[Taemin Ryu's Real Estate A to Z] Can Foreign Tenants Also Be Protected by the Lease Protection Act?

Application of the Lease Protection Act When Reporting Change of Residence
The Jeonwolse Reporting System Also Requires Mandatory Reporting for Foreigners

[Asia Economy Reporter Ryu Tae-min] As the number of foreign tenants has recently increased significantly, confusion continues on-site over whether they can also be protected under the Housing Lease Protection Act. Since the applicability of the Lease Protection Act varies depending on the situation for foreigners, caution is required.

According to the Court Registry Information Plaza on the 8th, the number of foreign tenants in Seoul who received a confirmed date this year up to August was 13,398. This is 5.4 times higher than the 2,472 during the same period last year. It is about 30 times more than the 451 foreign tenants during the same period in 2019.

The sharp increase in the number of foreign tenants appears to be due to the implementation of the Jeonwolse Reporting System starting in June last year. The Jeonwolse Reporting System is one of the "Three Lease Laws" passed on July 31, 2020, which requires landlords and tenants to mandatorily report contract details within 30 days from the contract date if the deposit exceeds 60 million KRW or the monthly rent exceeds 300,000 KRW. Failure to comply results in a fine of up to 1 million KRW.

In the case of the Jeonwolse Reporting System, reporting is required regardless of nationality if the criteria are met. Before the system was implemented, many foreign tenants who signed monthly rent contracts did not register their residence to hide rental income. However, after the system was enforced, foreign tenants are also required to report, which has significantly increased the number recorded in statistics.

On the other hand, under the Housing Lease Protection Act, foreign tenants are generally not eligible for protection. However, according to Article 88-2, Paragraph 2 of the Immigration Control Act, foreign tenants can be protected under the Housing Lease Protection Act if they have taken possession of the housing and have reported a change of residence. The change of residence report is a system similar to the Korean resident registration, where foreigners report their new residence to the head of the local government when they change their place of stay.

If a foreign tenant receives a confirmed date along with the change of residence report, they can also acquire the right of priority repayment. The right of priority repayment is the tenant's right under the Housing Lease Protection Act to be repaid the deposit first. If the leased housing is auctioned or publicly sold, having the right of priority repayment allows the tenant to receive payment from the auction proceeds before other subordinate creditors, thus protecting the jeonse deposit.

This also applies to overseas Koreans residing in Korea. If a person holds both Korean nationality and foreign permanent residency, they must report to the head of the local immigration office to be covered by the Lease Protection Act domestically. Additionally, if they receive a confirmed date along with the domestic residence change report, they can also acquire the right of priority repayment.