Hello, I am Attorney Eom Sang-yoon of Cheongchul Law Firm.

Article 1026, Item 1 of the Civil Act (민법 제1026조 제1호) provides that where an heir performs an "act of disposal" with respect to the inherited estate, the heir is deemed to have made an unqualified acceptance of the inheritance. As a result, an heir who disposes of estate property without realizing this may end up unconditionally assuming even the decedent's debts.

In particular, where the inherited estate includes leased property, the tenant will ordinarily demand that a new lease agreement be executed in order to secure the claim for the return of the lease deposit, and co-heirs are often placed in a position where they can hardly refuse. If a contract concluded in such circumstances were immediately treated as an "act of disposal" over the inherited estate, the co-heirs would face the grave consequence of bearing unlimited liability, out of their own personal assets, for the entirety of the inherited debts.

Against this backdrop, in its Decision of May 8, 2026, Case No. 2025 Da 220329, the Supreme Court held that where co-heirs conclude a lease agreement with an existing tenant and the substance of that agreement amounts to an "act of management" of the inherited estate, it cannot be regarded as an "act of disposal" under Article 1026, Item 1 of the Civil Act — thereby setting out an important standard of judgment. Today I will review the key holdings of that decision and its practical implications.

Statutory Unqualified Acceptance under Article 1026, Item 1 of the Civil Act and the Established Doctrine

Article 1026 of the Civil Act provides that "in any of the following cases, an heir shall be deemed to have made an unqualified acceptance," and Item 1 thereof designates "where an heir has performed an act of disposal with respect to the inherited estate." The legislative purposes of this provision lie in the following: (i) an heir who disposes of estate property can ordinarily be presumed to intend an unqualified acceptance of the inheritance; (ii) permitting a qualified acceptance or renunciation after such disposal risks inflicting unforeseen loss on estate creditors or on co-heirs and next-in-line heirs; and (iii) the need to protect third parties who relied on the heir's act of disposal.

As to the meaning of an "act of disposal" here, it is settled doctrine that the term covers (i) factual acts that alter the condition or nature of the property and (ii) juristic acts that bring about a change in the property, while acts of preservation and management of the inherited estate do not fall within it. This is because Article 1022 of the Civil Act imposes on heirs a duty to manage the inherited estate; if even acts performed in discharge of that duty were treated as acts of disposal, heirs would come to avoid performing the management duty itself, making preservation of the estate difficult and, in turn, harming the interests of estate creditors and other interested parties.

The difficulty is that, in any given case, distinguishing whether a particular act of the heir is an "act of disposal" or an "act of management" is by no means easy. In particular, where the inherited estate includes leased property, cases in which co-heirs, at the tenant's request, conclude an agreement extending only the lease term on terms identical to the existing lease arise very frequently in practice. Whether such an agreement is to be evaluated as an "act of disposal" that nullifies the effect of a qualified acceptance was the core issue in this case.

The Supreme Court's Judgment in Case No. 2025 Da 220329

A concluded a lease agreement with B over real property and paid the lease deposit, after which B, the lessor, passed away. C and the other co-heirs of B concluded with A a lease agreement extending only the lease term by two years, on terms in which the leased property, the lease deposit, and the rent were all identical to the existing lease agreement. The contract expressly stated that this lease agreement was an extension of the existing lease agreement and that C and the other co-heirs would "succeed to as is" the obligation to return the lease deposit. Meanwhile, C had obtained a family court ruling accepting a report of qualified acceptance of the inheritance. Thereafter, A brought suit against C and the others for the return of the lease deposit, arguing that C's conclusion of the lease agreement constituted an "act of disposal with respect to the inherited estate" under Article 1026, Item 1 of the Civil Act and had therefore extinguished the effect of the qualified acceptance.

The lower court held that the lease agreement constituted an act of disposal with respect to the inherited estate, but the Supreme Court reversed and remanded on the following grounds.

