Advisory on Whether the Priority Reimbursement Right Applies to a Corporate Tenant

1. Overview

The client company requested a legal review on whether it could assert the right to top-priority repayment with respect to a residential property for which it had entered into a lease agreement. The property was a house leased not for office or business purposes but for the residence of an employee of the company; however, after the contract, the house was put up for auction, which raised the issue of protecting the security deposit.

Our law firm closely reviewed whether the relevant company satisfied the applicable requirements, and confirmed that, where those requirements were met, it could assert the right to top-priority repayment. In addition, we further reviewed whether to establish a chonsegwon (right of lease on a deposit basis) to recover the security deposit, providing advice so that sufficient legal protective measures could be arranged.

Through this advice, the company was able to clearly grasp its legal position and to prepare an appropriate response plan to protect its security deposit.