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"I've paid off all the arrears — can the landlord still terminate?" This is the question we hear most often in lease disputes. The short answer is that paying up does not always save the lease. Rent arrears are not simply a debt to be cleared later; once they reach a statutory threshold, a right of termination arises in the landlord's hands. This article explains that threshold and what late payment actually achieves.

[Contents]

1. Three months for commercial leases, two for residential

2. Not "three consecutive months" but "three months' worth in total"

3. Paying late may not extinguish the right to terminate

4. A trap for landlords — accepting payment silently

5. Arrears affect renewal and key money, not just termination

6. Checkpoints for landlords and tenants

1. Three months for commercial leases, two for residential

Article 10-8 of the Commercial Building Lease Protection Act provides that where a tenant's rent arrears reach the amount of three months' rent, the landlord may terminate the lease.

Residential leases are governed instead by Article 640 of the Civil Act, under which the landlord may terminate once arrears reach two months' rent. The same "missed rent" therefore carries a different threshold: three months for commercial premises, two for housing.

Importantly, "three months" refers to an amount, not a number of missed payments. If the monthly rent is KRW 3 million, the threshold is reached when total arrears reach KRW 9 million.

2. Not "three consecutive months" but "three months' worth in total"

This is the most common misunderstanding. Many assume termination requires three consecutive missed months, but the statute speaks of arrears "reaching the amount of three months' rent".

In other words, intermittent arrears count, provided the cumulative total reaches three months' worth. Leaving one month unpaid in January, another in May and another in September brings the tenant to the threshold even though no two are consecutive.

For tenants, the assumption that "missing the odd month is fine" is the most dangerous one. For landlords, arrears must be tracked as a running unpaid balance so that the moment the right arises is not missed.

3. Paying late may not extinguish the right to terminate

Here is the decisive issue. If a tenant, on learning that proceedings have begun, hurriedly pays enough to bring arrears below three months' rent, is termination avoided?

In its decision of 24 June 2026 (Case No. 2024Da320215), the Korean Supreme Court held that the right of termination arises at the moment arrears reach three months' rent. Arrears are not recalculated as at the date the notice of termination reaches the tenant.

Accordingly, even where the tenant pays part of the arrears without the landlord's agreement before the complaint is served, bringing the balance below the threshold, the right of termination that has already arisen survives absent special circumstances. The tenant's appeal in that case was dismissed.

The lesson for tenants is clear: "I can settle it all later" is not a safe assumption. Once arrears touch the threshold, the fate of the lease is already in the landlord's hands.

4. A trap for landlords — accepting payment silently

Landlords face their own risk. In the same decision, the Court noted that the landlord could not be regarded as having accepted the arrears without objection.

Read the other way, a landlord who quietly accepts overdue rent may be treated as having withdrawn the intention to terminate. A hard-won right of termination can be undermined by a single silent receipt.

So where a tenant transfers money during proceedings, it should not simply be accepted. Two points should be recorded clearly, ideally by certified mail:

1. that the intention to terminate remains unchanged; and

2. that the sum received is taken as a payment for use on the premise that the lease has been terminated.

5. Arrears affect renewal and key money, not just termination

The consequences do not end with termination.

First, Article 10(1)1 of the Commercial Building Lease Protection Act allows a landlord to refuse a renewal request where the tenant has at any point allowed arrears to reach three months' rent. The statutory language turns on the fact of having been in arrears — so even a tenant who has since paid in full remains exposed.

Second, the same ground removes protection of the opportunity to recover key money. The Act prohibits landlords from obstructing key money recovery, but disapplies that protection where a ground for refusing renewal exists.

In short, a few months of unpaid rent can cost a tenant both the premises and the entire key money. That is why rent management is not merely a cash-flow question for commercial tenants.

6. Checkpoints for landlords and tenants

For landlords

1. Track arrears as a cumulative monthly unpaid balance and pinpoint when the threshold was reached.

2. Give notice of termination by a means that proves delivery, such as certified mail.

3. If money arrives during proceedings, immediately state in writing the basis on which it is received and that termination stands.

For tenants

1. Open discussions once arrears approach two months' worth.

2. Where arrears are unavoidable, agree a repayment plan with the landlord in writing.

3. If renewal or key money recovery is planned, review the history of arrears first.

Talk to Cheongchul Law Firm about commercial lease disputes

Rent arrears cases turn on timing — when the threshold was reached, when notice of termination was delivered, and how later payments were handled. The initial response cascades into possession, renewal and key money outcomes.

Cheongchul Law Firm handles the full range of lease disputes: termination and possession proceedings for commercial and residential leases, claims for arrears and unjust enrichment, renewal refusal disputes, and damages for obstruction of key money recovery. If you need to respond to a rent arrears problem, please contact us through our consultation booking page.

This article is general legal information, not legal advice on a specific matter. Whether a right of termination has arisen or lapsed, and whether a ground for refusing renewal exists, depend on the terms of the lease, the circumstances of the arrears and the parties' conduct. Please consult a lawyer.