Right of refusal of contract renewal for Actual Residence by a New Lessor
Authors:   The Institute of Legal Studies, Kyunghee University, Lee O-Hyeon , Kim Dae-Hee 
Published: January 2023

As housing costs rise and the housing market becomes unstable, there is an accelerated transition from Chonse to monthly rent, causing housing instability and increasing the burden of housing costs on lessees. By ensuring the lessee's right to renew the lease, the lease guarantee period has been increased from two years to four years. Increases in rent or security deposits upon contract renewal are limited to 1/20 of the agreed amount. Consequently, the lessor has a great deal of complaints.
In the lessee's situation, Chonse is hard to find, and the Chonse price increases sharply. The lessor also finds it difficult to raise the lease fee. Moreover, even after the lessor purchases the house, the lessor has difficulty moving in due to the lessee's application for contract renewal.
The lessor also suffers greatly. The timely sale of a home as needed, the completion of residence requirements that are exempt from transfer taxes, and the retroactive application of two rental laws (the 「Housing Lease Protection Act」 and Real Estate Transaction Reporting Act). Therefore, the lessor's property rights are being violated. Both parties express concern about tax burden due to actual transaction report of Chonse and monthly fee.
It may not be possible for the assignee to reside in their newly acquired home if the lessee residing there applies to renew their lease to the lessor (a seller) prior to registration of ownership transfer.
In accordance with current law, the transfer of ownership takes effect only after registration, and the assignee inherits the status of the lessor. Due to this, the assignee of the leased house had the right to refuse contract renewals.
The lessor's right to refuse renewal does not expire, even if ownership of the leased object changes after the application right to renewal is exercised. The lessor can also refuse to renew the lease. Consequently, the lessor is legally and effectively entitled to refuse renewal within the period stipulated by law. The lessor can also exercise the renewal refusal right of the previous lessor. The lease contract will thus be terminated in the non-renewal state during the original contract expiry period.
The amended 「Housing Lease Protection Act」 led to many disputes over the rights of lessees to renew their leases. A typical situation is when a lessee exercises their right to renew their lease where the new lessor acquires ownership of the house from the previous lessor, and on the basis of the actual residence, the new lessor rejects the lessee's renewal application.
Although the purpose of the amendment of the 「Housing Lease Protection Act」 was to protect the lessee, the only effect was to increase the pain of the lessee as the Chonse price increased at once for four years. The amended 「Housing Lease Protection Act」 has only been enacted recently, and a number of lower court decisions have been issued, but This was first Supreme Court ruling. If there is a legitimate reason under the「Housing Lease Protection Act」After exercising the Application right of contract renewal, within the renewal refusal period of the old lessor the transferee who has succeeded to the leasehold status must be able to exercise the right of refusal of contract renewal for the purpose of Actually Reside.
A full review of the 「Housing Lease Protection Act」 is also necessary in the future, as well as a discussion about the need for a 「Housing Lease Protection Act」