"Quantum Equivalent Contracts Impossible"
Landlord's Housing Disposal Violates Property Rights
Concerns Over Tenant Dominance Side Effects
"Price Ceiling System Contravenes Market Economy Order"
Existing Contracts' Retroactive Application Raises Unconstitutionality Concerns
[Asia Economy Reporter Kim Hyung-min] As the ruling party and government rush to pass the Lease 3 Acts (Jeonwolse Reporting System, Jeonwolse Rent Cap System, and Contract Renewal Request Right) through the National Assembly, legal circles are raising concerns that these laws may undermine the fundamental principles established by the Constitution and statutes. Additionally, many point out that thorough legal review must precede the legislation to prevent various side effects that could arise from the government's forced intervention in the housing market.
Real estate specialist lawyer Eom Jeong-sook (Beopdo Comprehensive Law Office) diagnosed in a phone interview on the 29th that "if the Lease 3 Acts are implemented, a reversal phenomenon could occur where tenants gain superiority over landlords." Lawyer Eom also interpreted that "restricting landlords' freedom of choice significantly deviates from the original principle of the Civil Act, which requires parties to contract on equal footing."
Lawyers including Eom point out that under the current Housing Lease Protection Act, tenants already receive substantial protection. The environment to rescue tenants from so-called 'gapjil' (abuse of power) by landlords is sufficient. However, if the Lease 3 Acts are enforced, tenants' status will be further elevated, potentially reversing the roles of abuser and victim, which may contradict the legislative intent.
Another lawyer from Seocho-dong, who requested anonymity, explained, "Since the 1990s, tenant rights, which were originally claims (rights effective only between two contracting parties), have been recognized as real rights (rights effective not only between the two contracting parties but also against a large number of third parties), thereby strengthening tenant protection. The current Lease 3 Acts go even further." He added, "Without the consent of the state and tenants, landlords will no longer be able to freely dispose of their housing, which can be seen as an infringement on landlords' property rights."
Lawyers particularly singled out the Jeonwolse Rent Cap System, which limits the increase rate of key money deposits and monthly rent when extending lease contracts, as a 'law to watch closely.' According to the Ministry of Justice and others, the likely plan is for local governments in the relevant areas to decide the rate within a 5% cap. A legal insider expressed concern, saying, "While the intention is understandable, when the state controls a market that should move naturally, new problems inevitably arise, and side effects are bound to follow."
There is also controversy over 'retroactive legislation.' The government and ruling party have announced plans to apply the Lease 3 Acts to existing contracts as well. The government argues that this is fully possible, citing the precedent of retroactively applying tenant key money recovery protections to existing contracts when amending the Commercial Lease Protection Act in 2018.
However, lawyer Eom stated, "Compared to 2018, the scope of retroactive application this time is different, and repeatedly disregarding the constitutional principle of non-retroactivity of laws is not a proper judgment." Meanwhile, the legal community is preparing for a potential 'flood of lawsuits' that may arise once the Lease 3 Acts are enforced. According to the real estate industry, conflicts between landlords and tenants trying to adjust lease contract terms before the law takes effect are becoming apparent in the housing market. The speed of increase in Jeonse prices in Seoul's housing market has also accelerated.
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