Commercial Lease Dispute | Supreme Court Judgment on Whether the Lease Was Renewed

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.

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.

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.

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.