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41-7 · Civil petitions & documents

Premium (Key Money) Contract Drafting

A premium (key money) contract is an agreement under which a prospective new tenant pays the existing tenant a premium in return for business facilities and fixtures, customers, goodwill, business know-how and the business advantages of the building's location (Article 10-3 of the Commercial Building Lease Protection Act). It is a private contract between the parties, not a document filed with a government agency, so the items transferred, the amount, the payment timing and the refund conditions on cancellation should be stated specifically, based on the standard premium contract that the Minister of Land, Infrastructure and Transport sets in consultation with the Minister of Justice and recommends for use (Article 10-6 of the same Act). From 6 months before the end of the lease until its termination, the landlord may not obstruct the tenant's recovery of the premium by, for example, demanding a premium from the new tenant introduced by the tenant or demanding a markedly excessive rent or deposit. This protection applies regardless of the deposit amount, but it does not apply to premises that are part of a large-scale or semi-large-scale store (excluding traditional markets) or that are state-owned or public property. Hwang Yunsang Administrative Office drafts the premium contract and supporting documents such as the list of facilities and fixtures.

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#Premium (Key Money) Contract Drafting#Official check#41-7
🌐 How to Draft a Premium (Gwonrigeum) Contract
01

Procedure

Procedure

Procedure type
  • Drafting Difficulty Low

    Work completed by drafting documents such as contracts, certified letters or statements of fact, without review by a government authority.

  1. 01

    Checking applicability: Because the premium recovery protection does not apply if the premises are part of a large-scale or semi-large-scale store or are state-owned or public property, first check the building's use and ownership with the building register and property register, and the remaining lease term with the existing lease contract.

  2. 02

    Checking rights and business feasibility: Check the property register for mortgages and provisional seizures, and the building register for any illegal building status. If the building is illegal, the new tenant may be unable to file a new business report for the same business and end up unable to operate despite paying the premium.

  3. 03

    Stating each type of premium separately: Distinguish the facility premium (interior and fixtures), the business premium (customers, know-how and goodwill) and the location premium, state the amount of each, and attach a list of the transferred facilities and fixtures with item, quantity and condition.

  4. 04

    Setting payment and handover terms: Link the timing of the deposit and balance payments to the signing of the new lease, and state the condition that the contract is cancelled and money received is returned if no lease is signed with the landlord, the scope of business handover, and an agreement not to run the same business.

  5. 05

    Introducing the new tenant and providing information: Introduce the new tenant to the landlord between 6 months before the end of the lease and its termination, and under Article 10-4(5) of the same Act provide the landlord with the information you know about the new tenant's ability to pay the deposit and rent and willingness to perform the tenant's obligations.

  6. 06

    Recording the introduction process: If the landlord demands a premium or a markedly excessive rent from the new tenant or refuses the lease without just cause, keep a dated record of events and communications such as text messages and certified letters. The resulting right to claim damages expires if not exercised within 3 years from the end of the lease.

02

Filing route

Filing route

No submission (contract between the existing tenant and the new tenant)

Confirm the current filing office, jurisdiction, and online availability on the official website.

Official check
Actual processing agencyCompetent Korean authority or official service
Statutory and policy authorityMinistry of Land, Infrastructure and Transport
Online routeOfficial check
03

Deadlines & processing notes

Deadlines & processing notes

Check deadlines and next steps against the notice, filing date, and any request for additional documents.Official check
04

Basic documents

Basic documents

Basic documents0 / 8

The premium contract is separate from the lease, so unless it includes a condition that it is cancelled and money returned if no new lease is signed with the landlord, the new tenant may pay the premium and still be unable to use the premises.

Scope of services

Scope of services

Hwang Yunsang Administrative Agent Office prepares and translates documents for administrative agencies, submits them on your behalf, and guides you through permit, application, and notification procedures. Services that require the principal’s personal appearance, principal’s application, or electronic signature may be limited in delegation.