After a real estate contract has been signed, it is possible to verify the landlord's delinquent taxes through the tax office or local government without the landlord's consent. If the real estate lease contract contains a special clause stating that the contract will be canceled if the landlord's delinquent taxes are confirmed, the contract can be canceled. However, in most cases, when a real estate lease contract is signed, a deposit or key money is paid. If the contract is canceled, the deposit or key money must be returned to the landlord. Let's take a look at the problem that arises in this situation.
Let's use a security deposit of 100 million won for a lease contract as an example. In most cases, the contract amount is set at 10 million won for the deposit and 90 million won for the remainder, and the lease contract is written accordingly. In some cases, an advance deposit of 1 million won is paid first instead of the 10 million won contract deposit. In any case, once the real estate lease contract is signed, the address of the property (i.e., the location of the leased property), the amount of the deposit, and the payment method are indicated, and the conditions for concluding the contract are met, and the contract proceeds.
In the example of the real estate lease contract above, the lessee (tenant) decided to pay only an advance deposit of 1 million won first, just in case they might become a victim of a fraudulent real estate transaction. They planned to check the landlord's delinquent taxes with the lease contract and then pay the remaining 9 million won if there were no problems. However, to their surprise, the landlord's delinquent taxes were confirmed. Fortunately, the real estate contract contains a special clause stating that if the landlord's delinquent taxes are confirmed, the contract will be canceled, so they thought that they could get back the advance deposit of 1 million won.
However, there is a point to note here. Since the details of the real estate lease contract have already been concluded, regarding the return of the deposit, you should examine the following Supreme Court precedent.
Even if the recipient can cancel the sales contract if only a part of the earnest money has been paid, it is reasonable to consider the amount of money that becomes the basis for the cancellation fee as the 'contracted earnest money', not the 'actual contract money received'. If you can cancel the sales contract by only repaying the amount of 'actual contract money received', this will not only go against the intention of the parties to establish a certain amount of money as earnest money, but also weaken the binding force of the contract. This is unreasonable, especially when the amount of money received is small.
Supreme Court Decision 2014Da231378, delivered on April 23, 2015
The Supreme Court precedent did not use the word 'security deposit'. Instead, it used the term 'actual contract money received' to describe the key money. In this case, since the lessor provided the reason for cancellation of the real estate contract, the lessee in question should receive not 10 million won but 20 million won, which is twice the amount of the key money of 10 million won.
In other words, if the lessor wants to proceed with the real estate lease contract without any problem or cancel the contract, the lessor needs to return 20 million won, which is twice the amount of the key money of 10 million won, to the lessee.
On the other hand, if the lessee (tenant) wants to cancel the contract, the lessee can pay the remaining contracted amount of 900 million won to the lessor, excluding the 10 million won already paid, and cancel the real estate lease contract. Here you can check how the tax for this penalty is applied.
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