Government to Guarantee Up to One-Third of Jeonse Scam Deposits... Prepayment Support for Trust Fraud Victims Before Auction

Enforcement Decree on Jeonse Scam Relief Approved, Effective November 13
LH to Administer Payments and Settlements
Decision Within 90 Days of Application Submission

If, after adding the money returned to a victim of rental fraud to the existing support amount, the total still amounts to less than one-third of their original deposit, the government will compensate for the shortfall. Additionally, an advance payment system will be introduced to assist victims of trust fraud and others, which allows a portion of the deposit to be paid out before legal proceedings are completed.

On October 6, the Ministry of Land, Infrastructure and Transport announced that a revision of the Enforcement Decree of the “Special Act on Support for Victims of Jeonse Fraud and Housing Stability”—which includes these measures—was approved at a cabinet meeting. The revised enforcement decree will take effect on November 13. These two support systems, introduced via legislation in May, could not be implemented until criteria and payment procedures were established. Those detailed standards have now been set.

If a victim’s total—consisting of auction proceeds, profits from the auction, and rent support—adds up to less than one-third of their original deposit, the government will make up the difference, providing this as a minimum support amount.

For example, if a tenant with a deposit of 150 million won receives 20 million won in auction proceeds and 10 million won in auction profit—totaling 30 million won—previously, only 30 million won could be recovered. Under the new scheme, since one-third of the deposit amounts to 50 million won, the government will cover the 20 million won shortfall, allowing the tenant to recover a total of 50 million won.

For victims who signed contracts with individuals lacking the authority to rent out a property, such as trust fraud victims, a “pay first, settle later” system will be applied. Rather than waiting until the completion of auction or public sale procedures, victims can receive support funds upfront, with final settlement based on any additional recovered amounts. The amount of advance payment is calculated as one-third of the deposit minus the sum of any amounts already recovered and rent support. For example, if the deposit is 150 million won and 10 million won was received through rent support, 40 million won will be paid upfront.

Victims seeking support funds should apply to the Korea Land & Housing Corporation (LH). Required documents include the victim determination statement, a copy of the lease agreement, and a certified extract of the resident registration. If it is difficult for the victim to apply directly due to illness or overseas stay, a proxy may be appointed. LH will determine and notify the applicant of payment eligibility and amount within 90 days of receiving the application.

If, after receiving support funds, a victim recovers additional amounts of their deposit that require reimbursement, this must be reported and repaid. Failure to repay within the prescribed period may result in an administrative fine of up to 30 million won, depending on the number of violations.

The recognized scope of costs for public housing providers purchasing affected properties has also been expanded. In addition to auction strike prices, deposits owed to previous tenants—who are not victims of jeonse fraud—may now be included in the recognized costs to facilitate swifter property acquisition. New criteria have also been outlined allowing local governments to provide administrative and financial support to real estate investment companies in which cooperatives established by victims hold more than 50 percent of issued shares.

Additionally, the Ministry of Land, Infrastructure and Transport will be authorized to request information such as landlords’ debt status and delinquency details from credit information agencies to identify information needed for providing victim assistance.

Baek Seung-rok, Director General for Victim Support at the Ministry of Land, Infrastructure and Transport, stated, “We will do our utmost to ensure the smooth implementation of the system by building the necessary infrastructure and thoroughly guiding victims.”

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