SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
6.14 Tenant’s Ability to Alter and Improve Real Estate Under the Civil Code, a tenant is basically per - mitted to implement improvement measures that objectively increase the value of the leased real estate. However, the tenant is not allowed to alter or improve the real estate against the landlord’s objection. 6.15 Specific Regulations Special laws (as opposed to the general provi - sions of the Civil Code) do exist, such as: • the HLPA, which applies to residential leases; and • the CBLPA, which applies to commercial leases. Parties cannot contract around clauses con - tained in these special laws to the detriment of tenants (ie, lease agreements cannot contain provisions that are less favourable to tenants than as set forth in the relevant special law). As described in 6.3 Regulation of Rents or Lease Terms , legislative amendments were made to the CBLPA in 2020 to mitigate the impact of the COVID-19 pandemic. 6.16 Effect of the Tenant’s Insolvency A lease term that stipulates the tenant’s insolven - cy as a cause of termination is invalid because it is inconsistent with the DRBA, which provides that the insolvent company has the right to elect either to terminate or keep the contract effective. 6.17 Right to Occupy After Termination or Expiry of a Lease A tenant has the right to continue to occupy the leased real estate until the security deposit is returned by the landlord, even after the expira - tion of the lease. Therefore, the landlord needs
to be prepared to return the security deposit to the tenant on the date originally agreed. 6.18 Right to Assign a Leasehold Interest Tenants and sub-tenants may assign their lease - hold interest with the consent of the landlord; however, it is extremely rare in practice for such consent to be granted by the lessors. 6.19 Right to Terminate a Lease A common reason for a landlord to terminate a lease is a tenant’s failure to make timely rent payments, or the tenant’s alteration of the real estate without approval from the landlord. On the other hand, a common reason for a tenant to terminate a lease is the landlord’s transfer of the real estate to a third party. In such cases, the landlord may negotiate with the tenant to insert a clause in the lease agreement permitting the landlord to freely transfer the real estate as long as the transferee (ie, the third party) agrees to accept all the terms and conditions of the lease agreement. 6.20 Registration Requirements There are no registration requirements or par - ticular execution formalities for leases. However, in order for the tenants to protect their leasehold interest from third parties, tenants are advised to record their leasehold interest in the registry (in practice, and in many cases, leases are recorded in the real estate registry). In addition, the tenant must pay a recording tax of 0.24% (inclusive of surtax) of the monthly rent payable to the land - lord and a recording fee of KRW15,000 for the real property. 6.21 Forced Eviction A tenant may be forced to leave if they are late paying rent, but the CBLPA stipulates that the tenant cannot be forced to leave until the delayed
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