Seoul Commercial Lease Disputes 50% Settlement Success... Biggest Issue Is Contract Termination

[Asia Economy Reporter Onyu Lim] Seoul City succeeded in reaching agreements in one out of every two commercial lease disputes last year. The biggest cause of commercial lease disputes was contract termination.

Seoul City announced on the 28th that a total of 180 cases were submitted to the Commercial Building Lease Dispute Mediation Committee last year. This is a 17% increase compared to 154 cases the previous year. Among them, 91 cases (50.6%) were settled through mediation, 72 cases (40%) were dismissed, and 17 cases (9.4%) failed mediation. Seoul City explained, "If we consider only the mediation-started cases (108 cases) excluding the dismissed ones, the rate of successful mediation reached as high as 84%."

The number one cause of disputes between tenants and landlords was contract termination, accounting for 21.1% (38 cases). This was followed by key money (30 cases, 16.7%), rent adjustment (29 cases, 16.1%), repair costs (28 cases, 15.6%), restoration to original condition (20 cases, 11.1%), and contract renewal (16 cases, 8.9%).

By district, the highest number of cases were in Mapo-gu (19 cases), Jung-gu (16 cases), Gangnam-gu (14 cases), Songpa and Jongno-gu (13 cases each), and Yeongdeungpo-gu (11 cases).

The Seoul Dispute Mediation Committee, including 16 expert lawyers specializing in commercial leases, proposes mediation agreements to tenants and landlords equivalent to court rulings, helping to resolve disputes quickly through objective guidelines. Additionally, the mediation agreements signed by landlords and tenants have the effect of a settlement under civil law, meaning they act as new contracts and have the same enforceability as court judgments, providing practical solutions and assistance to the parties involved.

Meanwhile, Seoul City also operates a Commercial Lease Consultation Center to prevent disputes caused by misinterpretations of commercial lease agreements. The center provides free consultations related to lease issues such as rent adjustment, key money recovery, contract duration, and contract renewal. Last year, a total of 17,097 consultations were provided, averaging about 70 consultations per day, with the main topics being rent, contract termination, legal application, and key money.

Furthermore, to help citizens easily understand lease-related information, frequent consultation cases have been compiled into the "Commercial Lease Consultation Casebook," which is distributed at the consultation center. The file can be downloaded from the Seoul City No More Tears website.

Seongman Seo, Director of Labor and Livelihood Policy at Seoul City, said, "Seoul City is striving to create a stable lease market for the coexistence and protection of commercial landlords and tenants. We will also support tenants who may be relatively vulnerable by activating the Dispute Mediation Committee and the Commercial Lease Consultation Center to prevent them from suffering damages."