured by the “converted deposit”, are covered only by the provisions listed in Article 2(3). The converted deposit is the deposit plus the monthly rent multiplied by 100 (Article 2(2); Decree, Article 2(2)–(3)).

Example: with the Seoul threshold of ₩900 million shown below, a Seoul unit with a ₩100 million deposit and ₩5 million monthly rent has a converted deposit of ₩600 million and is within the threshold. The same deposit with ₩8.5 million monthly rent gives ₩950 million and is above it.

• Key money in Korea: what it is and how the law protects it

Which protections apply above the threshold

• Commercial Building Lease Protection Act (Korean text)
• Enforcement Decree of the Act (Korean text)

The renewal right

If you demand renewal between six months and one month before your lease period expires, the landlord may not refuse without good cause (Article 10(1)). The renewed lease is on the same terms as before. Within the threshold, rent and deposit may be adjusted only within the Article 11 limits (Article 10(3)); above the threshold, either side may ask for an adjustment under Article 10-2.

The statutory right can be exercised only while the total lease period, including the first term, does not exceed 10 years (Article 10(2)). Ten years is the limit of what you can secure through the statutory right, not a cap on how long the parties may agree to continue.

Make the demand in writing and keep proof of delivery, ideally by content-certified mail (내용증명) in Korean. A demand made earlier than six months, or later than one month, before expiry is outside the statutory window.

The 10-year limit took effect on 16 October 2018; before that it was five years. It applies to leases first concluded after that date, and to earlier leases renewed after that date under the rules then in force. An earlier lease whose five-year period had already run out, and which ended without renewal after that date, does not get the longer limit (2020Da241017, 5 November 2020; 2021Da257255, 16 December 2021).

• After 10 years: the key money protection still applies

When a landlord may refuse renewal

A landlord may refuse a timely demand only on one of the grounds in Article 10(1) listed below. The same grounds also remove the key money protection (Article 10-4(1), proviso). The end of the 10-year period does not: the landlord must still not obstruct your sale to a new tenant in the last six months (2017Da225312, 16 May 2019).

• The tenant’s unpaid rent has at some point reached the total of three periods’ rent (Article 10(1)1). Reducing the balance later does not remove this ground (2020Da263635, 27 May 2021). Three separate late payments that never added up to that amount do not meet the test. Arrears for the six months from 29 September 2020 under the temporary COVID-19 rule are not counted (Article 10-9).
• The tenant obtained the lease by deception or other wrongful means (2).
• The parties agreed and the landlord provided substantial compensation (3).
• The tenant sublet all or part without the landlord’s consent (4).
• The tenant intentionally or through gross negligence damaged all or part of the premises (5).
• All or part of the premises was destroyed so the purpose of the lease cannot be achieved (6).
• The landlord needs possession to demolish or rebuild all or most of the building, and either told the tenant of a concrete plan, including timing and duration of works, when the lease was signed and follows that plan; or the building poses a safety risk because of age, damage or partial destruction; or demolition or rebuilding is taking place under another statute (7).
• The tenant has seriously breached its obligations, or there is another grave reason that makes it difficult to continue the lease (8).

• Landlord blocking your key money

If the landlord says nothing

For a lease within the threshold, if the landlord gives no notice of refusal or of changed terms between six months and one month before expiry, the lease is renewed on the same terms for one year. During that period you may give notice to end the lease at any time, effective three months after the landlord receives it (Article 10(4)–(5)).

Above the threshold, that rule does not apply, but the Civil Act may: if you keep using the premises after expiry and the landlord does not object within a reasonable time, the lease is treated as renewed on the same terms (Civil Act, Article 639(1)). Such a renewal ordinarily leaves a lease with no fixed term, which either side may end by notice: termination takes effect six months after the tenant receives the landlord’s notice, or one month after the landlord receives the tenant’s (Article 635(2)1). The Supreme Court has held that a tenant under an above-threshold lease with no fixed term cannot use the statutory renewal right, because that right presupposes a fixed expiry date (2021Da233730, 30 December 2021). If your lease is above the threshold, demand renewal before the agreed term expires rather than relying on staying on.

