InvestNot yet confirmed elsewhere1 publisher2 min readPublished
Korea's Supreme Court makes a landlord pay for re-leasing a home he said he needed for himself
Korea's Supreme Court upheld a 30.8 million won award against a landlord who refused a renewal to move in, then re-leased the home. Using the owner-occupancy exception to reset a jeonse deposit now carries a damages bill and a duty to prove cause.
The Investor · Invest desk
Timeline: Sept 2020, tenant A's jeonse lease starts at a 660 million won deposit. May 2022, A seeks renewal; B refuses, saying he will move in. Sept 2022, B registers residency. Feb 2023, B moves in. April 2024, B moves out and re-leases the home for two years at 820 million won.
- 2020Tenant A's jeonse lease starts, with a 660 million won deposit, claim 2
- 2022A seeks renewal; B refuses, saying he will move in himself, claim 3
- 2022B registers residency at the apartment, claim 4
- 2023B moves in, claim 4
- 2024B moves out and re-leases the home for two years at 820 million won, claim 5
| Date | Event | Claim |
|---|---|---|
| September 2020 | Tenant A's jeonse lease starts, with a 660 million won deposit | 2 |
| May 2022 | A seeks renewal; B refuses, saying he will move in himself | 3 |
| September 2022 | B registers residency at the apartment | 4 |
| February 2023 | B moves in | 4 |
| April 2024 | B moves out and re-leases the home for two years at 820 million won | 5 |
What happened
- The Housing Lease Protection Act makes a landlord liable to a former tenant if he forces the tenant out by claiming he will live in the home, then takes a new tenant without justifiable cause.
- B moved to another apartment in April 2024 and re-leased the Seodaemun home to a third party the same day, on a two-year term.
- The first-instance court sided with B, finding the six tenants' deposit demands hard to foresee and the re-lease to raise about 690 million won in repayments unavoidable.
- The appellate court reversed, saying the six repayment obligations already existed when B refused the renewal and their expiry dates were set, so B could readily anticipate them.
Why it matters
- cost The exception now costs a damages award plus the risk of losing a burden-of-proof fight, so it pays only if the funding from a higher deposit outruns the award.
- decision A landlord with several jeonse leases maturing has to line up cash, a loan or a sale before refusing a renewal, because tight lending and a capital gains bill on a sale were both rejected as excuses.
- exposure Moving in does not close the exposure: B lived in the home about 14 months and was still liable once he re-leased it.
- contradiction Two courts read the same repayment dates in opposite ways, so later cases will turn on what a landlord's lease calendar showed on the day he refused.
The award is small next to what the re-lease raised. The new tenant paid a deposit of 820 million won against the old tenant's 660 million [5][2], a gap of 160 million won [16]. The 30,799,992 won the appellate court ordered B to pay [9] is about 19% of it [17]. A jeonse deposit is a lump sum paid instead of monthly rent [15]. It has to be returned, as six tenants in B's other properties were demanding at once [7]. So the extra 160 million won is funding for the new two-year term [5], not income. Spread over those two years, the award costs about 9.6% a year on that funding [18] (a simple rate, not compounded). A landlord who could reliably earn more than that on the money would come out ahead after paying. We think that is a narrow group.
B's stated reason was cash. The first-instance court put the repayments at about 690 million won [8]. The new 820 million won deposit covered that with 130 million won to spare [19]. The reports do not say how the court computed the damages or whether the higher deposit was B's aim, so the 19% is one data point and the reset reading is our inference from the numbers.
The Supreme Court set a two-part test and put the proof on the landlord. "For 'justifiable cause' under Article 6-3, Paragraph 5 of the Housing Lease Protection Act to be recognized, the landlord must have leased the subject home to a third party because of circumstances that could not have been foreseen at the time of the renewal refusal," the court said [12]. Its second condition: "leasing the subject home to a third party must have been unavoidable" [12]. "The burden of proving that justifiable cause existed rests with the landlord," it said [13]. B lost on the first part, foreseeability [10]. A Supreme Court official said this is the first ruling on the meaning of "justifiable cause" under that article [14], so the test has no earlier Supreme Court version to compete with.
