Landlord Blocking Your Key Money in Korea: New Tenant, Refusal and Damages

When is the landlord liable?

In the last six months of your lease period, a landlord in Korea must not obstruct you from collecting key money from a prospective new tenant you introduce (Commercial Building Lease Protection Act, Article 10-4(1)). If the statutory conditions are met and the landlord’s unjustified refusal or other obstruction causes you loss, the landlord is liable in damages, capped at the lower of the key money your candidate agreed to pay and the key money value when the lease ended (Article 10-4(3)). The limitation period is three years from the end of the lease (Article 10-4(4)).

The law protects an opportunity, not a sale: the landlord cannot be made to sign with your candidate. Most disputes turn on evidence of what was said and done in the final months.

• What key money is and how it differs from a deposit

When the protection applies

• The premises are in a building subject to business registration and used mainly for business (Article 2(1)). The deposit amount does not matter for this protection (Article 2(3)).
• The unit is not part of a large store or quasi-large store under the Distribution Industry Development Act (traditional markets excepted), and is not state or public property (Article 10-5).
• No ground for refusing renewal under Article 10(1) exists (Article 10-4(1), proviso). The grounds most relevant in key money disputes include rent arrears, an unauthorised sublet and serious breach of the tenant’s obligations.
• On arrears, the test is whether the unpaid rent at some point reached the total of three periods’ rent, not whether you paid late three times. If it did, the landlord may refuse even if you later reduced the balance (2020Da263635, 27 May 2021). Arrears for the six months from 29 September 2020 covered by the temporary COVID-19 rule are not counted (Article 10-9).
• It does not matter that your 10-year renewal period has been used up. The landlord’s duty continues (2017Da225312, 16 May 2019; 2018Da252441, 3 September 2020).

• Renewal refusal grounds and the three-period arrears rule

Introducing a new tenant within the protected period

The protected period runs from six months before the lease period ends until the lease ends. Introduce your candidate inside that period and in a way you can prove: a letter to the landlord, ideally sent by content-certified mail (내용증명) in Korean, naming the person or company, their intended trade and contact details, and asking the landlord to sign a lease with them. The Supreme Court requires the tenant, in principle, to introduce a prospective tenant with specific identifying details (2018Da239608, 10 July 2019; 2022Da202498, 11 August 2022).

You must also share what you know about the candidate’s ability to pay the deposit and rent and their willingness and ability to perform as a tenant (Article 10-4(5)). Offering a summary of the candidate’s business plan and means at the outset makes it harder for the landlord to say it could not assess them.

• A signed key money contract is not indispensable. The Supreme Court has held that obstruction can be established before one is concluded, because a landlord’s demands can make it impossible to reach one (2018Da239608). You must still show a genuine opportunity to receive key money, the obstruction and the resulting loss; in that case the claim failed because no key money deal had ever been contemplated.
• If the landlord has already made clear that it will not sign with anyone you introduce, you may not need to introduce a candidate. A firm, unjustified refusal of that kind can count as obstruction even if no candidate was introduced (2018Da284226, 4 July 2019). In one case the landlord had said so about ten months before the lease ended and maintained that position (2024Da305605, 20 November 2025). Whether a refusal was firm is judged from everything said and done around the end of the lease, so keep earlier messages too; a single early remark will not necessarily be enough.

What counts as obstruction

The Act lists four kinds of obstruction (Article 10-4(1)): asking your candidate for key money or taking it; preventing your candidate from paying you; demanding rent and a deposit remarkably higher than the building’s taxes and charges and the rents and deposits of nearby premises justify; and refusing without good cause to sign a lease with your candidate. Situations that have reached the Supreme Court include:

• “I will run my own business there.” Not good cause on its own (2018Da252441; 2024Da305605).
• “I am going to rebuild.” Telling your candidate about a concrete demolition or reconstruction plan and its timing is not, by itself, obstruction, even if the plan would not meet the strict renewal-refusal ground in Article 10(1)7. It may be different where the need to rebuild is not objectively established or the plan is not concrete and the landlord insists on an unrealistically short term, or where later events contradict what was said (2022Da202498; 2024Da232530, 31 July 2024).
• “Not that kind of business.” Where there was no agreed trade restriction, a landlord who refused a candidate wanting to open a pub, citing smells and noise, without considering conditions such as ventilation or opening hours, was held to have refused without good cause (2019Da236392, 14 October 2021).
• “The rent will be three times higher.” A higher rent is not obstruction in itself; the question is whether the demand is remarkably excessive, judged against the existing rent, market rent for the unit, neighbourhood rents, taxes and charges, and market practice. Where a landlord asked the candidate for more than three times the existing rent, the Supreme Court said there was ample room to regard the demand as remarkably excessive, and held that the court should have established the appropriate rent, by appraisal if necessary, rather than reject the claim because market rent had not been proved (2026Da201337, 16 July 2026, sent back for retrial). The tenant still bears the burden of proof, so collect comparable rents and evidence that the demand is what made the deal fail.

