Closing my shop to leave Korea: can I still get key money?

Key money (권리금) moves in cash, often on nothing stronger than a handshake, and the person most likely to lose it is the owner who has already booked a flight. Korean law does not guarantee that you will receive it. What the law does is forbid your landlord from getting in the way while you find a successor, and give you a money claim if the landlord gets in the way anyhow. That claim dies three years after the lease ends, and the three years keep running while you are at home on the far side of the world.

What the landlord is forbidden to do

From six months before the lease ends until the day it ends, the landlord must not obstruct you from receiving key money from a prospective new tenant whom you introduced. Four acts are named.

1. Demanding or taking key money from that person.
2. Preventing that person from paying it to you.
3. Demanding rent or a deposit markedly higher than is warranted by rates, public charges, nearby rents and deposits and other burdens.
4. Refusing, without justifiable grounds, to make a lease with that person.

The third is the one that catches people, because it does not look like a refusal. A landlord who quotes your successor a rent far above the street can end your sale without ever using the word no.

None of this helps you if the landlord already holds a ground for refusing renewal, arrears reaching three months' rent among them. Check that first, before you spend anything on introducing anyone.

When a refusal counts as justified

The Act presumes justifiable grounds in four situations:

• the prospective tenant cannot pay the deposit or the rent;
• there is good reason to fear that person would breach a tenant's duties, or that the lease could not be maintained;
• the premises have not been used for profit for one year and six months or more;
• a new tenant chosen by the landlord has already contracted with you and paid you the key money.

Read the third one twice if you are thinking of pulling the shutters down early and spending a few months at home before you sell. A long dark shopfront can cost you the protection.

What can I actually claim?

Where the landlord breaches the prohibition and you lose money by it, the landlord must compensate you. The figure is capped. It cannot exceed the lower of two amounts: the key money your prospective tenant had agreed to pay, and the value of the key money at the time the lease ended. The claim is for your loss, in other words, not for the best price you once hoped to get.

Valuing key money where nothing was written down is the hard part, and the Act does not answer it. It rests on appraisal and on government guidance rather than on statute. That is one good reason a signed agreement with your successor is worth more than any argument made afterwards.

You carry a duty of your own as well. You must give the landlord the information you hold about the prospective tenant's ability to pay and about their willingness and ability to perform a lease. A name and a phone number is not that. Send what you have, and keep a copy of what you sent and the date you sent it.

Does the size of my shop take me out of this?

No. The key money provisions apply even to leases above the deposit figure that limits the Act's general cover, and that figure sits in the Enforcement Decree, which this article does not quote. For leases above it there is also a rule letting either side, on renewal, seek a higher or lower rent and deposit, judged against rates, public charges, nearby rents and deposits, other burdens and changed economic circumstances. If anyone tells you a shop is too big for the key money rules, ask them to point at the provision.

The flight is booked. What changes?

The three-year limit runs from the day the lease ended, and nobody pauses it because you are abroad. A Korean lawsuit also needs an address in Korea where court papers can be served and a person with authority to act for you. Both have to exist before you go, not after.

So, in the weeks before departure:

1. Put the key money agreement in writing and sign it, even where the money has already moved.
2. Introduce the successor to the landlord in writing, by message or by certified letter (내용증명), and keep the proof of sending.
3. Capture the landlord's answer in the same channel, whatever that answer is.
4. Leave a signed power of attorney (위임장) with a person you trust or with a lawyer, together with an address for service.
5. Keep the lease, the business registration (사업자등록) certificate, the rent transfer records and photographs of the fitted premises.

Make a short diary as you go: one line per conversation, with the day, the person and what was said. In eighteen months that page will be worth more than your memory.

Next step

Work out first whether your lease still carries a renewal right, because the key money protection is built on top of it. Then bring the lease, your successor's details, every message exchanged with the landlord, and the date you intend to fly. A consultation is a paid service, and the fee is set out when our staff phone you back.

법무법인 대한중앙
1533-7377

Rules applied

Commercial Building Lease Protection Act (상가건물 임대차보호법) Article 10-4(1) (from 6 months before the lease ends until it ends, no obstruction of key money from a prospective tenant the tenant introduced; the four prohibited acts; no application where a ground for refusing renewal under Article 10(1) exists), Article 10-4(2) (the four situations in which justifiable grounds are presumed, including premises not used for profit for 1 year and 6 months or more), Article 10-4(3) (damages capped at the lower of the key money agreed with the prospective tenant and the key money at the end of the lease), Article 10-4(4) (the claim is extinguished if not exercised within 3 years of the day the lease ended), Article 10-4(5) (the tenant's duty to provide information on the prospective tenant), Article 10-2 (increase or reduction of rent and deposit on renewal, for leases above the deposit figure in the proviso to Article 2(1)), Article 2(3) (the key money provisions apply even above that figure). Act No. 21083, in force 12 May 2026. The deposit figure sits in the Enforcement Decree of the Act and is not stated here. How key money is valued where there is no written contract rests on appraisal and on Ministry of Land, Infrastructure and Transport guidance, not on the Act.

This is general information, not legal advice. Every case is different.