〈Case concerning whether overdue rent for which the extinctive prescription has been completed may be set off against or deducted from the lease deposit〉

【Holding】

[1] The scope in which the lessor's obligation to return the lease deposit becomes due upon termination of the lease relationship (= the amount remaining after deducting from the lease deposit all obligations of the lessee arising until the leased object is returned)

[2] Where rent is in arrears during the continuation of the lease, whether the extinctive prescription of the rent claim runs from the payment date stipulated in the lease agreement (affirmative in principle)

[3] Where the extinctive prescription of a rent claim has been completed during the continuation of the lease, whether the lessor may set off the time-barred rent claim, as the active claim, against the obligation to return the lease deposit (negative in principle), and whether, in such case, the overdue rent may be deducted from the lease deposit by applying Article 495 of the Civil Act by analogy (affirmative)

【Summary of Decision】

[1] In a real estate lease, the lease deposit paid by the lessee to the lessor secures all obligations of the lessee arising from the lease relationship until the lease relationship terminates and the leased object is returned, and the lessor's obligation to return the lease deposit becomes due, upon termination of the lease relationship, only with respect to the amount remaining after deducting from the lease deposit all obligations of the lessee, such as overdue rent, arising until the leased object is returned.

[2] Where rent is in arrears during the continuation of the lease, the extinctive prescription of that claim runs from the payment date stipulated in the lease agreement, unless there are special circumstances such as an agreement to settle by deducting the arrears in a lump sum from the lease deposit upon delivery of the leased object after termination of the lease.

[3] Under Article 495 of the Civil Act, if a claim for which the extinctive prescription has been completed could have been set off before its completion, the creditor may set it off. This requires that "both claims have reached a state eligible for set-off before the completion of the extinctive prescription of the active claim." Since the lessor's obligation to return the lease deposit becomes due only when the lease agreement terminates, where the extinctive prescription of a rent claim has been completed during the continuation of the lease, the two claims cannot be regarded as having been in a state eligible for set-off unless there are special circumstances such as the lessor having actually waived the benefit of time with respect to the obligation to return the lease deposit before the completion of the extinctive prescription. Accordingly, the lessor's subsequent set-off of the already time-barred rent claim, as the active claim, against the obligation to return the lease deposit cannot be permitted even under Article 495 of the Civil Act.

However, taking into account the reliance of the lessor, who did not apply the lease deposit to the overdue rent even though rent was in arrears during the continuation of the lease, and the implied intention of the lessee, who continued the lease relationship while in arrears of rent, it is reasonable to hold that such overdue rent may be deducted from the lease deposit by applying Article 495 of the Civil Act by analogy.

【Referenced Statutes】

[1] Articles 152, 492, and 618 of the Civil Act [2] Articles 166(1) and 618 of the Civil Act [3] Articles 152, 153, 492, 495, and 618 of the Civil Act

【Referenced Precedents】

[1][3] Supreme Court Decision 87DaKa98, June 23, 1987 (Gong1987, 1232)
Supreme Court Decision 2002Da52657, December 10, 2002 (Gong2003Sang, 361)
[2][3] Supreme Court Decision 2016Da211309, November 25, 2016 (Gong2017Sang, 22)



(Source: Supreme Court Decision 2024Da302217, March 27, 2025 | Judicial Information Disclosure Portal, Precedents)