South Korea to guarantee one-third of jeonse deposits for fraud victims from Nov. 13
In short
South Korea's cabinet approved an enforcement decree amendment to the special act on jeonse fraud victims on Oct. 6, the Ministry of Land, Infrastructure and Transport said, with the measure taking effect on Nov. 13. Victims whose total recovery through auctions and existing support falls short of one-third of their lease deposit will receive the shortfall from the state, and trust fraud victims can be paid part of it before auction procedures end. Applications go to the Korea Land and Housing Corporation, which decides within 90 days.
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South Korea's cabinet approved an enforcement decree amendment to the Special Act on Support for Jeonse Fraud Victims and Housing Stability on Oct. 6, the Ministry of Land, Infrastructure and Transport said. The amended decree takes effect on Nov. 13 and sets out the calculation standards and payment procedures for two systems introduced by a legal revision in May: a minimum guarantee and a prepayment-then-settlement scheme, the ministry said. [ 1 , 4 , 5 , 6 , 8 ]
Under the minimum guarantee system, if the total a victim recovers through auction distributions, auction proceeds, deposit-return claims and rent support falls short of one-third of the lease deposit, the state pays the shortfall. In the example given by Yonhap and Asia Economy, a victim with a 150 million won deposit who received 20 million won from an auction distribution and 10 million won in auction proceeds would receive an additional 20 million won, bringing total recovery to 50 million won. [ 4 , 5 , 6 ]
The prepayment scheme applies to victims of trust fraud and others who signed contracts with parties that had no right to lease the property. Such victims receive all or part of the one-third guarantee before auction or public sale procedures finish, then settle accounts afterwards, according to the ministry. In the example given, a victim with a 150 million won deposit and 10 million won in rent support would receive 40 million won in advance. [ 4 , 5 , 6 , 8 ]
Applications go to the Korea Land and Housing Corporation, which handles payment and settlement. It must decide and notify the applicant within 90 days of receiving an application; Yonhap reported the period can be extended once by up to 30 days, and that applicants can file an objection within 30 days of notification. Victims who recover more money after receiving support must report and return the amount, and failure to repay on time can bring fines of up to 30 million won depending on the number of violations, the ministry said. [ 5 , 6 ]
The decree also lets public housing operators buying damaged homes include in the acquisition cost the deposits they take on for returning money to non-victim tenants, and sets standards for local governments to give administrative and financial support to real estate investment companies at least half-owned by cooperatives formed by victims. The ministry can also ask credit information agencies for landlords' loan, overdue and unpaid credit card information. [ 5 , 6 , 8 ]
Back Seung-rok, head of the ministry's damage support division, said the two systems would give victims a minimum guarantee of one-third of their deposit and provide practical help for their housing stability and recovery, adding that the ministry would focus on building the related systems and informing victims. [ 5 , 8 ]
Why it matters
The decree turns two systems introduced by a May legal revision into operating rules with calculation standards and payment procedures, which the ministry said is needed before victims can actually receive money. For victims of jeonse deposit fraud, the state now sets a floor of one-third of the deposit as a guaranteed recovery and allows earlier payment in trust fraud cases. The documents do not give the number of eligible victims or the expected cost to the government.
Key facts
- The Ministry of Land, Infrastructure and Transport said the enforcement decree amendment to the Special Act on Support for Jeonse Fraud Victims and Housing Stability was approved at a cabinet meeting on Oct. 6. [ 1 , 4 , 5 , 6 , 8 ]
- The amended decree takes effect on Nov. 13. [ 1 , 2 , 4 , 5 , 6 , 8 ]
- Victims whose total recovery falls below one-third of their lease deposit will receive the shortfall as minimum support from the state. [ 1 , 3 , 4 , 5 , 6 ]
- Minimum support is calculated by subtracting amounts recovered through priority rights, deposit-return claims, auction proceeds and rent support from the one-third figure. [ 4 , 5 , 6 ]
- A prepayment-then-settlement scheme applies to trust fraud victims and others who contracted with parties holding no right to lease the property. [ 4 , 5 , 6 , 8 ]
- The Korea Land and Housing Corporation handles applications, payment and settlement, and must decide within 90 days of receiving an application. [ 5 , 6 ]
- Victims who recover more money after receiving support must report and return it, with fines of up to 30 million won for missing the deadline. [ 5 , 6 ]
- The ministry can request landlords' loan, overdue and unpaid credit card information from credit information agencies. [ 5 , 6 , 8 ]
Confirmed by several sources
- The enforcement decree amendment to the jeonse fraud special act was approved at a cabinet meeting on Oct. 6, the Ministry of Land, Infrastructure and Transport said. [ 1 , 4 , 5 , 6 , 8 ]
- The amended decree takes effect on Nov. 13. [ 1 , 2 , 4 , 5 , 6 , 8 ]
- The state guarantees victims recovery of at least one-third of their lease deposit. [ 1 , 2 , 3 , 4 , 5 , 6 , 8 ]
- Minimum support subtracts amounts already recovered, including auction distributions, auction proceeds and rent support, from the one-third amount. [ 4 , 5 , 6 ]
- A prepayment-then-settlement system applies to victims of trust fraud and other contracts signed without the right to lease. [ 4 , 5 , 6 , 8 ]
- Payment and settlement work is entrusted to the Korea Land and Housing Corporation. [ 5 , 6 , 8 ]
- Failure to return funds that must be repaid within the set period can bring fines of up to 30 million won depending on the number of violations. [ 5 , 6 ]
Still unclear
- The number of victims covered by the two systems and the expected cost to the government. No document gives figures for eligible victims or the budget.
- Whether the 90-day period for LH to decide on payment can be extended. Yonhap reported it can be extended once by up to 30 days, while other documents describe only the 90-day period; the extension and the 30-day objection window rest on a single source.
- When victims can begin filing applications with LH. The documents say the decree takes effect on Nov. 13 and describe how to apply, but do not state the first date applications are accepted.
What local media are saying
Timeline, local time
- Chosun Ilbo reports that the enforcement decree amendment was approved at the cabinet meeting and that victims can recover at least one-third of their deposit. [ 1 ]
- Seoul Shinmun reports the government is implementing the minimum guarantee system. [ 3 ]
- Dong-A Ilbo reports the Nov. 13 start date and describes how minimum support and advance payments are calculated. [ 4 ]
- Asia Economy adds the worked example for minimum support and advance payments, LH application requirements and the fine for failing to return funds. [ 5 ]
- Yonhap reports the ministry's announcement with the calculation standards, LH procedures and the ministry's access to landlords' credit information. [ 6 ]
- Seoul Economic Daily reports the ministry statement and the official's comment on the systems' expected effect. [ 8 ]