We think the burden of proof will turn out to be a larger cost than the award. Foreseeability is judged as of the day of refusal [12]. That leaves a landlord one moment to fix his position: before he refuses. He can line up cash or credit for deposits that fall due, or, when he cannot, decline to use the exception. That view is wrong if courts begin to accept a lender's refusal as unforeseeable. The burden would then be easy to meet, and landlords could treat the award as a price worth paying.
What to watch
- Lower-court damages awards under Article 6-3, Paragraph 5: whether they land near 19% of the deposit gap or well away from it.
- Whether any court accepts a landlord's claim that lenders refused credit as an unforeseeable event, since the appellate court rejected that argument here.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence62
- Adoption
- Insufficient
- Hype gap−10
- Incentives
- Insufficient
- Confidence60
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
The Supreme Court's Second Division, presided over by Justice Kwon Young-joon, upheld a lower court ruling in favor of tenant A in a damages suit against landlord B.
- [2]
A rented an apartment in Seoul's Seodaemun District from September 2020 to September 2022 under a jeonse arrangement with a deposit of 660 million won.
- [3]
In May 2022, ahead of lease expiration, A notified the landlord of an intention to renew, but B told A to vacate, saying B would move in personally.
- [4]
B registered residency at the apartment in September 2022, moved in in February 2023, and lived there before moving to another apartment in April 2024.
- [5]
On the day B moved to another apartment in April 2024, B re-leased the original apartment to a third party for a two-year term with a deposit of 820 million won.
- [6]
The Housing Lease Protection Act holds a landlord liable for damages to a former tenant if the landlord forces the tenant out by claiming the landlord will live in the home, then takes in a new tenant without justifiable cause.
- [7]
B argued that six tenants in other properties B owned had simultaneously demanded return of their deposits due to circumstances that could not have been anticipated at the time of the renewal refusal, that bank lending was hard to obtain, and that re-leasing the apartment was unavoidable to raise the funds.
- [8]
The court of first instance sided with B, finding the deposit-return demands from tenants in B's other properties difficult to foresee at the time of the renewal refusal and that re-leasing the apartment to raise about 690 million won in repayments over a short period was unavoidable.
- [9]
The appellate court ordered B to pay A 30,799,992 won plus delayed damages, holding that being placed in financially urgent circumstances does not by itself establish justifiable cause.
- [10]
The appellate court said the obligations to return deposits on the six other units already existed when B declined the renewal and their expiration dates were already set, so B could have readily anticipated having to return the deposits.
- [11]
The appellate court found that changes in property market conditions or lending rules falling short of B's expectations could not be treated as unforeseeable, and rejected B's arguments that loans were difficult to obtain and that selling the apartment would have incurred a substantial capital gains tax.
- [12]
"For 'justifiable cause' under Article 6-3, Paragraph 5 of the Housing Lease Protection Act to be recognized, the landlord must have leased the subject home to a third party because of circumstances that could not have been foreseen at the time of the renewal refusal, and leasing the subject home to a third party must have been unavoidable," the court said.
- [13]
"The burden of proving that justifiable cause existed rests with the landlord."
- [14]
A Supreme Court official said the decision marks the first ruling on the meaning of "justifiable cause" under Article 6-3, Paragraph 5 of the Housing Lease Protection Act.
- [15]
Jeonse is a Korean lease system requiring a large lump-sum deposit instead of monthly rent.
- [16]
The new deposit exceeded the old deposit by 160 million won.
- [17]
The 30,799,992 won award is about 19% (19.25%) of the 160 million won deposit gap.
- [18]
Spread over the two-year term of the new lease, the award equals about 9.6% a year (simple, uncompounded) of the 160 million won extra deposit.
- [19]
The 820 million won new deposit exceeded the roughly 690 million won in repayments by about 130 million won.
- [20]
B lived in the apartment for about 14 months, from February 2023 to April 2024.
Sources
1 independent publisher whose own reporting we read for this story.
- en.sedaily.comLandlord Must Pay Tenant After Re-Leasing Home Claimed for Own Use
1 article · October 11, 2026
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Entities
- Supreme Court of KoreaFollow
- Housing Lease Protection ActFollow
- Seoul Economic Daily (en.sedaily.com)Follow