Civil Litigation

Commercial Premium (Key Money) Litigation Lawyer

Commercial Premium (Key Money) Litigation Lawyer | What counts as a protected claim, and how to prove your loss

Summary

Commercial "premium" (권리금) is the value a tenant has built up in a location — customer base, business know-how, fixtures — that a new tenant is normally willing to pay for. Korean law does not guarantee a tenant will recover this money; it only obliges the landlord not to unfairly interfere with the tenant's attempt to collect it from an incoming tenant, within a defined window before the lease ends (상가건물 임대차보호법 제10조의4). Disputes usually arise when the landlord refuses to meet a prospective new tenant, demands an unreasonable rent hike to sabotage the deal, or claims an exemption that may not actually apply.

Civil · Commercial Lease Governing law: Commercial Building Lease Protection Act Damages claim Landlord-tenant dispute

Commercial Premium (Key Money) Litigation | When does a landlord's conduct become an actionable premium claim?

A premium dispute is not simply 'the landlord didn't pay me key money.' It is built on specific statutory duties and exceptions. The cards below outline the conditions courts actually look at.

Art. 10-4(1)

The landlord's duty not to obstruct
From three months before the lease term ends until the term actually ends, the landlord generally may not refuse to meet a new tenant the current tenant has arranged, demand rent or key money far above market rate from that new tenant, or otherwise obstruct the transfer of premium without justified reason (상가건물 임대차보호법 제10조의4 제1항). Whether a landlord's specific act — a sudden rent demand, silence, refusal to sign — counts as 'obstruction' is the central factual dispute in most cases.

Art. 10-4(2)

Recognized exceptions where liability doesn't attach
The landlord is not liable if the incoming tenant cannot pay the rent the current tenant proposes, is deemed unfit to perform the lease (e.g. serious financial risk), or if the landlord takes back the space to run a similar business in good faith. The landlord's own reasons for refusing the new tenant are frequently litigated under this provision.

Art. 10-5

Categorical exclusions
Premium protection does not apply to certain large retail spaces, spaces inside traditional markets already covered by separate rules, or leases of state/public property, among other listed exclusions. Confirming whether the leased premises falls into an excluded category is often the first thing to check before filing.

Art. 10-4(3)

The 3-year damages window
A tenant's claim for damages against the landlord's obstruction must be brought within 3 years from the end of the lease; missing this window generally bars the claim (상가건물 임대차보호법 제10조의4 제3항). This is separate from, and shorter than, general contract limitation periods, so timing needs to be checked carefully.

What this protection does NOT do

The statute does not force the landlord to pay premium directly, and it does not guarantee any particular tenant will actually be found. It only creates liability when the landlord's own conduct prevents the current tenant from collecting premium from a tenant the current tenant found. If no substitute tenant ever came forward, there is usually no claim regardless of how the lease ended.

Commercial Premium (Key Money) Litigation | What actually counts as landlord obstruction

Most disputes turn on whether the landlord's conduct crosses the line from ordinary lease negotiation into unlawful obstruction of the premium transfer.

Refusing to meet the incoming tenant

If the tenant introduces a specific, ready buyer and the landlord simply refuses contact or delays without explanation, this is one of the clearest fact patterns supporting a claim under 상가건물 임대차보호법 제10조의4 제1항 제1호. Documentation of the introduction attempt (texts, emails, witness statements) matters heavily.

Demanding an inflated rent or premium from the new tenant

A landlord who quietly demands a rent increase or a side payment from the incoming tenant that has no relation to market conditions can be found to have obstructed the transfer under 제10조의4 제1항 제2호·제3호. Comparing the new terms against the existing lease and nearby market rents is usually necessary evidence.

Timing: the 3-month window before lease end

The obstruction duty applies specifically from three months before the lease term ends. Conduct outside that window, or attempts to introduce a new tenant made too early or too late, can weaken the claim even if the landlord's behavior seems unreasonable.

Commercial Premium (Key Money) Litigation | Proving the loss and calculating damages

Even where obstruction is established, the tenant still has to prove how much premium was actually lost — this is usually the harder half of the case.

Damages are capped by the lower of two figures

Courts generally award the lesser of (1) the premium amount actually agreed with, or offered by, the substitute tenant, and (2) the premium level ordinarily recognized in that area at the time the lease ends (상가건물 임대차보호법 제10조의4 제3항). Without a concrete agreed figure from a real prospective tenant, damages become much harder to quantify.

Appraisal and market comparables

Where there was no finalized deal, tenants often rely on a court-appointed appraisal or comparable premium transactions in the same commercial district to establish a reasonable figure. This evidence needs to be gathered before or early in litigation, since it can take time to compile.

Whether the current lease term itself matters

A tenant's ability to claim premium recovery also depends on how long the tenant has occupied the space and whether the lease relationship is one the law recognizes for premium purposes; landlords sometimes argue the tenant's own history undercuts the claim. This is fact-specific and usually needs to be checked against the lease history.

Commercial Premium (Key Money) Litigation | From initial consultation to resolution

Fact review and evidence check
We review the lease, timeline of the landlord's conduct, and whether a substitute tenant existed or was actually prevented, to assess whether an obstruction claim is viable.

Demand and negotiation
A formal written demand to the landlord often opens negotiation before litigation, and can also serve as evidence of the landlord's refusal if the case proceeds further.

