Owner-Occupancy Renewal Refusal in South Korea

A tenant rented an apartment in Seoul for two years with a deposit of KRW 660 million. About four months before the lease ended, the landlord said the landlord would move in and asked the tenant to leave. The tenant wanted to renew but moved out. In April 2024, a new tenant moved into the same apartment with a deposit of KRW 820 million.

South Korea's Housing Lease Protection Act gives a residential tenant a one-time right to request renewal, and a renewed lease is deemed to last two years. A landlord may refuse if the landlord, or the landlord's lineal ascendants or descendants, will actually live in the home. But if the landlord then leases the home to a third party without a justifiable reason before the renewed term would have ended, the landlord must compensate the tenant (Article 6-3(1)8, (2) and (5) of the Housing Lease Protection Act). The statute does not define what a justifiable reason is.

In this case, the landlord argued that six tenants in another multi-unit house the landlord owned demanded their deposits back at the same time, leaving no choice but to rent out the apartment. The first-instance court agreed; the appellate court did not. On September 10, 2026, the Supreme Court of Korea upheld the appellate ruling and set out the requirements and the burden of proof for a justifiable reason. The ruling matters both to landlords considering an owner-occupancy refusal and to tenants who moved out and later found a new tenant living in their former home.

What happened in this Seoul apartment case?

The facts found by the first-instance court and adopted by the appellate court are as follows (Seoul Western District Court, May 21, 2025, 2024Gadan279556; Seoul Western District Court, April 10, 2026, 2025Na1348).

Had renewal not been refused, the lease would have continued until September 12, 2024. The third party's lease began on April 29, 2024, before that date (Seoul Western District Court, April 10, 2026, 2025Na1348).

The landlord argued that the landlord had actually lived in the apartment for almost two years, that six tenants in another property demanded their deposits back at the same time, which could not have been foreseen when renewal was refused, and that without access to loans the landlord had to lease the apartment to a third party. According to the appellate court, around February 2024 the leases of six units in a multi-unit house co-owned by the landlord and the landlord's husband ended, the deposits returned totaled KRW 690 million, and the new deposits received at about that time totaled KRW 180 million (Seoul Western District Court, April 10, 2026, 2025Na1348).

The tenant sued for KRW 30,799,992 in damages under Article 6-3(5) of the Housing Lease Protection Act (Seoul Western District Court, May 21, 2025, 2024Gadan279556).

Why does Korean law make the landlord pay damages?

Article 6-3(5) of the Housing Lease Protection Act provides that if a landlord refuses renewal on owner-occupancy grounds and, before the renewed term would have ended, leases the home to a third party without a justifiable reason, the landlord must compensate the tenant for the loss caused by the refusal.

Liability therefore arises when:

1. the landlord refused renewal because the landlord would actually live in the home (Article 6-3(1)8);
2. the landlord leased the home to a third party before the renewed term would have ended; a renewed lease is deemed to last two years (Article 6-3(2)); and
3. there was no justifiable reason for leasing to the third party.

The rule is designed to prevent abuse of the owner-occupancy exception. In a renewed lease, a demand to increase rent or deposit cannot exceed one-twentieth (5%) of the agreed amount (Article 6-3(3) and Article 7(2) of the Housing Lease Protection Act). In upholding the rule, the Constitutional Court of Korea noted that landlords who abuse renewal refusals are likely motivated by avoiding this cap on increases, and held that Article 6-3(5) and (6) are constitutional (Constitutional Court of Korea, July 18, 2024, 2024Hun-Ba16).

Why did the first-instance court side with the landlord?

The first-instance court found a justifiable reason and dismissed the tenant's claim for the following reasons (Seoul Western District Court, May 21, 2025, 2024Gadan279556).

• The landlord actually lived in the apartment for more than 14 months, from February 11, 2023 to April 29, 2024, and leased it to a third party 17 months after the original lease ended.
• As the risks of jeonse (lump-sum deposit) leases drew public attention in the wake of deposit fraud cases in late 2022, six tenants in another property demanded their deposits back at the same time. The court treated this as unforeseeable at the time of refusal.
• Leasing the apartment was unavoidable to raise KRW 690,282,197 in deposits within a short time. Barring the lease would have forced the landlord to sell the apartment and pay about KRW 300 million in capital gains tax, which the court saw as a serious restriction on property rights.

