Top court stops eviction of insolvent shop tenant citing pandemic

The Supreme Court of Korea (The Supreme Court of Korea)

South Korea's top court has ruled that a shop tenant who couldn't pay the rent during the COVID-19 pandemic should not be evicted, news reports said Wednesday, quoting the court's decision.

The ruling by the Supreme Court in a lawsuit filed by the tenant against the landlord confirmed the lower courts' decisions that the landlord could not get rid of tenants behind on their monthly rent, ruling in favor of the plaintiff. The landlord’s appeal to the Supreme Court was dismissed.

The tenant has leased a store in Seocho-gu, Seoul, owned by the landlord, since July 2018. When the tenant failed to pay the monthly rent on time, the landlord filed a lawsuit against the tenant, demanding eviction in Oct. 2018.

In the mediation, a court called on the tenant to pay the rent on time and stated that the lease contract would be automatically terminated if the total amount of overdue monthly rent and management expenses reached three months under Article 10 Clause 8 of the Commercial Building Lease Protection Act. As the landlord did not receive the rent properly even after the mediation was established, the landlord notified the tenant that they would be evicted from the building.

The tenant filed a lawsuit to prevent the forcible eviction, arguing that Article 10 Clause 9 of the revised Commercial Building Lease Protection Act should be applied, referring to an exceptional clause protecting small business owners affected by the COVID-19 pandemic. It prohibits the overdue amount incurred over six months from Sept. 2020 from being used as the basis for the termination of the contract.

The first and second trials judged that the overdue amount equivalent to six months' rent should be excluded from the total overdue amount. In this way, the overdue amount did not reach the monthly threshold of three months' worth of rent, so the termination conditions were not met.

The landlord appealed against the lower courts' decisions, but the Supreme Court did not accept the claim.

By Lee Jaeeun(jenn@heraldcorp.com)