Not All Lease Agreements Are the Same? ... Differences Between Jeondaechal and Jeonjeonse

[Asia Economy Reporter Ryu Tae-min] Mr. A, who is about to move, found a house he liked near his company after much effort. However, he learned that the lessor was not the apartment owner but the current tenant. Having never heard of such a jeonse contract before, Mr. A wondered if it would be okay to sign a jeonse contract with the current tenant.

Under current law, it is a legitimate lease contract for a tenant to sublease the rented house. If the tenant has registered a jeonse right, it is classified as jeonjeonse; if not, it is classified as “jeondaechal” (sublease). Both contracts involve making an agreement with the existing tenant, but there are clear differences.

First, jeonjeonse means a tenant who has completed the registration of the jeonse right subleases to a third party. Since the jeonse right registration is completed, a jeonjeonse contract can be made without the separate consent of the landlord. Therefore, when signing a jeonjeonse contract, it is sufficient to contract with the existing tenant, not the landlord. However, if the landlord and the existing tenant included a special clause prohibiting jeonjeonse when registering the jeonse right, then a jeonjeonse contract cannot be made.

Jeondaechal means a tenant who has not registered the jeonse right subleases to another person. Unlike jeonjeonse, since the jeonse right registration is not done, the landlord’s consent must be obtained to sublease. If the tenant subleases to a third party without the landlord’s consent, the landlord has the right to terminate the lease contract. However, if the tenant rents out only a part of the building rather than the entire property, the landlord’s consent is not required. For example, renting out one room out of three rooms in a jeonse house is possible without the landlord’s consent.

The most important thing in jeonjeonse and jeondaechal contracts is to secure rights so that the deposit can be safely returned if there is a problem with the house. In the case of a jeonjeonse contract, it is necessary to check whether the existing tenant is the first-priority jeonse right holder on the registry. After the contract, the jeonjeonse right registration must be completed. If the landlord cannot return the deposit, the right to auction the house or receive distribution after auction belongs to the first-priority jeonse right holder. Even if the jeonse right holder does not participate in the distribution, the new landlord who wins the auction also inherits the jeonse right, so the deposit can be recovered.

In the case of a jeondaechal contract, the subtenant must complete the move-in registration within 14 days after the tenant moves out. This is because the subtenant has no oppositional power just by paying the deposit and monthly rent to the existing tenant. By registering the move-in, the existing tenant’s oppositional power is maintained, so the subtenant is also protected.

It should be noted that in jeonjeonse and jeondaechal contracts, the deposit cannot exceed the amount of the existing jeonse deposit. Also, when the existing jeonse contract ends, the jeonjeonse and jeondaechal contracts also terminate. If a jeondaechal contract is made, the landlord must notify the subtenant of contract termination at least six months before the existing jeonse contract expires.