When your Airbnb lease ends, getting your deposit back can turn into a legal nightmare. Attorney Shin Yul unpacks the residency requirement trap and what hosts using rented properties need to know.
05. Running an Airbnb in a Leased Property: What Happens When the Lease Ends
Writer Attorney Shin Yul
Editor ONDA Manager Somora
Shin Yul Law Office
Shin Yul Law Office specializes in hospitality law and the sharing economy, serving clients primarily in Gyeonggi and Incheon.
This column series draws on real client questions to unpack the legal issues — big and small — that come up when starting and running accommodation businesses in Korea. Our goal: make it practical, accessible, and maybe even a little entertaining.
Contact
Blog: https://blog.naver.com/iwillsue
Tel. 032-294-0056 Fax. 032-294-5301
Address: 401, Dohyeong Bldg, 37beon-gil 16, Hakikso-ro, Michuhol-gu, Incheon (Hakik-dong)
Guesthouses and Airbnbs in Rented Homes
Hello, I'm Attorney Shin Yul. More and more people are operating guesthouses and Airbnbs under Korea's Foreign Tourist Urban Homestay license.
Some hosts own the property. But many others rent their space. Leasing has a clear upside: lower barrier to entry. You can test the waters without a mortgage.
But in Korea, running a legal urban guesthouse almost always means registering as a Foreign Tourist Urban Homestay under the Tourism Promotion Act — which only allows you to host foreign guests (with rare exceptions).
This post zeroes in on one specific legal risk: what can go wrong when your lease ends and you need to get your deposit back.
The "Residency" Requirement for Foreign Tourist Urban Homestays
Under the Tourism Promotion Act Enforcement Decree:
Article 2 (Types of Tourism Business) ① Tourism businesses under Article 3(2) of the Tourism Promotion Act shall be subdivided as follows:
F. Foreign Tourist Urban Homestay: A business in which a resident of an urban area (excluding rural areas under the Rural Improvement Act) provides lodging and meals to foreign tourists in a home where the resident actually resides, offering facilities suitable for experiencing Korean home culture. This includes single-family homes, multi-family homes, apartments, and townhouses under the Building Act.
Key phrase: "a home where the resident actually resides."
You don't have to own the property. But you do have to live there. In principle, if you rent a home and actually reside in it, you can register and run a guesthouse there — no problem.
What Happens If You Don't Actually Live There
Some operators consider renting a home, registering it as a guesthouse, but living elsewhere — just using the space for guests.
Bad idea. Here's why.
A. The Property May Not Qualify as "Residential"
Korea's Housing Lease Protection Act shields tenants who live in residential properties. But the Supreme Court has ruled that what matters is actual use, not just how the building is classified on paper.
Whether a building qualifies as residential under the Housing Lease Protection Act must be determined by its actual use, not merely its official designation. When part of a building is used for both residential and commercial purposes, courts must consider: the purpose of the lease, the structure of the building, how the tenant uses the space, and whether the tenant conducts daily life there. (Supreme Court Decision 87Daka2024, Dec. 27, 1988)
This ruling addressed mixed-use buildings (e.g., a shopfront with living quarters upstairs). But the principle applies here too.
If you register the address but never actually live there — just use it as a rental business — a court may rule that the property isn't truly residential. That means you'd lose the protections meant for residential tenants. And you'd also be in violation of the guesthouse licensing rule that requires you to reside there.
B. You Could Lose Your Deposit When the Lease Ends
Korea's Housing Lease Protection Act gives residential tenants powerful protections. If you meet two conditions — delivery of possession (moving in) and resident registration (registering your address) — you gain priority rights (daehangryeok). Add a certified date (hwakjeongilja), and you get preferential repayment rights over other creditors.
Why does this matter for guesthouse operators?
Because Foreign Tourist Urban Homestays require residency. To register your business, you'll need to file resident registration at that address. But if you don't actually live there, you're committing false registration (wijang jeonip) — a violation of the Resident Registration Act.
Consequences:
- Criminal liability. False registration is punishable by law.
- Loss of tenant protections. If you're not truly residing there, you don't meet the daehangryeok requirement. Your priority claim to your deposit evaporates.
Korean courts do allow some flexibility — for example, if your family lives in the home while you temporarily move elsewhere for work, you may retain protections. But if no one lives there and you only registered the address to run a business, you're not protected.
If your landlord (or the landlord's creditors) challenge your claim — especially in a foreclosure or bankruptcy scenario — you could lose your deposit entirely.
C. It Violates the Spirit of the Law
The Housing Lease Protection Act exists to protect people's homes — their stability and security.
The Foreign Tourist Urban Homestay law exists to let foreign visitors experience authentic Korean home culture, and to help local tourism thrive.
Both laws assume the host actually lives in the space. A guesthouse run out of a place where no one lives doesn't serve the purpose of either law. It's a regulatory arbitrage play — and courts don't look kindly on those.
If you use a property solely for lodging — without actually living there — it may not be considered a residential building.
In Closing
Admittedly, these issues are a bit esoteric. Enforcement of false registration laws is spotty. But here's the thing: if you're running a guesthouse in a leased property, your landlord knows. Your neighbors know. And conflicts are inevitable — noise complaints, guests coming and going at odd hours, cultural friction.
If those conflicts escalate, all of this can come back to bite you. You could face:
- Losing your deposit
- Being sued by the landlord or creditors
- Criminal penalties for false registration
Bottom line: Don't cut corners. If you're going to lease a property for a guesthouse, live there. Follow the rules. It's the only way to protect yourself legally — and financially.
Thanks for reading. See you in the next installment of Attorney Shin Yul's Legal Q&A.
[Series Archive]
Aug 2019: Cancellation and Refund Policies
Sep 2019: Minors Checking Into Lodging
Oct 2019: Hidden Camera Crimes in Lodging
Nov 2019: Partnership Contracts for Lodging Businesses
Dec 2019: Running an Airbnb in a Leased Property: What Happens When the Lease Ends