The appellate court and the Supreme Court of Korea did not accept this reasoning.

What test did the Supreme Court of Korea set out?

The Supreme Court of Korea held that, for a justifiable reason under Article 6-3(5), the landlord must have leased the home to a third party because of circumstances that could not be foreseen at the time renewal was refused, and leasing to a third party must have been unavoidable. The landlord bears the burden of proving that such a justifiable reason existed (Supreme Court of Korea, September 10, 2026, 2026Da203203).

Both elements are required. An unexpected event is not enough if it could have been handled another way, and an unavoidable re-letting is not excused if the underlying circumstance was foreseeable when renewal was refused.

The test is consistent with the Constitutional Court's interpretation, which read a justifiable reason as unavoidable circumstances, unforeseeable at the time of refusal, that left the landlord no choice but to lease the home to a third party (Constitutional Court of Korea, July 18, 2024, 2024Hun-Ba16). The appellate court added that a justifiable reason is available only in exceptional cases, such as where barring a lease to a third party would seriously restrict the landlord's property rights, and that financial urgency alone does not qualify (Seoul Western District Court, April 10, 2026, 2025Na1348).

Why was repaying other tenants' deposits not a justifiable reason?

The Supreme Court of Korea found no legal error in the appellate court's conclusion that the landlord's circumstances were neither unforeseeable at the time of refusal nor made re-letting unavoidable, and dismissed the landlord's appeal (Supreme Court of Korea, September 10, 2026, 2026Da203203). The appellate court's reasons were as follows (Seoul Western District Court, April 10, 2026, 2025Na1348).

Was it unforeseeable?

The deposit refund obligations for the six units already existed when renewal was refused, and the landlord could have expected them to fall due around February 2024, when those leases ended. Having spent the deposits elsewhere and then finding that new deposits did not cover the refunds did not make the situation unforeseeable. The court added that real estate market conditions and lending rules can change at any time, so a turn of events contrary to the landlord's expectations is not an unforeseeable change of circumstances.

Was it unavoidable?

The landlord argued that, having no income, the landlord could not borrow against the apartment or obtain a personal loan, and that selling the apartment would have triggered KRW 300 million in capital gains tax. The court held that even if all of this were true, it did not make re-letting unavoidable. The landlord had chosen one of several ways to raise the money, and the statutory damages were a cost of that choice.

What else did the appellate court consider?

On May 20, 2022, the day the tenant received the refusal, the tenant told the landlord through a broker that the tenant was willing to adjust the deposit to the market level. On May 23, 2022, the landlord replied through the broker that the landlord was also willing to extend if the deposit were raised to the market price of KRW 1 billion. The tenant later heard from the landlord's broker that the landlord planned to lease the apartment for a KRW 100 million deposit and KRW 3 million in monthly rent instead of a lump-sum deposit. The court said it could not rule out that the prospect of an increase above the statutory cap prompted the refusal and the new lease.

How are damages calculated in South Korea?

Unless the parties agreed on liquidated damages at the time of refusal, damages are the largest of the following three amounts (Article 6-3(6) of the Housing Lease Protection Act).

1. Three months of the converted monthly rent at the time of refusal
2. Two years of the difference between the converted monthly rent the landlord obtained from the third party and the converted monthly rent at the time of refusal
3. The tenant's actual loss caused by the owner-occupancy refusal

The converted monthly rent is the monthly rent plus the deposit converted into a monthly amount at the lower of two rates: 10% per year, or the Bank of Korea base rate plus 2 percentage points (Article 7-2 of the Housing Lease Protection Act; Article 9 of its Enforcement Decree). The appellate court applied the base rate plus 2 percentage points. The tenant claimed under method (2), and the court calculated as follows (Seoul Western District Court, April 10, 2026, 2025Na1348).

Within that amount, the court awarded the KRW 30,799,992 the tenant claimed, with delay interest from April 29, 2024 (Seoul Western District Court, April 10, 2026, 2025Na1348). On the same facts, method (1) would yield only KRW 5,775,000 (KRW 1,925,000 × 3), so where the new deposit is much higher, method (2) produces a far larger figure.

