When a building where you rent a shop goes to auction in Korea, a tenant with a small deposit can get part of it back ahead of secured creditors such as the bank. Article 14(1) of the Commercial Building Lease Protection Act gives the tenant the right to be paid a fixed part of the deposit ahead of other secured creditors, provided that the tenant had taken possession of the building and applied for business registration (Art. 3(1)) before the auction was registered. Decree Articles 6 and 7 set who counts as a small tenant and how much — in Seoul, a tenant whose converted deposit is 65 million won or less gets up to 22 million won. Enter the area, deposit, rent and building value to see the top-priority amount.
1. Small tenant = converted deposit (deposit + rent × 100) within the local line — Seoul 65 million won, overcrowding control zone 55 million won, metropolitan cities etc. 38 million won, elsewhere 30 million won (Decree Art. 6).
2. The fixed amount paid first — up to 22 million won in Seoul, 19 million won in the control zone, 13 million won in metropolitan cities etc., 10 million won elsewhere, within half the building value (Decree Art. 7).
3. Our example — in Seoul, a 20 million won deposit and 400,000 won rent convert to 60 million won, so a small tenant, and the whole 20 million won has top priority.
Checker
Results update as you type. Converted deposit = deposit + monthly rent × 100 (Act Art. 2(2); Decree Art. 2(2)(3) — monthly rent, a ratio of 100 to 1). The fixed amount comes out of the deposit (the rent conversion is not money you get back), and if it exceeds half the building value, small tenants share that half in proportion to their fixed amounts (Art. 7(2)(3)). Auction costs, taxes on the property and other prior ranks, and the claim procedure, are not counted. Mortgages taken before 1 January 2014 use the former amounts, which this checker does not hold.
The provisions
| Provision | What it says | Note (our reading) |
|---|---|---|
| Act Art. 14(1) | A tenant has the right to be paid a fixed part of the deposit ahead of other secured creditors. The tenant must meet the conditions of Article 3(1) before the auction of the building is registered. | A fixed date is not required — possession and the business registration application are |
| Act Art. 14(3) | The range and standard of the tenants and fixed amounts are set by Presidential Decree within half of the leased building's value (including the landlord's land) … | The outer frame for the cap |
| Act Art. 3(1) | Even without registration, a lease takes effect against third parties from the day after the tenant takes possession of the building and applies for business registration under Article 8 of the Value-Added Tax Act … | Effect against third parties starts the next day — Art. 14 only needs the conditions met before the auction registration |
| Decree Art. 6 | A tenant entitled to priority is one whose deposit and rent, converted and added up under Act Article 2(2), are at or below the amounts below. | High rent can rule out a small deposit |
| Decree Art. 7(2)(3) | Where a tenant's fixed amount exceeds half the value of the building, priority is limited to half. Where there are 2 or more tenants and their fixed amounts together exceed half, half the value is divided in proportion to each tenant's fixed amount, and each share is treated as that tenant's fixed amount. | The "other small tenants" box in the checker |
Amounts by area — Decree Arts. 6 and 7(1)
| Area | Small tenant (converted deposit) | Fixed amount paid first |
|---|---|---|
| Seoul | 65 million won or less | up to 22 million won |
| Overcrowding control zone (excl. Seoul) | 55 million won or less | up to 19 million won |
| Metropolitan cities (excl. control zone and counties), Ansan, Yongin, Gimpo, Gwangju | 38 million won or less | up to 13 million won |
| Other areas | 30 million won or less | up to 10 million won |
These areas are not the same as in Decree Article 2 (the converted-deposit line for the Act to apply at all — 900 million won in Seoul and so on). Article 2 puts Busan with the control zone (690 million won) and Sejong, Paju and Hwaseong with the metropolitan cities (540 million won), but Articles 6 and 7 do not name Busan, so it reads into the "metropolitan cities" row (38 million and 13 million won), and Sejong, Paju and Hwaseong into "other areas" (30 million and 10 million won) (our reading). The amounts come from the amendment in force from 1 January 2014 (Presidential Decree No. 25036), and Article 4 of its addendum applies them to leases existing at that time, except that a creditor who took a mortgage before then is governed by the former rules.
If the mortgage predates 1 January 2014 — the former amounts
Addendum Art. 4 of Presidential Decree No. 25036 applies the amended Articles 6 and 7 to leases already running, but says the former provisions apply to anyone who acquired a security right before the decree took effect. The version just before it (Presidential Decree No. 23807, in force 23 May 2012; Articles 6 and 7 as amended on 21 July 2010) gives these amounts.
| Area (former Arts. 6 and 7) | Converted deposit | Fixed amount |
|---|---|---|
| Seoul | 50 million won or less | 15 million won |
| Overcrowding control zone (not Seoul) | 45 million won or less | 13.5 million won |
| Metropolitan cities, Ansan, Yongin, Gimpo, Gwangju | 30 million won or less | 9 million won |
| Other areas | 25 million won or less | 7.5 million won |
The sharing line differed too — former Art. 7(2)(3) shared one third of the building value, not today's half. That is why the calculator sends you to this table instead of computing when you pick "before 1 January 2014". A mortgage taken before the 21 July 2010 amendment may point further back through that amendment's addendum, which we have not read (our reading).
