Unqualified Brokerage Assistants Deceive Using Manager and Director Business Cards
Embezzle Deposit and Jeonse Guarantee Money
[Asia Economy Reporter Ryu Tae-min] Newlywed couple Mr. A signed a lease contract for a villa they liked six months ago at the recommendation of a real estate brokerage assistant, only to face the risk of losing a 30 million won deposit. Mr. A found the listing online, and when a person from the brokerage introduced himself as an ‘isa’ (director) and handed over a business card, he showed no suspicion and was introduced to the house, sending the preliminary deposit to his account. However, when he was later unilaterally notified that the preliminary contract was canceled, Mr. A demanded the return of the deposit, but the brokerage assistant gave absurd answers for months, saying, “I used the deposit for my personal business and don’t have the money now,” and “I will return it soon, please wait.”
Recently, ‘unlicensed brokerage’ lease fraud has been rampant. Brokerage assistants who are not licensed real estate agents proceed with lease contracts and then embezzle deposits and lease guarantees, mainly targeting young people or newlyweds who have little knowledge of real estate.
A brokerage assistant supports a licensed real estate agent, usually guiding customers to property sites and assisting with the agent’s duties. Since no special certification is required and only four hours of job training is needed, they are legally prohibited from directly drafting contracts or explaining contract details.
However, some of them print titles such as manager or director on their business cards, which can mislead customers. The concept of brokerage assistants is not well known to the public, and brokerage assistants are not obligated to inform customers that they are ‘brokerage assistants’ when assisting with brokerage tasks such as site guidance. Moreover, since there is no limit on the number of brokerage assistants, some licensed agents hire dozens at once, raising concerns about whether this exceeds their management capacity.
Recently, due to COVID-19, phone consultations have increased over in-person visits, further expanding the role of brokerage assistants. According to data from the Korea Association of Licensed Real Estate Agents, the rate of accidents caused by brokerage assistants among real estate brokerage intentional accidents rose from 57.6% in 2016 to 67.4% in 2020. Although it dropped to 59.3% last year, it remains a high figure exceeding half every year.
To prevent such problems, a revision bill was proposed last year that includes provisions limiting the number of brokerage assistants employed by a business to not exceed the number of licensed real estate agents and obligating them to notify customers that they are brokerage assistants, but it has not yet been institutionalized. Attorney Jo Se-young of Lawwin Law Firm advised, “Only licensed real estate agents are allowed to discuss or conclude contract matters,” adding, “In situations where contracts are concluded or money is exchanged, it is essential to verify whether the other party is a licensed real estate agent.” Whether someone is a licensed real estate agent can be checked on the Korea Association of Licensed Real Estate Agents website.
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