Grounds a landlord can rely on

The Act deems good cause to exist in four situations (Article 10-4(2)): the candidate cannot afford the deposit or rent; the candidate is likely to breach the tenant’s obligations, or there is another substantial reason that would make the lease hard to maintain; the premises are not used for profit for 18 months or more; or a new tenant chosen by the landlord has signed a key money contract with you and paid. A landlord may also argue other good cause on the facts.

The 18-month ground has specific requirements. The landlord must rely on it when refusing, and then actually leave the premises unused for profit for at least 18 months after the lease ends; a landlord who refused for another reason cannot rely on later non-use (2019Da285257, 25 November 2021). If the building is sold within that period, the periods of the old and new owners can be combined where the sale was made on the basis that the premises would continue not to be used for profit, and they were in fact not used for profit for at least 18 months in total (2021Da272346, 14 January 2022). Keep track of what happens to the unit after you leave.

Damages: how they are measured

Damages cannot exceed the lower of two figures: the key money the new tenant agreed to pay you, and the key money value at the time the lease ended (Article 10-4(3)). You must prove your loss within that cap. The end-of-lease value is usually established by a court-appointed appraiser. The appraisal can include the value of the fit-out and equipment notwithstanding a restoration clause in the lease, but items you can take away and reuse, such as computers or portable equipment, are deducted to avoid double recovery (2018Da287423, 23 February 2023).

Deadlines and possession

• Limitation: three years from the day the lease ended (Article 10-4(4)). Do not rely on negotiations or a demand letter to stop the clock. A demand interrupts limitation only if it is followed within six months by court proceedings, attachment or another step listed in Civil Act Article 174. Have the end date of the lease and any interruption checked early.
• Possession: unpaid key money damages do not entitle you to keep the premises; the Supreme Court has held that the tenant’s duty to return the premises and the landlord’s key money damages are not owed in exchange for each other (2018Da242727, 10 July 2019). The deposit is different: the balance after proper deductions is normally repayable against handover of the premises (Supreme Court en banc 77Da1241, 28 September 1977). Take advice before you hand over the keys while the deposit is unpaid.

Evidence to collect now

• The lease and every renewal, with dates, and proof of rent payments for the whole term.
• Written communications with the landlord and its agent over the last year, including messaging-app chats, exported with dates.
• Your introduction letter and proof of delivery.
• The key money contract or draft, the candidate’s offer, and their identity and business details.
• The landlord’s response: its stated reason, any rent demanded, and any plan disclosed.
• Comparable rents for nearby premises if the rent demanded is in issue.
• Photographs of the premises at handover, and an inventory of what you removed.
• What happened to the unit afterwards: who moved in, at what rent, and when.

• Lease and key money contract clauses to check

Conciliation and court

Key money disputes can be taken to a Commercial Building Lease Dispute Conciliation Committee (Article 20(2)5). For Seoul, committees sit at the Korea Legal Aid Corporation’s Seoul Central branch and the Korea Real Estate Board’s Seoul East branch (Decree, Article 9 and Table 2), and the Seoul Metropolitan Government runs its own commercial lease consultation centre and conciliation committee. Conciliation may offer a less costly resolution if both parties take part and accept a settlement; a binding outcome against an unwilling landlord may require court proceedings. Do not assume that applying for conciliation stops the limitation period; if the three-year deadline is close, take advice and file in court.

• Seoul commercial lease consultation centre (Korean)
• Commercial Building Lease Protection Act (Korean text)
• Supreme Court 2018Da284226 (Korean text)
• Supreme Court 2024Da305605 (Korean text)
• Supreme Court 2026Da201337 (Korean text)

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 whether the protection is likely to apply. The office can also draft the Korean introduction letter and the reply to a refusal, organise the evidence, deal with the appraisal, and represent you in conciliation or a damages action. If your business is in Itaewon, Haebangchon or elsewhere in Yongsan, you can meet the attorney at the office near Samgakji Station by appointment.

General information on Korean law as at the date shown, including Supreme Court decisions to July 2026. Advice requires a review of your documents and an agreed engagement.

• Key money in Korea
• Renewal right and refusal grounds
• Commercial lease checklist for foreign business owners
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