Five sums — our examples
| Example (ours) | Result | Note (our reading) |
|---|---|---|
| Seoul, 20 million won deposit, 400,000 won rent, building 300 million won | Converted 60 million won → 20 million won | 20 million + 400,000 × 100 = 60 million won ≤ 65 million won; the deposit is under the 22 million won cap, so all of it |
| Seoul, 30 million won deposit, 300,000 won rent | Converted 60 million won → 22 million won | Only up to the cap — the other 8 million won ranks by fixed date or as an ordinary claim |
| Seoul, 10 million won deposit, 600,000 won rent | Converted 70 million won → 0 won | A small deposit, but the rent takes it over 65 million won |
| Busan, 30 million won deposit, 80,000 won rent | Converted 38 million won → 13 million won | Exactly on the metropolitan-city line |
| Other area, 10 million won deposit, 150,000 won rent, building 60 million won, 3 other small tenants with 30 million won of fixed amounts | Converted 25 million won → 7.5 million won | Fixed amounts total 40 million won, above half (30 million won) → 30 million × 10 / 40 |
Related posts
- For a home rather than a shop — housing small-tenant top-priority checker.
- Converted deposit and the 5% cap — commercial lease converted deposit & 5% calculator.
- The 10-year renewal right — commercial lease renewal for 10 years; rent arrears in the rent arrears termination checker.
- Key money — commercial lease premium protection.
Checklist
- ☐ Have you taken over the shop (possession) and applied for business registration?
- ☐ Did both come before the auction registration?
- ☐ Is deposit + rent × 100 within the local line?
- ☐ The earliest mortgage date on the register (before 1 January 2014?)
- ☐ Get a fixed date too — it ranks the deposit above the fixed amount (Art. 5(2))
- ☐ Once an auction starts, file a distribution claim before the deadline
Questions that remain
Do I get top priority without a fixed date?
Article 14(1) asks only that the Article 3(1) conditions (possession and a business registration application) be met before the auction registration; it says nothing about a fixed date. The fixed date is the condition in Article 5(2) for ranking the rest of the deposit.
Why does high rent rule me out?
Decree Article 6 tests "the converted amounts added up". Each 10,000 won of rent converts to 1 million won, so in Seoul a 650,000 won rent reaches 65 million won even with no deposit.
What about a shop with a converted deposit above 900 million won?
Act Article 2(3) lists the provisions that apply even above the Article 2(1) line, and Article 14 is not on that list. But the small-tenant line (65 million won at most) is far lower anyway, so in practice the Article 6 amount decides.
Sources
- Korea Law Information Center — Commercial Building Lease Protection Act Arts. 2, 3, 5 and 14 — source (current text, in force 12 May 2026, Act No. 21083; checked 10 November 2026). Scope and conversion, effect against third parties, fixed-date priority, protection of a fixed part of the deposit.
- Korea Law Information Center — Enforcement Decree Arts. 2, 6 and 7, and Addendum Art. 4 of Presidential Decree No. 25036 — source (current text, in force 1 July 2026, Presidential Decree No. 36423; checked 10 November 2026). Lines and fixed amounts by area, the half-value sharing, former rules for mortgages before 1 January 2014.
- Korea Law Information Center — Enforcement Decree (Presidential Decree No. 23807, in force 23 May 2012) Arts. 6 and 7 — source (former version, checked 10 November 2026). The former amounts and one-third sharing that apply to mortgages before 1 January 2014.
- Not read. The addendum to the 21 July 2010 amendment (for earlier mortgages), the extent of the overcrowding control zone (Annex 1 of the Seoul Metropolitan Area Readjustment Planning Act Decree — set out in the converted deposit calculator), the ranking and claim procedure under the Civil Execution Act, and cases on what is deducted from the sale proceeds to get the "building value".
- What we added. Where Busan, Sejong, Paju and Hwaseong fall, rounding down in the sharing sum, the examples, and the notes column.
Where to check further
- Supreme Court Internet Registry Office — mortgage dates and the auction commencement registration on the building register.
- Your tax office — business registration application date and the fixed date for a commercial lease.
- Korea Legal Aid Corporation — advice on distribution claims and objections.
Written on 10 November 2026. The provisions are quoted from the source; the reading and the sums are ours.
