Advisory Case on the Termination of a Master Lease by Mutual Agreement, the Survival of the Sublease, and a Strategy for Recovering the Security Deposit

1. The Client's Situation

While conducting business on land subleased from a third party, the client received notice that the lease agreement between the original lessor and the lessee had terminated. Accordingly, the client requested a legal review of whether the sublease agreement between the client and the sublessor would automatically terminate as well, and whether, on the premise that the sublease had terminated, the equivalent of the security deposit could be recovered through a collection-money (garnishee) lawsuit. In particular, the rights relationships were complexly intertwined in a situation where it was unclear whether the original lease had ended by mutual agreement to terminate or by notice of termination.

On the premise that the sub-lessee's right is established on the basis of the original lessee's right, Your Legal Team set out that the survival of the sublease may differ depending on the type of termination of the original lease. In particular, distinguishing between the case where the original lease was extinguished by expiration of the term or by termination, and the case where it was terminated by agreement in a situation lawfully subleased with the lessor's consent, the team analyzed the risks and reviewed the applicability of the provisions protecting sub-lessees. In addition, based on the requirements for a claim to return the security deposit (termination of the contract, delivery of the subject property, and confirmation of the balance after deducting debts), the team organized the practical merits and anticipated defenses of the collection-money lawsuit, and structured the items requiring confirmation of the facts to present a response strategy.

By proactively checking the cause of the original lease's termination, whether the subject property had been delivered, and whether any overdue rent existed, the client was able to block unnecessary litigation risk. By clearly distinguishing the possibility of the sublease's survival from the requirements for return of the security deposit, the client established refined negotiation and litigation strategies and secured, in advance, a logic to counter the opposing party's anticipated defenses. Through this, the client could realistically assess the prospects of recovering the deposit and prevent escalation into an unfavorable legal dispute.

Your Legal Team provides comprehensive legal advice for protecting corporate property rights, including organizing the rights relationships that arise in complex lease and sublease structures, responding to security-deposit return disputes, and establishing collection-money litigation strategies.