South Korea Commercial Landlord Disclosures: Property Information, Key Money, and Agent Obligations

Commercial lease transactions in South Korea, governed primarily by the Commercial Building Lease Protection Act (effective 29 December 2001), require landlords and real estate agents to disclose specific information to prospective tenants. In addition to the standard property disclosures, commercial leases involve unique considerations around converted deposits, permitted uses, and key money.

Landlord Disclosure Obligations (Upon Request)

Under the Commercial Building Lease Protection Act and tax collection statutes, commercial landlords do not have a broad, proactive "material fact" disclosure duty in the same manner as licensed agents. However, they are legally required to provide or consent to the following specific information:

Note: Prospective tenants may request to view tax arrears with the landlord's consent. However, if the deposit exceeds 10 million KRW, the tenant has the right to view these arrears without the landlord's consent from the date the contract is signed until the lease commencement date.

Commercial-Specific Considerations

While not strictly statutory proactive disclosures for the landlord, these items are critical for commercial leases and are typically negotiated or disclosed during contracting:

Property Confirmation and Explanation Document (Agent's Duty)

When a licensed real estate agent brokers the transaction, the agent—not the landlord—has the statutory obligation under Article 25 of the Licensed Real Estate Agents Act to prepare and deliver a detailed "Property Confirmation and Explanation Document" (중개대상물 확인·설명서) covering:

| Rights | Ownership, mortgages, seizures, liens | | Use restrictions | Zoning, urban planning limitations | | Facilities | Electricity, water, gas, HVAC, fire safety | | Transaction terms | Expected deposit and rent |

Commercial-Specific Agent Obligations

• Business type restrictions — notify if building rules or zoning prohibit certain businesses
• Business licensing feasibility — whether the location supports required permits
• Illegal construction status — unauthorized additions or use changes
• Nearby development plans — redevelopment or reconstruction projects

Key Money Disclosures

A separate key money agreement specifying the type (facility, business, location) and amount is recommended. Note that key money is typically a private agreement between outgoing and incoming tenants; landlords have no statutory duty to disclose interference history or prior key money amounts.

Best Practices for Landlords

1. Verify building register status — business registration may be denied for illegal constructions
2. Explain converted deposit implications — affects the scope of tenant protections
3. Disclose permitted use restrictions — prevents post-contract disputes
4. Itemize management fees transparently — distinguish common charges from individual charges
5. Address reconstruction and key money clearly — document 10-year renewal period, reconstruction plans, and key money recovery rights

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