Supreme Court: "If Contract Period Completed 5 Years, Revised Lease Law Does Not Apply"

[Asia Economy Reporter Baek Kyunghwan] The Supreme Court has ruled that even though the lease protection period was extended by the amendment of the Lease Protection Act, contracts signed before the amendment cannot be subject to the revised law.

On the 25th, the Supreme Court's First Division (Presiding Justice Lee Gitaek) announced that it upheld the lower court's ruling in favor of landlord A in a building eviction lawsuit filed against tenant B.

In July 2012, A signed a contract to lease a commercial building to B for a monthly rent of 2.5 million won. In July 2014, the monthly rent was raised to 3 million won, and the contract was renewed to continue leasing the building until July 2019.

However, ahead of the contract expiration in July 2019, A notified B that the contract would not be renewed. Since the initial 5-year lease period guaranteed by law had already ended in 2017, A judged that there was no obligation to extend the contract further.

B demanded renewal, arguing that the amended law guaranteeing a 10-year lease period should apply, and A filed a lawsuit requesting the return of the building.

The first trial ruled in favor of B. The court stated, "The amended law applies not only to contracts first signed after the enforcement date but also to all lease contracts lawfully renewed after the enforcement date." It viewed that the contract was renewed under the same conditions due to B's renewal request, as the total lease period including the initial lease did not exceed 10 years.

The second trial differed. The court pointed out, "Since A, who leased the commercial building before the amended law took effect, expected a maximum 5-year lease contract, applying the amended law could cause unforeseeable damage to A." While acknowledging that the purpose of the amendment is to protect tenants by extending the lease guarantee period, the court emphasized that the scope of the amended law should be interpreted reasonably, considering the landlord's position.

B appealed, but the Supreme Court dismissed it. The Supreme Court explained, "When B requested lease renewal from A, the mandatory lease period of 5 years starting from July 2012 had already passed," and "the amended Commercial Lease Protection Act does not apply to this lease contract."