Focused Management on Malicious Landlords Withholding Tenant Deposits... "Criminal Charges Also Under Consideration"

HUG, Increasing Deposits Repaid on Behalf of Landlords
As Uncollected Claims Rise, Guarantee Fees Increase... Only Tenants Suffer
Considering Criminal Charges Against Malicious Multi-Home Debtors (Landlords)

Lee Jae-kwang, President of the Housing and Urban Guarantee Corporation (HUG), is taking an oath as a witness at the National Assembly's Public Planning and Finance Committee's audit of the Ministry of Economy and Finance held at the Government Complex Sejong in Sejong City on the afternoon of the 7th. (Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The Korea Housing & Urban Guarantee Corporation (HUG) is strengthening its debt recovery efforts against landlords (debtors) who fail to return tenants' jeonse deposits. In cases where landlords deliberately withhold the jeonse deposits, criminal charges will also be considered.

On the 26th, HUG announced that it is actively pursuing debt recovery activities through focused management of multi-home debtors.

As a public guarantee institution, HUG provides a guarantee payment (subrogation) to tenants who have subscribed to the jeonse deposit return guarantee insurance but fail to receive their deposits from landlords after the contract period expires, and then exercises recourse rights against the landlords.

In April, HUG established the "Focused Management Plan for Malicious Multi-Home Debtors," selecting those with no intention to repay or with uncollected debt amounts exceeding 200 million KRW as targets for focused management.

For those under focused management, HUG is actively pursuing debt recovery by promptly initiating legal procedures without repayment grace periods after subrogation.

Following criticism during the recent National Assembly Land, Infrastructure and Transport Committee’s audit that the amount of deposits defaulted by malicious multi-home debtors is excessively large, HUG plans to further strengthen its debt management and recovery activities.

If malicious multi-home debtors fail to return jeonse deposits to tenants and HUG pays on their behalf but cannot recover the amount from the debtors, only the guarantee fees will increase, ultimately harming low-income tenants.

One malicious multi-home landlord, Mr. Kim, selected as a focused management target by HUG, owned 343 multi-family housing units and defaulted on over 10 billion KRW in tenants' jeonse deposits. When pressured by HUG, he disappeared and hired people to conduct proxy protests in front of the institution head’s residence.

HUG immediately initiates legal procedures such as auctions to recover debts early, and if amounts are not recovered through auctions, it proceeds with recovery procedures against the general assets of the multi-home debtors.

Additionally, for cases suspected of fraud, HUG plans to consider criminal charges against the debtors to prevent further damage to low-income tenants.

Lee Jaegwang, President of HUG, emphasized, "As damages to low-income tenants increase due to reckless gap investments, HUG will strengthen debt management and recovery activities against malicious multi-home debtors to protect the property rights of low-income tenants."