Amendments to the Special Law on Jeonse Fraud: Where Are the Fundamental Solutions?

A revised version of the Special Law on Jeonse Fraud is set to pass through the National Assembly on August 28, following an agreement between the ruling and opposition parties. While the amendments significantly expand the scope of victim support and recognition, there are concerns that crucial measures for preventing future fraud are still missing. This article explores the key points of the amendment, its limitations, and the ongoing debate about fundamental solutions.

The issue of jeonse fraud has created severe housing instability in South Korea. To address this, a revised version of the Special Law on Jeonse Fraud is expected to pass the National Assembly soon. This amendment aims to enhance support and recognition for victims but has been criticized for lacking sufficient measures to prevent future occurrences.

Enhanced Victim Support

One of the main changes in the amendment is the expansion of victim support. The Korea Land and Housing Corporation (LH) will now be able to purchase affected properties at auction and either provide the profit to victims directly or convert the properties into public rental housing, allowing victims to live rent-free for up to 10 years. This measure is expected to provide significant relief to victims. Additionally, support has been extended to illegal buildings and multi-unit houses, and the upper limit for support has been increased from 500 million won to 700 million won.

Broadened Victim Recognition

The scope for recognizing victims has also been expanded. The LH can now acquire illegal buildings and multi-unit houses, and the limit for the amount of deposit eligible for support has been raised. Furthermore, local governments will be allowed to directly manage affected properties, aiming to reduce gaps in victim protection. As of now, there are 20,949 officially recognized victims, with over 90% having deposits of 300 million won or less.

Lack of Measures to Prevent Recurrence

However, the most significant criticism of the amendment is the absence of adequate measures to prevent future fraud. Essential preventive measures, such as mandating jeonse rights registration and introducing an escrow system for part of the deposit, are notably missing from the amendment. Jeonse rights registration would clarify tenants' rights and facilitate quicker legal actions in case of fraud, while the escrow system would prevent indiscriminate speculation.

What to Do if the Landlord is Unresponsive?

If you are approaching the end of your jeonse contract but cannot get in touch with the landlord, here are steps to take: 

1. Send a notice demanding the return of the deposit (content certification) to the landlord at least two months before the contract ends.

2. Apply for a tenant rights registration order (one day after the contract ends).

3. File a claim for the return of the deposit under the jeonse deposit return insurance (one month after the contract ends).

If these steps seem cumbersome, it's advisable to avoid properties with pre-existing mortgages or trust registrations. If unavoidable, ensure that the contract includes conditions for the removal of such encumbrances.

The amendments to the Special Law on Jeonse Fraud represent a positive step in expanding victim support and recognition. However, the lack of comprehensive measures to prevent future fraud remains a significant concern. To truly address the issue of jeonse fraud, stronger preventive measures must be considered. Continued attention and efforts towards legal and policy improvements are essential.