A Review of the Revised Commercial Building Lease Protection Act
As protection of commercial property lessee became a societal issue, the need to promote the stability of the lessee's economic situation was proposed, and the Commercial Building Lease Protection Act was enacted in 2001. Subsequent to the implementation of this act, various different forms of issues have continually been raised against disadvantages to the lessee in the commercial real estate lease contract, such as rent increase, abuse of lessor termination rights, instability of rental periods, the problem of charging high interest rates for monthly rental agreements, the non-return of rental security deposit money, and the difficulty of registering commercial buildings.
But recently, this Commercial Building Lease Protection Act was revised, as follows. First, the law is now applicable to the lessee who has exceeded the leasehold deposit stipulated by the presidential enforcement decree. Second, in the situation where a part or whole of the deposit money is converted to monthly rent, a comparison is to be made against the standard interest rate as set by the Bank of Korea, for the lower rate to be applied. Third, the maximum limit of first priority default compensation for the small rent lessee category is to be upto one half the value of the rental property, as stipulated in the presidential decree, to be determined in consideration of the local economic situation, security deposit, and rent. Fourth, in case the building was leased to accomodate, or demolition or reconstruction is required due to age or safety, the lessee is granted the right to refuse renewal of the said contract.
The revised law is intended, in principle, to make the Commercial Building Lease Protection Act applicable to all transactions of commmercial building rental, and its provisions exhibit a significantly increased scope of applicability. The intention of this amendment, to solve the problem of method based on the amount of security deposit, and to effect practical protections for the vast majority of commercial building lessees, through increased scope of applicability, is deemed to be commendable.