Jeonse fraud victims reach 39,000 as government expands support

The cumulative number of Jeonse fraud victims has reached approximately 39,000, prompting the government to provide 61,800 customized support measures. To improve housing stability, the Korea Land and Housing Corporation has increased its monthly average house acquisition from 90 units in the year before last to 784 units this year.

According to the Ministry of Land, Infrastructure and Transport, the cumulative number of Jeonse fraud victims has reached approximately 39,000 since the enactment of the relevant law. The government is providing a total of 61,800 customized support measures, including housing, financial, and legal assistance, to these victims.

The Korea Land and Housing Corporation (LH) is also conducting a project to purchase damaged houses to ensure housing stability for affected residents. To date, LH has purchased a total of 9,707 Jeonse fraud-affected houses. The pace of acquisition has accelerated; after purchasing only 90 houses during the year before last, the monthly average rose to approximately 650 houses in the second half of last year, and has increased to a monthly average of 784 houses this year. This improvement is the result of reducing bottlenecks by introducing a fast track that unifies work procedures between the Ministry of Land, Infrastructure and Transport and LH, as well as holding frequent purchase inspection meetings. When LH acquires houses through public auctions by being granted the right of first refusal, victims can convert the resulting auction profits into their security deposits, allowing them to continue living in their current homes for up to 10 years.

Sophisticated Methods Ranging from Zero-Capital Gap Investment to Exploiting Countervailing Power

Jeonse fraud methods are highly diverse. The most representative method is "zero-capital gap investment," where fraudsters set the house sale price equal to or even lower than the Jeonse deposit, allowing them to acquire ownership without spending a single won. In the case of newly built villas, where it is difficult to determine the exact market price, a "simultaneous proceeding" method is used. In this scheme, builders, sales agencies, and brokers conspire to recruit tenants, and on the very day the tenant pays the remaining balance, the ownership is transferred to a "straw owner" or a person with tax arrears.

There are also cases of "contractual deception," where landlords hide their financial status and reassure tenants with false promises. A video presented a case where a landlord promised to repay all loans by selling other land, but the house ultimately went to auction. The victim reported suffering so much that they were prescribed sleeping pills after receiving notice that the house had gone to auction.

Methods that exploit loopholes in the law, such as "exploiting countervailing power," are also frequent. While the countervailing power—the legal effect regarding the house—begins at midnight the day after a tenant files a moving-in report, the effect of a bank loan begins immediately on the day of registration. If a malicious landlord exploits this time difference by secretly taking out a loan using the house as collateral on the same day the tenant files the moving-in report, the tenant's rights are pushed behind those of the bank. To prevent this, the government recommends using the "Standard Housing Lease Agreement," which includes a special clause stating that the landlord cannot take out a loan until the day after the moving-in report is filed.

The Trap of "Unauthorized Contracts" Under the Guise of Being Family

Field investigations have confirmed the dangers of "unauthorized contracts," where individuals conduct contracts claiming to be the spouse of the landlord. The video presented a case where a man, claiming to be the landlord's spouse and showing an ID and family relationship certificate, was actually a spouse undergoing divorce proceedings, and the house in question had been left to the woman as an inheritance from her parents.

Even between spouses or parents and children, the authority to contract for a house is not automatically granted. Without formal evidence of delegated authority, a contract is legally equivalent to contracting with someone who has no authority. To prevent this, one must check a power of attorney and a seal certificate prepared directly by the landlord, and confirm via a direct phone call with the landlord whether the authority was indeed granted. Additionally, payments should preferably be transferred to the landlord's account as listed on the certified copy of the real estate register.

The "Safe Jeonse 3·3·3 Rule" to Protect Deposits

The Ministry of Land, Infrastructure and Transport recommends the "Safe Jeonse 3·3·3 Rule" at each stage of a Jeonse contract.

First, before the contract, you must personally check the surrounding market prices and the certified copy of the real estate register, and verify whether the house is eligible for Jeonse deposit insurance.

Second, at the time of the contract, verify if the real estate agent is in normal business operation, and if an agent appears, thoroughly compare the ID and power of attorney to ensure the landlord and the contractor match. At this time, it is advisable to use the Standard Housing Lease Agreement and safety special clauses.

Third, after the contract, the lease report should be completed on the day of the contract to immediately receive a fixed date. Furthermore, the certified copy of the real estate register should be inspected once more just before paying the remaining balance to check for changes in rights, and the moving-in report must be completed on the day of the move.

Those experiencing difficulties related to Jeonse fraud can receive free legal consultation and support through the "Jeonse Damage and Prevention Support Center."

Source: original video (YouTube)