The Constitutional Court of Korea explained that this formula eases the tenant's burden of proving loss, because requiring proof under general damages rules would lead many tenants to give up their claims in view of the cost of litigation (Constitutional Court of Korea, July 18, 2024, 2024Hun-Ba16).

Who must prove the landlord's intent to move in?

The landlord also bears the burden of proof at the refusal stage. The Supreme Court of Korea held that the landlord must prove that the landlord will actually live in the home. A mere statement of intent is not enough, but the intent can be inferred where the circumstances show, in a way that would normally be accepted, that it is genuine rather than invented (Supreme Court of Korea, December 7, 2023, 2022Da279795).

The Supreme Court of Korea listed the following factors (Supreme Court of Korea, December 7, 2023, 2022Da279795).

• The landlord's housing situation
• The social circumstances of the landlord and family, such as work and school
• How the landlord came to intend to live in the home
• The landlord's circumstances before and after refusing renewal
• Any words or conduct inconsistent with the intent to live there, and whether they could undermine the tenant's legitimate expectation of renewal
• Whether and how the landlord prepared to move from the current residence

In a later decision, the Supreme Court of Korea confirmed that the owner-occupancy ground operates as a defense to the tenant's renewal right, so the landlord bears the burden of pleading and proving it, and that it should not be treated differently from other refusal grounds just because it concerns future plans (Supreme Court of Korea, December 21, 2023, 2023Da263551).

In short, the landlord carries the burden twice: first to prove a genuine intent to move in when refusing renewal, and then, if the home is leased to a third party within the renewed term, to prove a justifiable reason.

What should landlords and tenants in South Korea prepare?

For landlords

• Before refusing renewal, check your finances for the next two years. Circumstances already known at the time of refusal, such as when other tenants' deposits fall due, are unlikely to count as a justifiable reason later (Supreme Court of Korea, September 10, 2026, 2026Da203203).
• If plans change and you must lease the home, keep objective records showing that the change was unforeseeable when you refused renewal and that leasing to a third party was the only option. The burden of proof is on you.
• If you and the tenant agree on liquidated damages when you refuse renewal, that agreement applies instead of the statutory formula (Article 6-3(6) of the Housing Lease Protection Act).
• Offering to extend only if the deposit is raised to market level may later be treated as a sign that the prospect of an increase prompted the refusal (Seoul Western District Court, April 10, 2026, 2025Na1348).

For tenants

• Keep the refusal notice and your messages and call records with the landlord and brokers. In this case, statements relayed through brokers were part of the court's reasoning (Seoul Western District Court, April 10, 2026, 2025Na1348).
• Check whether a new tenant moved in within the renewed term and on what deposit and rent. These figures are the basis of the method (2) calculation.
• A landlord's period of actual residence does not by itself end liability. The landlord in this case lived there for about 19 months after refusing renewal, yet no justifiable reason was found (Seoul Western District Court, April 10, 2026, 2025Na1348).

What does this mean for residents and investors in IFEZ?

Many expatriate professionals rent apartments in Songdo International Business District, Cheongna International City and Yeongjong International City within the Incheon Free Economic Zone (IFEZ), and foreign investors also own residential units there. Where a residential lease is governed by the Housing Lease Protection Act, the rules discussed above apply to both sides.

The landlord in this case entered Korea on February 11, 2023, and then lived in the apartment (Seoul Western District Court, May 21, 2025, 2024Gadan279556). An overseas-based owner who refuses renewal in order to return to Korea should plan finances and relocation for the full renewed term, because a later decision to lease the home again will be tested against what was foreseeable at the time of refusal. Expatriate tenants who are asked to leave on owner-occupancy grounds should keep written records of the landlord's stated reasons and of any proposals to raise the deposit. Atlas Legal can review these issues for foreign tenants and property owners in IFEZ.

Frequently asked questions

This article summarizes publicly available court decisions on the justifiable reason test under Article 6-3(5) of South Korea's Housing Lease Protection Act and is not legal advice for any specific case. Whether a justifiable reason exists depends on the circumstances at the time of refusal and what followed, so please consult Atlas Legal about your particular situation.

About the Author

Soyoung Park | Representative Attorney

Family Law, Inheritance, Construction & Real Estate Disputes

Judicial Research and Training Institute, 33rd Class

Korea University, Department of Law

Atlas Legal | Incheon Songdo, South Korea

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