Terminating a lease for unpaid rent: two periods for housing, three for commercial premises

We are often asked whether a landlord can tell a tenant to leave right away when they have not paid rent for several months. The answer depends on how many payments are overdue, and also on whether it is a home or commercial premises. Rushing to evict without meeting the requirements for termination actually takes longer.

Building leases: two periods

In a building lease, the landlord may terminate the contract when the tenant's unpaid rent reaches the amount of two periods' rent (Article 640 of the Civil Act). Here, two periods do not necessarily mean two consecutive months. It is enough for the total overdue amount to reach two months' rent. Even if payments are missed one month at a time here and there, adding up to two months' rent, that can be grounds for termination.

Commercial premises: three periods

Commercial premises covered by the Commercial Building Lease Protection Act can be terminated only when the overdue amount reaches three periods' rent (Article 10-8 of that Act). A tenant who has ever been in arrears up to an amount equal to three periods' rent can be refused a request to renew the lease (Article 10(1)1 of that Act), and loses protection of the opportunity to recover key money (권리금) (proviso to Article 10-4(1) of that Act). This works differently from termination in that, once it has happened, it remains a ground for refusing renewal even if all the overdue amounts are paid later.

It ends only when notice of termination is received

Arrears alone do not end the contract automatically. It takes effect only when notice of termination is given and reaches the tenant. Since the time of termination must be proved in court, it is common to send it by certified mail (내용증명) setting out the arrears. If the tenant pays the overdue rent before notice and the overdue amount falls below the threshold, termination may no longer be possible, so make sure the date you calculated the arrears and the date of notice line up.

Some contracts include a special term allowing termination after even one missed payment, but an agreement that departs from Article 640 of the Civil Act to the tenant's disadvantage has no effect (Article 652 of the Civil Act). Rather than giving notice of termination based only on a special term, please first check whether the statutory requirements are met.

A judgment that settles the deposit at the same time

Even after the lease ends, if the landlord does not return the deposit, the tenant can refuse to vacate by asserting simultaneous performance. That is why, in eviction suits, landlords often seek a judgment ordering the tenant to hand over the building in exchange for payment of the deposit minus overdue rent, maintenance fees and an amount equivalent to rent until the premises are vacated.

Once the eviction judgment becomes final or is declared provisionally enforceable, you apply to a court enforcement officer for enforcement of delivery. You should also work out in advance the cost and schedule for dealing with belongings left on the day of enforcement, and if the tenant leaves their belongings and cuts off contact, opening the door or removing the belongings on your own can lead to criminal issues.

If possession passes to someone else during the lawsuit, enforcement may be blocked even after you win, so the proper order is to fix the occupant with a provisional injunction against transfer of possession (점유이전금지가처분) before filing. Also factor in that the longer the arrears continue, the less room there is to cover them with the deposit.