Hello, this is Cheongchul Law Firm.

A tenant who has run a shop for years finds a successor and signs a premium (권리금) agreement, only to see the deal fall apart because the landlord demands from the successor a deposit and monthly rent far above the existing terms. The tenant loses the chance to recover the business value built up over a long period.

Based on the July 2026 Supreme Court of Korea decision introduced in the video, this post explains what counts as a demand for “significantly high” rent and deposit prohibited by the Commercial Building Lease Protection Act Article 10-4 (상가건물 임대차보호법 제10조의4), how far damages can go, and which records a tenant should secure in advance.

[Contents]

1. The case in the video – why a KRW 2.2 billion premium deal collapsed

2. The prohibited demand for “significantly high” rent and deposit

3. The landlord's right to adjust rent, and its limit

4. The Supreme Court's view – confirm the fair rent by appraisal

5. Evidence to secure and the three-year limitation period

1. The case in the video – why a KRW 2.2 billion premium deal collapsed

The case introduced in the video was decided by the Supreme Court of Korea in July 2026. A tenant who had operated a pharmacy for more than 20 years found a new tenant to take over the business and signed a premium agreement for KRW 2.2 billion. The problem was the lease terms the landlord then presented to the new tenant.

• Deposit – from KRW 100 million to a demanded KRW 500 million

• Monthly rent – from KRW 6 million to a demanded KRW 20 million

The premium agreement fell through, and the tenant sued, arguing that the landlord had interfered with the recovery of the premium.

The lower court rejected the claim. It reasoned that, because the fair rent had not been established, the landlord's demand could not be regarded as “significantly high.” The Supreme Court reversed that judgment and remanded the case for a new hearing.

2. The prohibited demand for “significantly high” rent and deposit

Article 10-4(1) of the Act provides that, from six months before the lease term ends until the lease terminates, a landlord must not interfere, by any of the following acts, with the tenant receiving a premium from a prospective new tenant arranged by the tenant.

• Demanding or receiving a premium from the prospective new tenant (item 1)

• Preventing the prospective new tenant from paying the premium to the tenant (item 2)

• Demanding rent and a deposit that are significantly high in light of the taxes and public charges on the commercial building, the rents and deposits of neighboring commercial buildings, and other burdens (item 3)

• Otherwise refusing, without justifiable grounds, to enter into a lease with the prospective new tenant (item 4)

An exception applies where any of the grounds in Article 10(1), on which a landlord may refuse a request for renewal, exists.

The issue in this case is item 3. The yardsticks the provision names are the taxes and public charges on the building, the rents and deposits of neighboring commercial buildings, and other burdens. The question is not merely whether the rent went up, but whether the demanded amount is significantly high in light of the building's burdens and the surrounding market.

Many ask whether a tenant of more than 20 years is still protected. The Supreme Court has held that, even where the total lease period exceeded five years under the law then in force, so that the tenant could no longer exercise the right to request renewal, the landlord still owes the duty under Article 10-4(1) to protect the tenant's opportunity to recover the premium (Supreme Court Decision 2017Da225312, 225329, May 16, 2019). Long occupancy alone does not take a tenant outside this protection.

3. The landlord's right to adjust rent, and its limit

Does this mean a landlord cannot raise the rent? No. Article 11 of the Act allows either party to request an increase or reduction of future rent or deposit where the rent or deposit has become unreasonable because of changes in taxes, public charges or other burdens, or changes in economic conditions. An increase may not exceed the rate set under the Presidential Decree, and no further increase may be requested within one year after an increase.

So a landlord does have a right to adjust rent. Nor is it unlawful merely to offer a new tenant terms higher than before. What the Act prohibits is demanding rent and a deposit that are “significantly high.”

The two are distinguished as follows.

• Request for rent adjustment (Article 11) – a right to request adjustment of future rent or deposit on the ground of changed burdens or economic conditions

• Interference with premium recovery (Article 10-4(1), item 3) – demanding significantly high rent and deposit from the prospective new tenant arranged by the tenant

Having a right to raise rent does not extend to blocking the tenant's opportunity to recover the premium by presenting significantly high terms to the new tenant.

4. The Supreme Court's view – confirm the fair rent by appraisal

The circumstances the Supreme Court noted were as follows.

• Monthly rent – from KRW 6 million to KRW 20 million, about 333% of the existing rent (roughly 3.3 times)

• Converted basis including the deposit – adding 100 times the monthly rent to the deposit, from KRW 700 million to KRW 2.5 billion, about 357% of the existing level

• Market rents – there was no material showing that neighboring rents had risen to that extent

• Negotiation – the landlord held to the high terms with no room for negotiation

In light of these circumstances, the Court found considerable room to regard the landlord's demand as significantly high. It further held that a court should first confirm the fair rent, by appraisal or other means, and then decide whether the demand was significantly high; it must not dismiss the tenant's claim outright merely because the fair rent has not been established.

This matters for tenants. Uncertainty about the fair rent should not immediately be resolved against the tenant; the court should first examine it through appraisal or similar means. Because the case was remanded, however, whether damages are awarded and in what amount will be decided in the renewed proceedings.

The scope of damages is also fixed by statute. A landlord who violates Article 10-4(1) and causes loss to the tenant is liable for damages, and the amount may not exceed the lower of the premium the new tenant agreed to pay the tenant and the premium as of the termination of the lease (Article 10-4(3)). The contract figure does not automatically become the amount of damages; the premium at termination is also at issue, which is why a premium appraisal is important.

As introduced in the video, according to the appraisal conducted in this case, pharmacy premiums are formed at around 20 months of average monthly dispensing fees, and KRW 2.2 billion was a reasonable amount in light of this pharmacy's sales. The location premium was appraised at zero and the business premium at more than KRW 2 billion. The video explains this as showing that the pharmacy's value came not from the site but from the clients, credit and know-how the tenant had built over 20 years.

5. Evidence to secure and the three-year limitation period

Because it is the tenant who must prove that the terms demanded of the new tenant were significantly high, it is advisable to secure the following in advance if a dispute is foreseeable.

• Premium agreement – the terms and amount of the premium agreement signed with the new tenant

• Terms presented by the landlord – text messages, KakaoTalk messages and recordings showing the demanded deposit and rent

• Neighboring rent data – materials showing deposit and rent levels of nearby commercial premises

• Negotiation history – records of requests to adjust the terms and the landlord's responses

• Existing lease agreement – the existing deposit and rent against which the demand is compared

The time limits should also be checked.

• Protected period – the landlord's duty not to interfere covers acts from six months before the lease term ends until the lease terminates. Check whether the new tenant was arranged and the discussions with the landlord took place within this period.

• Limitation period – the claim for damages is extinguished by prescription unless exercised within three years from the date the lease terminated (Article 10-4(4)).

Cheongchul Law Firm handles commercial lease and premium disputes by organizing the landlord's demanded terms, market rents and negotiation history as evidence, and by reviewing premium appraisal and damages claims together. If a premium agreement is about to fall through because of the terms a landlord has presented, it is best to have the matter reviewed before the records are scattered.

For a consultation, please call 02-6959-9936 or use our consultation request page.

This post is provided for general legal information and is not legal advice on any particular matter. Please consult an attorney regarding your specific case.