[Real Estate A to Z] Is It Okay for Tenants to Find New Tenants Themselves?

[Asia Economy Reporter Ryu Taemin] Due to consecutive interest rate hikes, the reversal of the jeonse market has occurred, raising concerns that tenants may not be able to get their jeonse deposits back. This is because as the interest burden on jeonse loans increases, more landlords are unable to find new jeonse tenants.

Typically, many people use the jeonse deposit from their current home to pay the balance on a new home when moving. The problem arises when the current landlord fails to find a new tenant and does not return the jeonse deposit, forcing the tenant to move out without the refund. In such cases, anxious tenants sometimes advertise the property themselves or try to arrange new tenants.

In principle, tenants are not property owners and therefore cannot post real estate listings. The responsibility to find new tenants lies with the landlord. However, if there is prior agreement with the landlord regarding advertising, there is no legal issue. Also, tenants can arrange new tenants, but landlords are not legally liable if they refuse to sign a contract.

If the landlord remains passive and fails to find a new tenant by the end of the jeonse period, the existing tenant can take countermeasures. Real estate specialist lawyer Um Jeongsook of the Lawdo Comprehensive Law Office advised, "Since landlords and tenants have a simultaneous performance relationship, if the landlord refuses to return the jeonse deposit on the grounds that a new tenant has not been found, the tenant is not obligated to vacate the property. The failure to find a new tenant is the landlord's issue and not a valid reason, so tenants should respond by filing a jeonse deposit return lawsuit." A jeonse deposit return lawsuit refers to a lawsuit filed by tenants against landlords who do not return the jeonse deposit.

On the other hand, regarding finding new tenants, commercial lease agreements differ from residential leases. The Commercial Building Lease Protection Act (Sangimbeop) stipulates that tenants must actively find new tenants and present them to the landlord starting six months before the lease term ends. This is to protect the tenant's right to recover key money.

Under Sangimbeop, if the landlord refuses to contract with a new tenant introduced by the existing tenant without justifiable reason, it constitutes a violation of the obligation to protect key money. Justifiable reasons for refusal include when the new tenant lacks the financial ability to pay the deposit or rent, or there is a risk of violating tenant obligations.

A representative case is when the new tenant has no experience in the same industry. Lawyer Um explained, "If the new tenant is inexperienced in the same industry, the landlord may refuse the contract depending on the situation," adding, "According to Article 10, Paragraph 2, Subparagraph 2 of the Commercial Building Lease Protection Act, there is concern that the tenant may fail to pay rent due to operational inexperience."