The 5% ceiling and its limits

Within the threshold, either side may ask to change the rent or deposit for the future where taxes, charges or economic conditions have made it inappropriate (Article 11(1)). An increase demanded this way may not exceed 5% of the current amount (Decree, Article 4) and may not be made within one year of the lease or the last agreed increase (Article 11(2)). The 5% figure is a ceiling, not an automatic annual increase; the landlord still needs a justification.

The Supreme Court has held that these limits govern a party’s demand while the lease continues, and do not apply where the parties agree an increase or sign a fresh lease after the old one ends (2013Da80481, 13 February 2014). This is different where you have exercised the statutory renewal right. The renewed lease is on the previous terms, and rent may be increased only within Article 11 (Article 10(3)). The Supreme Court has held that a document signed near expiry in the form of a “new lease” is still a statutory renewal if, in substance, it implements your renewal demand; an agreed increase above the cap is then void to the extent of the excess, and rent overpaid can be recovered (2013Da35115, 30 April 2014; Article 15). Whether a particular document has that character depends on its content and how it came about, so if the landlord presents a “new contract” at a higher rent when you are entitled to renewal, take advice before signing.

One further exception: where rent or deposit was reduced because of economic changes caused by a Class 1 infectious disease, the landlord may later demand increases back up to the pre-reduction amount without the 5% ceiling (Article 11(3)).

Above the threshold there is no fixed percentage. On renewal either side may ask for an adjustment having regard to taxes, charges, nearby rents and deposits, and other economic changes (Article 10-2). If the parties cannot agree, a court decides; conciliation can help only if both sides accept a settlement.

Within the threshold, where all or part of the deposit is converted into monthly rent, the additional monthly rent may not exceed: the amount converted × the lower of 12% and 4.5 times the Bank of Korea base rate ÷ 12 (Article 12; Decree, Article 5).

• Supreme Court 2013Da80481 (Korean text)
• Supreme Court 2013Da35115 (Korean text)

Management fees: the 2026 change

From 12 May 2026, a tenant who pays management fees to the landlord under the lease may ask for a breakdown, and the landlord must provide it (Article 19-2). This applies to leases signed or renewed on or after that date (amending Act No. 21083, Supplementary Provisions, Article 2) and, because Article 19-2 is not among the provisions extended by Article 2(3), to leases within the regional threshold.

The breakdown must show the amount for each of 14 items: general management, cleaning, security, disinfection, lift maintenance, heating, cooling and hot water, repairs and maintenance (including cleaning of heating and cooling equipment), outsourced-management fees, electricity, water and gas (excluding parts the tenant pays directly), septic-tank charges, waste charges, and insurance for the whole building. Where the monthly fee is under ₩100,000, the landlord may list only the items included (Decree, Article 8). The Ministry of Justice’s standard commercial lease asks that a fixed monthly fee of ₩100,000 or more be broken down by main item, and that for a fee that is not fixed the items and the method of calculation be stated. For a lease above the regional threshold, or an older lease not yet renewed, negotiate disclosure into the contract.

At the end of the lease: the deposit

• The landlord returns the balance of the deposit after proper deductions, such as unpaid rent and fees and the cost of restoration you did not carry out. The return of the deposit balance and the handover of the premises are performed at the same time (Supreme Court en banc 77Da1241, 28 September 1977).
• Within the threshold, the lease relationship is treated as continuing until the deposit is returned (Article 9(2)). If the deposit is not returned after the lease ends, you can apply to the district court for a lease registration order; once it is registered, you acquire or keep protection against a new owner and deposit priority even after moving out (Article 6(1), (5)), and can recover the costs from the landlord (Article 6(8)).
• Above the threshold, Articles 6 and 9 do not apply. A lease registered under the Civil Act takes effect against third parties (Civil Act, Article 621(2)); unless the parties agreed otherwise, the tenant can ask the landlord to cooperate with registration (Article 621(1)). For a lease above the threshold, do not assume registration gives the same deposit priority as Article 5; consider separate security for the deposit, and in a dispute, provisional attachment and a claim.
• Agree the handover condition in writing, with photographs.

• Protection against a new owner, the fixed date and restoration clauses

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 identify the provisions likely to cover your lease and assess a proposed rent increase. The office can also prepare a Korean renewal demand or response and act for you in negotiation, conciliation or court, including deposit recovery at the end of the lease.

General information on Korean law as in force on the date shown. Thresholds and rates are set by Presidential Decree and can change.

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