Corporations Cannot Refuse Tenant's Lease Renewal Request Even for 'Actual Residence' Purposes

Corporation: "Will use as dormitory for executives and employees... for actual residence"
Tenant: "Corporation does not meet actual residence requirements"
Ongoing lawsuit... Court rules in favor of tenant

Apartment complexes in Songpa and Gangnam areas of Seoul, viewed from Namhansanseong on the 24th

A court ruling has stated that even if a corporation-owned house is intended for the lessor's actual residence, the lessor cannot refuse the tenant's request for contract renewal.

The Housing Lease Protection Act, revised in July last year, stipulates that "if the lessor or their direct ascendants or descendants actually reside in the house, the tenant's request for contract renewal can be refused." However, the court sided with the tenant, noting that a corporation is not an entity that can actually reside in the property.

According to the legal community on the 24th, Mr. A, the owner of the house and representative of the corporation, informed tenant Mr. B about four months before the contract expiration that he intended to use the house as the corporation's office and dormitory for its executives and employees, expressing his intention to refuse contract renewal for actual residence (actual use) purposes.

In response, tenant Mr. B sent a text message through a real estate agent to Mr. A stating, "I request the renewal of the lease contract."

Mr. A filed an eviction lawsuit against tenant Mr. B on the grounds of contract expiration.

Tenant Mr. B argued against Mr. A's actual residence purpose, stating, "Since the subject property (house) is owned by a corporation, not a natural person, it does not correspond to the lessor's actual residence."

Judge Ban Jeong-mo of the Civil Division 8 at Seoul Northern District Court stated, "If the house is to be used as a company residence by the corporation, the actual residents of the house would be the corporation's executives and employees, not the lessor corporation itself."

He added, "Article 6-3, Paragraph 1, Subparagraph 8 of the Housing Lease Protection Act regulates cases where the lessor themselves or their direct ascendants or descendants reside in the subject house," and "It does not regulate the residence of the corporation lessor's executives or employees in the subject house."

Furthermore, "Since Article 6-3, Paragraph 1, Subparagraph 8 of the Housing Lease Protection Act includes cases where not only the lessor but also their direct ascendants or descendants actually reside, it appears to assume that the lessor is a natural person."

He continued, "The explanatory booklet on the revised Housing Lease Protection Act published by the Ministry of Justice and the Ministry of Land, Infrastructure and Transport on July 31, 2020, also provides an authoritative interpretation stating that 'it is difficult to consider a corporation as an entity that can actually reside under the Housing Lease Protection Act, so if the lessor is a corporation, refusal of renewal based on direct residence is not possible.'"

The court thus ruled, "The plaintiff corporation cannot refuse the defendants' request for contract renewal on the grounds of actual residence," siding with tenant Mr. B.

Attorney Jeong Min-gyeong of the law firm Myeongdo expressed regret, saying, "The Housing Lease Protection Act recognizes its application to corporations meeting certain conditions, and there is no reason to view corporations differently from how civil law does." Attorney Jeong added, "Actual residence by a corporation ultimately means residence by natural persons constituting the corporation," and "Considering that the purpose of the Housing Lease Protection Act is to guarantee the stability of citizens' housing life, this ruling is even more regrettable."