105 Cases of Adjustment Initiated Last Year with 93 Agreements Reached
Most Common Cause of Lease Disputes: 'Contract Termination'... 104% Increase Compared to 2020
Operation of Commercial Lease Consultation Center... Over 15,000 Cases Last Year, Average 63 Consultations per Day
[Asia Economy Reporter Lim Cheol-young] Seoul City announced on the 22nd that out of 185 commercial lease dispute cases submitted to the Commercial Building Lease Dispute Mediation Committee last year, 93 cases were successfully mediated out of 105 cases where mediation was initiated, achieving a mediation rate of 89%.
According to Seoul City, among the 185 cases submitted to the Commercial Building Lease Dispute Mediation Committee, 80 cases (43.2%) were dismissed due to non-attendance of parties, and 12 cases (6.5%) resulted in unsuccessful mediation. The mediation rates for cases initiated over the past three years were 84% in 2019, 86% in 2020, and 89% in 2021.
Due to the prolonged impact of COVID-19, the number one dispute between landlords and tenants was ‘contract termination’ disputes, accounting for 28.6% (53 cases) of all applications, following 2020. In terms of number of cases, this represents a 104% increase compared to 26 cases in 2020. This was followed by rent adjustment (50 cases, 27%), repair costs (46 cases, 24.9%), contract renewal (16 cases, 8.6%), and key money (11 cases, 5.9%).
Examining the total 185 applicants submitted to the Commercial Building Lease Dispute Mediation Committee last year, tenants accounted for 89% (164 people) and landlords 11% (21 people). The number of tenant applications ranked as rent adjustment (50 cases), contract termination (44 cases), and repair costs (38 cases), while landlord applications were highest in contract termination (9 cases), repair costs (8 cases), and contract renewal (2 cases).
The Commercial Building Lease Dispute Mediation Committee has been operating since 2016 and has resolved 411 disputes to date. The committee consists of 30 experts in the commercial building lease field, including lawyers, appraisers, architects, certified public accountants, and professors. It not only conducts legal reviews of dispute cases such as rent adjustment, contract termination, key money recovery, contract renewal, and restoration but also performs on-site investigations, calculates the ‘Seoul-type Fair Rent,’ and uses objective mediation data to objectively review and mediate dispute cases based on established standards.
A Seoul City official explained, “If rent disputes escalate to lawsuits, relationships between parties worsen and significant time and costs are incurred. However, if an application is made to the Dispute Mediation Committee, related experts analyze the contractual relationship and dispute details to mediate quickly and fairly, reducing wasteful conflicts and social costs.”
Meanwhile, last year, the Commercial Lease Consultation Center received 15,043 consultations, averaging about 63 consultations per day, which is a 2.8% increase compared to 14,630 consultations in 2020. The main types of consultations were rent adjustment (3,091 cases), contract renewal (2,486 cases), contract termination (2,398 cases), interpretation of the Commercial Lease Act (1,465 cases), and key money (1,183 cases).
Seoul City plans to promote awareness and recognition of the Commercial Building Lease Dispute Mediation Committee by conducting a survey to activate the committee and provide more practical help to many citizens, ensuring that landlords and tenants can receive relief and protect their rights through the mediation committee.
Han Young-hee, Seoul City’s Director of Labor, Fairness, and Coexistence Policy, said, “Seoul City operates various channels to resolve conflicts and promote coexistence between landlords and tenants. We will actively support tenant merchants facing difficulties due to the prolonged COVID-19 pandemic to receive practical help through the Commercial Lease Dispute Mediation Committee and the Consultation Center.”
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