Background
Our clients were a manufacturing company that had leased an asphalt and ready-mix concrete plant since 2007, and two of its officers. The lease renewed in December 2021 carried a KRW 210 million deposit and monthly rent of KRW 50 million (excluding VAT), and the officers guaranteed the company's obligations. The parties agreed to end the lease on December 31, 2023.
The landlord then sued our clients jointly for KRW 681,618,262, consisting of (1) KRW 160.6 million in three months of unpaid rent, (2) rent-equivalent damages until the plant was handed back on February 27, 2024, (3) electricity charges for that period, (4) KRW 65.7 million in restoration and waste-removal costs, and (5) KRW 300 million for lost rent allegedly caused by the delay in transferring the plant's KS certification.
What Was at Stake
The unpaid rent itself was undisputed. The questions were how it related to the deposit, whether our clients were liable for the delayed handover, and whether the restoration and certification losses had actually occurred.
How Changchun Helped
The court examined each of the five claims and accepted the defense's position.
Rent was already covered by the deposit. A tenant's debts are deducted automatically from the deposit on return of the premises. KRW 210 million less KRW 160.6 million still left KRW 49.4 million, so no rent remained payable.
No delay damages without tendering the deposit. Because the landlord had neither returned nor properly tendered the remaining deposit, it could not claim rent-equivalent damages.
Electricity was the landlord's cost. Our client had stopped using the plant by January 2024, and with the deposit still held, those charges fell on the landlord.
Restoration and certification losses were unproven. The structures in the estimate had not been demolished but were still in use under a new roof, and there was no record of the plant's original condition. The landlord had apparently re-leased the plant before the certification lawsuit concluded.
Outcome
In October 2025, the first-instance court dismissed all of the landlord's claims and ordered it to bear the litigation costs.
Settling a commercial lease turns on deposit deductions, the parties' simultaneous obligations, and proof of actual loss. Applying these principles item by item can defeat even a large claim. (Outcomes depend on the facts of each case.)