South Korea Commercial Eviction Process: 3-Month Arrears, Key Money Obligations, and Court Procedures

Evicting a commercial tenant in South Korea follows similar procedural requirements to residential eviction but with a higher arrears threshold and additional obligations around key money (gwolligeum) protection.

Legal Grounds for Termination

Key difference: Commercial leases require 3 months of cumulative rent arrears for termination, compared to 2 months for residential leases.

Renewal Refusal Grounds

When a tenant exercises the Contract Renewal Request Right, the landlord may refuse only for:

1. 3 or more months of rent arrears
2. Obtaining the lease by fraud or improper means
3. Unauthorized subletting
4. Serious property damage through willful or gross negligence
5. Planned demolition or reconstruction (with compensation or equivalent offer)
6. Material breach of tenant obligations after reasonable cure period
7. Other statutory grounds

Key Money and Eviction

Landlord's Obligation

From 6 months before lease termination through the termination date, the landlord must not interfere with the tenant's ability to recover key money from an incoming tenant.

Prohibited Interference

• Refusing to contract with a prospective tenant introduced by the outgoing tenant without just cause
• Demanding significantly higher rent or deposit from the prospective tenant
• Demanding significantly higher key money from the prospective tenant
• Other acts that obstruct key money recovery

Key Money Protection After 10 Years

Per Supreme Court precedent, key money recovery protection continues even after the 10-year renewal period has expired. This is a significant consideration for landlords.

Damages for Interference

Landlords who interfere with key money recovery face damages liability, calculated based on the lower of the agreed key money or the market-rate key money at lease termination.

Eviction Procedure

Step 1: Certified Notice

Send formal termination and vacate notice via certified mail.

Step 2: Preliminary Injunction

File for an order preventing possession transfer during litigation.

Step 3: Eviction Lawsuit

Step 4: Forced Execution

After final judgment, apply for court-supervised forced vacating.

Deposit and Eviction Relationship

• Deposit return and premises surrender are simultaneous obligations
• An eviction without offering deposit return may be dismissed
• Overdue rent may be deducted from the deposit

Best Practices for Landlords

1. Track the 3-month arrears threshold carefully — cumulative, not necessarily consecutive
2. Understand key money obligations — interference exposes you to significant damages
3. Verify renewal refusal grounds before sending notice
4. Define restoration scope upfront — especially for tenant-installed interiors
5. Engage specialized legal counsel — commercial disputes tend to involve large sums

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