Seoul City Resolved 1 in 2 'Commercial Lease Disputes' Last Year... Top Dispute: 'Rent'

192 Cases Filed with Commercial Building Lease Dispute Mediation Committee, 25% Increase from 2 Years Ago, Annual Growth Trend
47.9% Settlement Completed, 86% Agreement Achieved Excluding 44.3% Dismissals

[Asia Economy Reporter Lim Cheol-young] Tenant B, who operates a one-room hotel in Guro-gu, spent 4 million won on inspection and repairs at the landlord's request due to water leakage but could not find the exact cause of the leak and applied to Seoul City for confirmation of leakage responsibility. In response, the 'City Commercial Building Lease Dispute Mediation Committee' dispatched a dedicated team to the site and found that the cause of the leak was the landlord after inspection. Furthermore, a recommendation stating that the repair responsibility also lies with the landlord was notified to both the landlord and the tenant.

According to Seoul City on the 24th, a total of 192 cases were received by the 'City Commercial Building Lease Dispute Mediation Committee' last year, and it was announced that agreements between landlords and tenants were reached in 92 cases (48%). The number one cause of disputes was 'rent adjustment.' The 'Dispute Mediation Committee' is composed of a group of 30 experts including lawyers, appraisers, architects, licensed real estate agents, and professors.

The total number of cases received by the Dispute Mediation Committee last year was 192, which is a 7% increase from 180 cases in 2019 and a 25% increase from 154 cases in 2018. Among these, 92 cases (47.9%) were settled, 85 cases (44.3%) were dismissed, and 15 cases (7.8%) failed to settle. Especially, excluding dismissed cases, the mediation commencement cases (107 cases) resulted in an 86% settlement rate.

The number one cause of disputes between tenants and landlords was 'rent adjustment,' accounting for 68 cases (35.4%). This was followed by repair costs (44 cases, 22.9%), key money (26 cases, 13.5%), contract termination (26 cases, 13.5%), restoration to original state (10 cases, 5.2%), and contract renewal (6 cases, 3.1%). Reviewing the dispute mediation applications from 2018 to 2019, 'key money (2018)' and 'contract termination (2019)' had the highest proportions, but last year, due to the prolonged COVID-19 pandemic and decreased tenant sales, applications for 'rent adjustment' surged.

The Dispute Mediation Committee, upon receiving disputes or mediation applications related to rent, visits the site to facilitate dialogue and compromise between tenants and landlords. If necessary, it provides the 'Seoul-type Fair Rent,' based on surrounding commercial area market prices and big data, to support rent reduction adjustments.

Meanwhile, Seoul City also operates the 'Commercial Lease Consultation Center' to prevent disputes that may arise from incorrect interpretations or lack of information related to commercial leases and to provide accurate information to citizens before leasing commercial spaces.

Park Ju-seon, Seoul City's Fair Economy Officer, said, "The Dispute Mediation Committee is meaningful in that it can amicably resolve various disputes related to commercial leases at an early stage through mediation, an alternative dispute resolution (ADR) method, without going to time-consuming and costly court litigation. We will continue to strengthen expertise and public interest and actively support this effort."

This content was produced with the assistance of AI translation services.