Supreme Court: Landlord Must Prove When Refusing Lease Renewal Due to "Actual Residence" Reason

The Supreme Court has issued its first ruling that a housing landlord must prove that they intend to 'actually reside' in the property in order to refuse a tenant's request for contract renewal on the grounds of 'actual residence.'

According to the legal community on the 26th, the Supreme Court's Second Division (Presiding Justice Min Yu-sook) overturned the appellate court's ruling that had favored apartment owner Mr. A in a building delivery claim lawsuit against a tenant couple, and remanded the case to the Seoul Central District Court.

Supreme Court, Seocho-dong, Seoul.

The court stated, "To refuse a renewal request on the grounds of actual residence, Mr. A must prove this, but there is room for doubt as to whether it can be generally accepted."

The court added, "Nevertheless, the appellate court did not sufficiently examine these circumstances and judged that the plaintiff's intention to actually reside was plausible and that no acts clearly contradicting such intention were found, thus deeming the refusal of renewal lawful. This appellate court ruling misapplied the legal principles regarding the burden of proof under Article 6-3, Paragraph 1, Note 8 of the Housing Lease Protection Act and failed to conduct necessary examination, which affected the judgment, hence the reason for reversal and remand."

Article 6-3, Paragraph 1 of the Housing Lease Protection Act enumerates exceptional cases where a landlord can refuse a tenant's contract renewal request, and Item 8 includes "cases where the landlord (including the landlord's direct ascendants or descendants) intends to actually reside in the leased property" as grounds for refusal.

In January 2019, Mr. A signed a lease contract to rent an apartment in Seocho-gu, Seoul, to the defendant couple for two years until March 2021, with a deposit of 630 million KRW.

At that time, Mr. A was living with his children in his own house in Jeju Island to send them to an international school, and Mr. A's husband was residing in another apartment he owned in Seoul.

In December 2020, Mr. A notified that he would not renew the lease, stating, "Due to business difficulties caused by COVID-19, I plan to sell another apartment and move into the rented apartment."

In response, the tenants sent a certified letter exercising their right to request contract renewal under the Housing Lease Protection Act, and Mr. A responded with a lawsuit demanding they vacate the property.

The contract renewal claim right allows tenants to request a renewal from the landlord between six months and one month before the lease contract ends.

Mr. A argued that he planned to have his elderly parents reside in the property, which falls under the renewal refusal grounds stipulated by the Housing Lease Protection Act (actual residence by the landlord or their direct ascendants/descendants).

However, the tenants countered that Mr. A initially claimed that direct family members would move in but changed his story to actual residence by elderly parents after the lawsuit was filed, thus abusing the right to refuse renewal.

The first and second trial courts ruled in favor of Mr. A.

The courts held that "even if the actual resident changes, it cannot be considered that the refusal of renewal suddenly becomes unlawful."

However, the Supreme Court's judgment differed.

The court first stated, "The burden of proof that the landlord intends to actually reside in the leased property lies with the landlord."

The court explained, "The existence of the 'intention to actually reside' cannot be immediately recognized merely because the landlord expresses such intention. However, considering the nature of this ground for refusal as a plan regarding the landlord's future intentions, if circumstances exist that generally allow acceptance that the landlord's intention is genuine rather than fabricated, the existence of such intention can be affirmed."

The court presented criteria for judging the landlord's 'intention to actually reside.'

The court stated, "The landlord's 'intention to actually reside' can be judged comprehensively by considering various factors such as the landlord's housing situation, the social environment including workplaces or schools of the landlord or their family, the circumstances leading to the landlord's intention to reside, the landlord's situation before and after refusing the lease renewal request, the presence or absence of conduct contradicting or inconsistent with the landlord's actual residence intention, whether such conduct damages the tenant's legitimate trust formed regarding the contract renewal, and whether preparations for moving from the existing residence to the leased property have been made and their details."

The court pointed out that Mr. A initially said he, his husband, and children would move into the rented apartment, then changed the claim in the complaint to himself or his parents residing there, and later in a written preparation submitted during the lawsuit, claimed that his husband would move into the apartment while his parents would live in another nearby apartment but had no choice but to have his parents live together due to the tenants' renewal request, showing inconsistent positions.

The court stated, "The plaintiff has made different claims regarding the reason for actually residing in the apartment in question, but has not provided a reasonable explanation for such changes," and "There is no reason to believe that the plaintiff and his family had circumstances warranting refusal of the lease renewal and residence in the apartment."

Furthermore, "Considering these circumstances, the plaintiff's claims alone leave room for doubt as to whether the plaintiff or his parents' intention to actually reside in the apartment is generally acceptable as genuine," and "Therefore, the appellate court should have comprehensively examined not only these circumstances but also whether there were other circumstances regarding the plaintiff or his parents' intention to actually reside in the apartment, and judged whether such intention was genuinely acceptable."

Until now, lower courts have been divided on how to determine whether a landlord has the 'intention to actually reside' when a tenant claims that the landlord refused renewal without such intention after refusing renewal on the grounds of actual residence.

A Supreme Court official stated, "This ruling explicitly clarifies for the first time the burden of proof on the landlord to prove that they intend to actually reside in the leased property and the method of judging whether the landlord has such intention."

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