First, the Supreme Court reaffirmed the general doctrine on the interpretation of juristic acts, emphasizing in particular that where the contractual content asserted by one party would impose a grave liability on the other party, the contract must be interpreted all the more strictly. This is understood to mean that, in light of the grave legal consequence that accepting A's assertion and treating the lease agreement as an act of disposal would cost C the effect of the qualified acceptance and leave C bearing unlimited liability out of personal assets for the entirety of the inherited debts, the substance of the contract must be analyzed strictly.

On that interpretive premise, the Supreme Court considered the following factors as a whole: (i) the lease agreement was concluded by all of B's co-heirs as joint lessors, and the leased property, the lease deposit, and the rent were all identical to the existing lease agreement, with only the lease term extended by two years; (ii) the contract itself stated that the lease agreement was an extension of the existing lease agreement and that C and the others would "succeed to as is" the obligation to return the lease deposit; and (iii) the conclusion of the lease agreement with A by C and all of B's other co-heirs appears to have been no more than a response to A's request made in order to extend a jeonse loan. On this basis, the Court held that it is difficult to regard this as C having expressed an intention to make an unqualified acceptance of the inheritance from B, or an intention to bear the lease deposit return obligation as C's own personal debt.

Ultimately, the Supreme Court held that the act of concluding the lease agreement was not an "act of disposal with respect to the inherited estate" under Article 1026, Item 1 of the Civil Act, but rather an act performed in discharge of the estate management duty borne by the heir under Article 1022 of the Civil Act — that is, an act of management. This clarifies the view that where, in response to the tenant's request, a contract is concluded for the purpose of maintaining the existing lease relationship without substantive change, it is not an act that alters the condition of the inherited estate or generates a new change in property, but merely an act of managing and maintaining a lease relationship already established over the inherited estate.

Practical Implications

The decision offers the following important implications for inheritance and qualified acceptance practice.

First, from the standpoint of co-heirs considering a qualified acceptance or a renunciation of inheritance, it has now been clearly confirmed that where the inherited estate includes leased property, concluding an agreement to renew or extend the lease at the tenant's request does not immediately extinguish the effect of a qualified acceptance, so long as the substance of that agreement amounts to an act of management. That conclusion, however, is confined to cases where (i) the principal terms such as the leased property, the deposit, and the rent are maintained identically to before; (ii) the purpose of the contract lies in maintaining the existing lease relationship rather than in a new change of property; and (iii) the wording of the contract clearly records that purpose — a point that warrants careful attention. If the lease deposit is substantially increased, if substantive changes are made to the lease terms, or if the contract expressly states that the heir assumes a new lease deposit return obligation as the heir's own personal debt, there remains room to evaluate the act as an "act of disposal." It is therefore safest to obtain a prior review before concluding the contract.

Next, from the tenant's standpoint, where a tenant seeks to renew or extend a lease with co-heirs after the lessor's death, it is necessary to ascertain in advance (i) whether the wording of the new contract is confined to the purpose of managing and maintaining the existing lease relationship, and (ii) whether the co-heirs are in the process of filing a qualified acceptance or a renunciation of inheritance. In particular, where a renewal contract concluded at the tenant's request is later evaluated as an act of management, the tenant will still be able to recover the lease deposit only within the scope of the inherited estate. For the safe recovery of the lease deposit, it is therefore necessary to also consider separate means of securing the claim, such as a lease deposit return guarantee (jeonse deposit return guarantee).

That said, this decision does no more than set out a general standard for distinguishing acts of management from acts of disposal; in any individual case, the final determination can only be made by comprehensively considering the specific content of the contract, the circumstances of its conclusion, and the intentions of the parties. Because it is in most cases difficult to determine in advance and with precision how various juristic acts concerning the inherited estate will later affect the validity of a qualified acceptance, an heir who is seriously considering a qualified acceptance or a renunciation of inheritance would be best advised, before performing any significant juristic act concerning the inherited estate, to obtain expert assistance and have the legal character of that act clearly diagnosed in advance.