Ending Broker "Ostracism" in Real Estate... Bill to Ban Business Obstruction

Bipartisan Former and Current Land Committee Secretaries Jointly Sponsor Bill
Administrative Fines for Restricting Co-brokerage or Excluding Specific Brokers
Aimed at Preventing Price Inflation and Disruption of Low-priced Listings

A bill has been introduced to regulate acts of "business obstruction" among brokers in the real estate brokerage market. The aim is to put in place an institutional mechanism to prevent cases, seen in some areas, where influential licensed real estate agents or groups restrict co-brokerage or exclude certain brokers from business activities. By explicitly defining business obstruction as a punishable act, the bill seeks to ease closed brokerage networks and restore fair competition.

Yonhap News Agency

On the 11th, Bok Kiwang, a Democratic Party lawmaker who serves as secretary of the National Assembly’s Land, Infrastructure and Transport Committee, and Kwon Youngjin, a People Power Party lawmaker (former secretary), jointly sponsored a partial amendment to the Licensed Real Estate Agents Act that contains these provisions. The bill was jointly introduced based on an agreement reached after discussions among the Ministry of Land, Infrastructure and Transport, ruling and opposition party secretaries, the Korea Association of Realtors, and the proptech industry, and it was referred to a subcommittee of the National Assembly on the 9th. From here, it will go through review by the subcommittee, resolution at a full session of the standing committee, review by the Legislation and Judiciary Committee, and then a vote at a plenary session.

The amendment adds Article 28-2 to the Licensed Real Estate Agents Act to prohibit "acts that unjustly restrict brokerage of specific properties or restrict co-brokerage by other brokers, thereby obstructing business." It also stipulates that violations will be subject to administrative fines.

Conflicts between brokers are reported to occur frequently in the field. In areas where licensed real estate agents face excessive competition, some groups are said to collude to exclude certain licensed agents from co-brokerage and, furthermore, to engage in price inflation and disruption of low-priced listings. These actions are ultimately leading to infringements of sellers' property rights. Because certain agents hold listings and do not share them with other brokers, transactions are not concluded at fair prices, and properties are not being absorbed smoothly by the market.

An official in the real estate industry said, "Due to long-standing practices in the brokerage industry, newly opened licensed real estate agents are effectively marginalized if they do not join the local cartel," adding, "Given the increasingly negative public perception of the brokerage market, including due to jeonse fraud, some institutional improvements will be necessary to strengthen soundness."

This amendment was prepared in the follow-up discussion process after lawmakers Bok Kiwang and Kwon Youngjin introduced an amendment to the Licensed Real Estate Agents Act in July last year to designate the Korea Association of Realtors as a statutory body. The previous amendment was a bill to elevate the association to a statutory body and impose obligations to establish ethical rules and carry out public-interest activities, after illegal practices by some licensed agents, such as jeonse fraud, "empty-can" jeonse, and false listing advertisements, became widespread. A statutory body is an organization established and operated on the basis of law, and the Korea Association of Realtors will henceforth be subject to the supervision and oversight of the Ministry of Land, Infrastructure and Transport. This bill passed the National Assembly plenary session on January 29. It will take effect six months after promulgation, following deliberation by the Cabinet.

The preparation of ethical rules is still at an early stage. The association held a meeting last week with officials from its branches nationwide to gather feedback from the field, and it is also said to be exchanging views with the Ministry of Land, Infrastructure and Transport at the working level. A representative of the Korea Association of Realtors explained, "Discussions on establishing ethical rules are only in the initial stage," and "specific details and types of sanctions have not yet been finalized."

This content was produced with the assistance of AI translation services.