COVID-19 Gathering Restriction Measures Make Contract Termination Easier for Commercial Tenants Who Closed Businesses... Revised Bill Passed at Cabinet Meeting

The demolished signboards of shops in the Myeongdong area that closed due to the impact of the COVID-19 pandemic.

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] Commercial building tenants who suffered damage due to gathering restrictions and bans caused by COVID-19 will be able to terminate their contracts citing a change in circumstances.

The Ministry of Justice announced that the partial amendment to the Commercial Building Lease Protection Act containing this provision passed the Cabinet meeting on the 17th.

The amendment allows tenants who have been subject to gathering bans or restrictions for more than three months under the Infectious Disease Control and Prevention Act and have filed for business closure due to significant changes in economic circumstances to terminate their lease contracts.

Previously, the Supreme Court strictly applied the principle of change of circumstances to lease contract terminations, but through this legal amendment, a clear provision recognizing the termination rights of commercial tenants who closed their businesses due to gathering restrictions and bans caused by COVID-19 has been newly established.

The effect of contract termination takes place three months after the landlord is notified of the termination. According to the supplementary provisions, the amended law will be enforced immediately from the date of promulgation and will also apply to commercial lease contracts concluded before the enforcement of the amended law.

The Ministry of Justice stated that it plans to submit the amended bill to the National Assembly in the second half of this year.

Earlier, in September last year, the Ministry of Justice added "changes in economic circumstances due to a first-class infectious disease under the Infectious Disease Control and Prevention Act such as COVID-19" as grounds for commercial building tenants to request a reduction in rent or deposit through a legal amendment.

A Ministry of Justice official said, "With this legal amendment, we expect to protect commercial tenants whose right to livelihood is threatened by unavoidable reasons amid the unprecedented economic crisis caused by COVID-19, and to promote coexistence through shared pain between landlords and tenants."

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