You are using a commercial building for rent, but the landlord dies during the contract period. After looking into it, you find that the landlord's heirs are A, B, and C. In this case, can you continue to use and benefit from the commercial building? Who should you get your rental deposit back from when the contract period ends? Let's take a look at each of these below.
Q. If the lessor dies and there are heirs, does the lease continue?
A. The Commercial Lease Protection Act stipulates that “the transferee of a leased building (including any other person who has succeeded to the right to lease) is deemed to have succeeded to the lessor’s status” (Article 3, Paragraph 2 of the Commercial Lease Protection Act). Therefore, if you have the requirements for opposing power under the Commercial Lease Protection Act, you can assert your claim against the transferee even if the leased building is transferred, and in this case, the transferee is deemed to have succeeded to the lessor’s status.
However, can the landlord claim that the lease contract continues to exist against the heirs even if the landlord dies? The answer to this question is determined by whether the landlord's heirs fall under the 'transferee of the leased building' under Article 3, Paragraph 2 of the Commercial Lease Protection Act.
In this regard, the Supreme Court has ruled that if the lessor of a leased building dies and the heirs inherit the leased building, the person who acquires the ownership of the leased building through inheritance is also considered the assignee of the leased building as referred to in the above provision [Supreme Court Decision 2023da318857, delivered on August 1, 2024]. Therefore, in this case, since the existing lease relationship still exists between you and the heirs, you can assert the continuation of the lease contract relationship to the heirs of the leased building as well.
Q. If there are multiple heirs, who is responsible for returning the rental deposit?
A. If there is only one heir to a leased property, the heir succeeds to the status of the existing lessor, and the lease relationship remains between the heir and the lessee. Therefore, when the lease agreement is terminated, the lease deposit can be returned from the heir.
But if there are multiple heirs to the landlord, from whom should the rental deposit be returned? Can the deposit be returned only to the amount corresponding to the inheritance share from all heirs, or can the entire amount be returned from one person?
The Supreme Court has ruled that if the position of a lessor is inherited by multiple people, the obligation to return the lease deposit is an indivisible obligation by nature [Supreme Court Decision 2015da59801, January 28, 2021]. In this case, an indivisible obligation refers to an obligation in which, even if there are multiple people bearing the debt, each person bears the obligation to perform the entire debt, and if one of the multiple people pays the entire amount, the other debtors are also released from the debt.
Therefore, the tenant can choose one of the heirs and demand the return of the entire rental deposit, or can demand the return of the entire rental deposit from multiple people at the same time. However, considering the case of forced execution such as an application for auction, it may be safer to proceed with the lawsuit against all the heirs.
Q. After the landlord died, the inheritance was divided and the leased building was given to one of the heirs.
If it belongs to A, who can I demand the return of the rental deposit from?
A. The Supreme Court’s position is that if the heirs assign the subject matter of the lease to a specific heir through an agreement on the division of the inheritance, that specific heir assumes the obligation to return the lease deposit, and the other heirs withdraw from the lease relationship and are thus exempt from the obligation to return the lease deposit to the lessee [Supreme Court 2013. 1. 17. Decision of the Full Bench 2011Da49523].
Therefore, in this case, only A, who acquired the leased property, is liable for the return of the lease deposit, and B and C are not liable for the return of the lease deposit. Accordingly, the lessee must demand the return of the deposit from A, who acquired the leased property. However, if the lessee demands the return of the lease deposit from B or C, not A, he or she must be careful because he or she will lose in court.
Attorney Sunjin Kim has been mediating franchise disputes based on coexistence for the past 10 years and is working to restore the franchise to its original state. KLF handles nearly 100 franchise lawsuits every year and is Korea's top franchise-specialized law firm that serves as an advisor to several franchise companies.
KLF Franchise Law Firm Room 205, 2nd floor, 151 Seochojungang-ro, Seocho-gu, Seoul 02-738-9600
