"Even with 6 Months of Rent Arrears, Contract Termination Not Allowed"… Commercial Lease Protection Act Amendment Passed

[Asia Economy Reporter Baek Kyunghwan] A bill allowing commercial tenants affected by the novel coronavirus infection (COVID-19) to request rent reductions from building owners has passed the National Assembly. Building owners cannot legally request eviction even if tenants fail to pay rent for six months.

On the 24th, the Ministry of Justice announced that the amendment to the "Commercial Building Lease Protection Act" to protect commercial tenants in response to the economic crisis caused by COVID-19 has passed the plenary session of the National Assembly.

First, tenants will not be rejected for lease renewal even if they are six months late in paying rent. Even if tenants fail to pay rent for six months, they cannot be forcibly evicted. Until now, landlords could terminate contracts or refuse renewals if tenants were three months late on rent.

In particular, the amendment specifies the conditions for requesting rent reductions from "changes in economic circumstances" to "changes in economic circumstances due to first-class infectious diseases under the Infectious Disease Control and Prevention Act." This provides grounds for small business owners affected by quarantine measures for first-class legally designated infectious diseases, including COVID-19, to request rent reductions from building owners.

However, the amendment does not include an obligation for landlords or building owners to accept tenants' rent reduction requests. If landlords accept tenants' reduction requests, they may demand an increase later regardless of the 5% cap regulation when the economy improves.

A Ministry of Justice official stated, "We will strive to ensure that this amended law operates quickly and stably amid the crisis caused by COVID-19," adding, "It is expected to protect commercial tenants whose livelihoods are threatened by force majeure in this unprecedented economic crisis and to promote coexistence through shared pain between landlords and tenants."