Financial Services Commission Reaffirms "No Landlord Consent Needed for Jeonse Loans"

[Asia Economy Reporter Kim Hyo-jin] The Financial Services Commission reiterated on the 27th that the landlord's consent is not required when receiving or increasing a Jeonse loan.

In a press release on the same day, the FSC explained, "When handling Jeonse loan guarantees through the Housing and Urban Guarantee Corporation (HUG) and SGI Seoul Guarantee, the landlord's consent is not necessary and notification alone is sufficient," adding, "Currently, banks do not require the landlord's consent as a condition when handling Jeonse loans."

The FSC and the Ministry of Land, Infrastructure and Transport also announced this on the 31st of last month.

The FSC stated, "Recently, some media reports have caused misunderstandings such as 'banks continuously confirm the landlord's consent even though it is not required when extending Jeonse loans,'" and provided this guidance.

The FSC further emphasized, "In cases where a Jeonse loan is extended without an increase, neither the consent nor notification of the landlord is necessary regardless of which guarantee institution is used."

Nevertheless, the FSC plans to actively expand notification confirmation methods through text/mobile messages and receipt by related parties to prevent damages caused by landlords refusing to receive notifications.

However, the FSC explained that banks inevitably verify the fact of the Jeonse contract with the landlord to prevent fraudulent loans such as false loans.

In particular, since there are cases where the Jeonse contract extension is made verbally or implicitly without a written contract, it is difficult for banks to manage loans based solely on the tenant's unilateral claim when extending Jeonse loans.

However, if it is difficult to confirm the extension of the Jeonse contract due to the landlord being continuously unreachable, the FSC informed that there is a procedure to extend the Jeonse loan through individual review, etc.