Filing the damages claim
If negotiation fails, a civil action for damages is filed, generally within the 3-year window from lease termination (상가건물 임대차보호법 제10조의4 제3항).

Evidence and appraisal stage
The case typically involves submitting comparable premium transactions, appraisal reports, and any records of the prospective tenant's offer to establish the damages figure.

Mediation, settlement, or judgment
Many premium cases settle once the evidence on both obstruction and valuation is laid out; where they don't, the court issues judgment based on the proven obstruction and the capped damages calculation.

Commercial Premium (Key Money) Litigation | How legal fees are typically structured

Retainer (착수금)
Set based on the complexity of the obstruction claim and whether a substitute tenant and appraisal evidence already exist, rather than a fixed rate for all premium cases.

Success fee (성공보수)
Usually calculated as a percentage of the damages actually awarded or recovered through settlement, agreed upon before filing.

Appraisal and expert fees (감정료 등 실비)
Court-appointed appraisal of the premium value, if needed, is billed separately from legal fees and depends on the scope of the appraisal.

Filing and procedural costs (송달료·인지료)
Court filing fees are calculated based on the claimed damages amount and are paid in addition to attorney fees.

※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.

Commercial Premium (Key Money) Litigation | Self-Check Before You File

1️⃣ For Tenants Facing Landlord Obstruction

Did the landlord's refusal or unreasonable demand occur within 3 months before your lease term ended?
Do you have written or recorded proof that you introduced a specific prospective tenant to the landlord?
Did the incoming tenant make a concrete premium offer, or is there no figure to point to?
Has more than 3 years passed since your lease ended?

2️⃣ For Landlords Facing a Premium Claim

Do you have a documented, good-faith reason for refusing the incoming tenant (e.g. inability to pay rent, unfitness to perform)?
Are you planning to use the space yourself for a similar business, and can you show this was decided in good faith?
Does the leased property fall under one of the statutory exclusions (e.g. large retail, certain public property)?
Is the tenant's claim being filed within the 3-year deadline, or is it potentially time-barred?

3️⃣ Evidence to Gather Early

Correspondence with the incoming tenant and the landlord (texts, emails, contracts)
Comparable premium transactions in the same commercial area
The original and any renewed lease agreements
Any appraisal reports already obtained

Frequently Asked Questions

Q. Can I sue my landlord directly for the premium amount itself?

A. Not directly for the premium amount itself — the claim is for damages caused by the landlord's obstruction of your ability to recover premium from an incoming tenant (상가건물 임대차보호법 제10조의4). If there was never a real prospective tenant, there is generally nothing for the landlord to have obstructed.

Q. What if the landlord says they want to use the space for their own business?

A. This is a recognized exception if done in good faith (상가건물 임대차보호법 제10조의4 제2항 제3호). Whether the landlord's stated intent is genuine, or a pretext to avoid paying premium, is often a contested fact that requires evidence such as timing and later actual use of the space.

Q. Does it matter if my commercial building is a large discount store or in a traditional market?

A. Yes, certain categories of commercial space are excluded from premium protection under 상가건물 임대차보호법 제10조의4 제2항 제4호 and related provisions, including large-scale retail stores above a certain size and spaces already regulated under separate traditional market laws. This should be checked early since it can end the case before damages are even discussed.

Q. How long do I have to file a claim after my lease ends?

A. The damages claim must generally be filed within 3 years of the lease's termination (상가건물 임대차보호법 제10조의4 제3항). This deadline is strict and separate from other, longer limitation periods that might apply to other types of claims.

Q. What happens if I never actually found a new tenant?

A. Without a prospective incoming tenant, it is difficult to show the landlord obstructed anything, since the obstruction has to relate to a specific transfer attempt. Courts generally need at least a real, identifiable prospective tenant and some offer or negotiation to assess damages against.

Q. Can I still claim premium if my lease was for less than the minimum protected term?

A. Premium protection rules operate somewhat separately from the minimum contract term protections, but how long you actually occupied and operated the business can affect both the credibility of your claim and the value the court assigns to the premium. This is fact-specific and worth reviewing with the actual lease history.

Q. Is verbal agreement with a new tenant enough, or do I need a signed contract?

A. A signed agreement or clear written offer from the incoming tenant makes the damages calculation far more concrete, but even without one, other evidence — messages, meeting records, deposit payments — can sometimes support the claim. The strength of this evidence directly affects the amount a court is willing to award.

Q. What if the landlord raised the rent for the new tenant but not by much?

A. Whether a rent increase counts as obstruction depends on how far it deviates from market conditions, not simply whether there was any increase at all (상가건물 임대차보호법 제10조의4 제1항 제2호). Comparable rents in the area are usually needed to make this argument either way.

Q. Should I try to negotiate with the landlord before filing suit?

A. A written demand is often a reasonable first step and can also become evidence of the landlord's response (or refusal to respond) if litigation follows. Whether to negotiate first or file promptly can depend on how close you are to the 3-year deadline.

Q. Do I need a lawyer for a premium dispute, or can I handle it myself?

A. These cases often turn on appraisal evidence, market comparables, and precise statutory exceptions, which can be difficult to assemble without legal assistance. Many tenants consult a commercial premium litigation lawyer early specifically to check whether their fact pattern actually fits within the statute's protections before spending time negotiating.

Official References

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