Supreme Court Rules "Landlords Obstructing Key Money Recovery Must Compensate"… First Judgment

Court: "Interference with Key Money Recovery Opportunity, Legal Responsibility"

[Asia Economy Reporter Heo Kyung-jun] The Supreme Court has made its first ruling that if a lessor obstructs a lessee's opportunity to recover key money, the lessor must bear liability for damages from the time the lease contract ends.

The Supreme Court's 3rd Division (Presiding Justice Ahn Cheol-sang) announced on the 17th that it ruled partially in favor of tenant A in a damages lawsuit against lessor B, ordering B to pay A approximately 71 million KRW plus delayed damages.

A entered into a contract to lease a commercial property owned by B for six months starting July 2019. Before the contract period ended, in October of the same year, A found another tenant and signed a key money contract, notifying B of this fact, but B refused to enter into a lease contract.

A then contracted with another tenant to receive a total key money of 110 million KRW and informed B, but B again refused to enter into the lease contract. Consequently, A filed a lawsuit against B seeking damages for obstructing the opportunity to recover key money.

The first trial ruled in favor of A, ordering payment of 102 million KRW plus delayed damages. The second trial mostly upheld the first trial's judgment but reduced the damages to approximately 71 million KRW. The second trial court stated, "Even in liability for damages due to obstruction of the opportunity to recover key money, responsibility limitations based on the fundamental principles of damages law can be applied," recognizing only 70% of the established damages liability.

The Supreme Court also ruled in favor of A. The court stated, "The defendant obstructed the plaintiff's opportunity to recover key money, and the lower court's judgment that responsibility limitations based on the fundamental principles of damages law can apply to damages arising from this is appropriate."

However, the court added, "The damages amount that the lessor must bear is regulated not to exceed the key money at the time the lease ends," and "Liability for damages due to obstruction of the opportunity to recover key money is a statutory liability specially stipulated by the Commercial Lease Protection Act regarding its requirements, scope of compensation, and statute of limitations. The obligation to pay damages becomes due on the day the lease ends, and delay liability arises from the following day."

The Supreme Court explained, "This ruling is the first judicial precedent concerning the legal nature of liability for damages due to obstruction of the opportunity to recover key money and the starting point for calculating delayed damages on that compensation obligation."

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