The Commercial Building Lease Protection Act does not apply to all leases, but only applies to cases where the converted deposit is less than the standard amount. However, in some cases, the Commercial Building Lease Protection Act applies even if the converted deposit is more than the standard amount (Article 2, Paragraph 3 of the Commercial Building Lease Protection Act). Therefore, there is no need to think that you cannot receive any protection just because you rent a commercial space with a high rent or security deposit.
Below, we will look at the second part of the content that applies regardless of the amount of the conversion deposit, the right to claim renewal.
Concept of renewal claim
The tenant may request the building owner to renew the lease between 6 months and 1 month before the expiration of the lease. In this case, the building owner cannot refuse without justifiable reasons (Article 10 of the Commercial Building Lease Protection Act). Therefore, as a tenant, you can enjoy the effect of safely renewing the contract by simply requesting renewal of the contract from the building owner during the above period.
Whether the right to claim renewal is recognized when the conversion deposit amount exceeds the enforcement decree
This right to request renewal applies in all cases, regardless of the amount of the conversion deposit. Therefore, even if the converted deposit amounts to 1 billion won, there is no problem in exercising the right to request renewal. However, if the amount of the converted deposit exceeds the standard amount, the following matters will change, so caution is required.
1. Unlimited increase in rent and deposit
If the amount of the converted deposit is less than the standard amount, the increase in rent and deposit is restricted. In other words, there is no limit to the scope of reduction of rent, etc., but in case of increase, more than 5% cannot be increased at once, and the amount cannot be increased again within one year after the increase (Article 11 of the Commercial Building Lease Protection Act). However, if the converted deposit amount exceeds the standard amount, there is no such limitation. Therefore, at one time, the amount can be increased by more than 5%, and there is no limit to the interval between increases.
2. Non-recognition of implied renewal
If the building owner does not notify the renewal of the contract or change the conditions during the period from 6 months to 1 month before the expiration of the contract period, the lease contract is renewed under the same conditions as the previous lease.
However, if the conversion deposit amount exceeds the standard amount, such implied renewal is not recognized. Therefore, as a lessee, you must remember that you must exercise your right to request renewal within the specified period.
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
