CONTENTS
- 1. Commercial Lease Dispute, a Case in Which Whether the Lease Was Renewed Was at Issue
- - The Plaintiff's Arguments Regarding the Lease Agreement
- 2. The Lower Court's Determination on the Commercial Lease Dispute
- 3. The Supreme Court's Determination on the Commercial Lease Dispute
- - The Supreme Court's Legal Reasoning on Whether the Lease Was Renewed
- 4. Commercial Lease Dispute, What Was Daeryun's Strategy?
1. Commercial Lease Dispute, a Case in Which Whether the Lease Was Renewed Was at Issue
This is a case concerning a commercial lease dispute in which whether the lease was renewed was at issue.
The Plaintiff and the Defendant had entered into a lease agreement regarding the commercial premises at issue.
We will set out the outline of the Plaintiff and the Defendant's 🔗lease dispute as a timeline.
■ Lease Agreement
Plaintiff: lessor Defendant: lessee
Lease deposit: KRW 100 million
Monthly rent: KRW 6 million
Lease term: July 12, 2018 to July 11, 2020
■ Renewal of the Lease Agreement
June 30, 2020, lease agreement executed
Lease deposit KRW 100 million
Monthly rent KRW 3.5 million
Lease term July 12, 2020 to July 12, 2021
■ The Plaintiff and the Defendant subsequently set the monthly rent at KRW 3.2 million and the lease term through July 12, 2022.
■ July 15, 2022, the Plaintiff sent certified mail
On July 15, 2022, the Plaintiff sent the Defendant certified mail stating, “I request that the monthly rent be increased to KRW 6 million,” and the Defendant received that certified mail on July 18, 2022.
The Plaintiff's Arguments Regarding the Lease Agreement
The Plaintiff argues that the lease agreement entered into with the Defendant ended on July 12, 2022.
Accordingly, with respect to the Defendant's continued use of the building, the Plaintiff demands that the Defendant pay KRW 4.2 million per month (from July 13, 2022 to July 12, 2023) or KRW 4.3 million (from July 13, 2023 onward) as unjust enrichment and vacate the building.
The Defendant, on the other hand, countered that the lease agreement did not end on July 12, 2022 but was automatically renewed, and that the Defendant therefore has the right to continue using the building.
2. The Lower Court's Determination on the Commercial Lease Dispute
As to the commercial lease dispute, the lower court determined that the Plaintiff's claim was well-founded.
The court held that, because the Plaintiff had requested an increase in the rent, the contract could not be regarded as having been automatically renewed.
The lease agreement between the Plaintiff and the Defendant ended on July 12, 2022.
The court decided that the Defendant must return the building to the Plaintiff and pay unjust enrichment of KRW 4.2 million or KRW 4.3 million per month from July 13, 2022.
3. The Supreme Court's Determination on the Commercial Lease Dispute
The Supreme Court's determination on the commercial lease dispute differed from that of the lower court.
The Supreme Court held that, unlike the lower court, which had determined that the lease agreement ended on July 12, 2022, there was a strong basis for finding that it had been impliedly renewed.
The Supreme Court's Legal Reasoning on Whether the Lease Was Renewed
Under Article 639(1) of the Civil Act, where the lessee continues to use the building after the lease has ended and the lessor does not object within a reasonable period, the lease is deemed to have been automatically extended on the same terms as the existing agreement.
Where the lessee continues to use and profit from the leased object after the lease term has expired, and the lessor does not raise an objection within a reasonable period, the lease is deemed to have been renewed on the same terms as the previous lease.
The building owner may object to the extension of the contract, and this objection may be expressed clearly by words or in writing (express objection) or may be manifested through conduct or the circumstances (implied objection).
The owner may also object on a conditional basis, for example by stating that the contract will not be extended unless the rent is increased.
However, because the lessee may act in the belief that the contract will be extended, in order for the lessor's implied or conditional intent to object to be recognized, the intent to no longer maintain the contract must be objectively clear.
In addition, under Article 628 of the Civil Act, the building owner may request an increase in the rent only while the contract remains in effect.
Accordingly, the fact that the building owner requested an increase in the rent after the contract ended does not readily indicate that the owner expressed an intent to object so as to prevent automatic extension.
Where the agreed rent becomes unreasonable due to an increase or decrease in the public charges on the leased object or other changes in economic circumstances, a party may request an increase or decrease in the rent for the future.
4. Commercial Lease Dispute, What Was Daeryun's Strategy?
This was a case in which whether the lease was renewed was at issue within a commercial lease dispute.
In this case, the Supreme Court found that the Plaintiff's exercise of the right to request a rent increase through the certified mail dated July 15, 2022, also indicated that the contract had not already ended but had been renewed and remained in effect.
The court determined that the mere fact that the Plaintiff requested an increase in the rent after the lease term had ended does not readily show that the Plaintiff expressed a clear intent to no longer maintain the lease agreement with the Defendant.
In other words, a request to increase the rent may be interpreted not as an intent to terminate the contract itself but as an intent to maintain the contract while changing its terms.
That is, a request to increase the rent alone cannot be regarded as the lessor's refusal to renew the contract.
Whether a lease has been impliedly renewed must be considered comprehensively, taking into account not only whether the contract term has ended but also the manner in which the parties expressed their intent, the request for a rent increase, the actual use of the building, and other factors.
Because legal interpretation is particularly important in this regard, it can be helpful to obtain the assistance of an attorney experienced in such matters.
At Daeryun Law Firm LLP, 🔗attorneys experienced in real estate matters who have handled numerous lease dispute cases provide comprehensive real estate legal services, including ▲review and performance of lease dispute agreements, ▲civil and criminal litigation, ▲advisory services relating to the lease protection acts, and ▲dispatch of certified mail.
