[Tracking Jeonse Fraud]③ "Our Newlywed Home Is Up for Auction"... Tears of Prospective Newlyweds

[Asia Economy Reporter Ryu Tae-min] “I was dreaming of a happy newlywed life, but this feels like a bolt from the blue. I was looking for a bigger newlywed home, but now I’m worried sick that even the house I’m living in might be taken away. Thinking about the future is so devastating that I can only sigh.”

Mr. Lee (35), who lives in Juan-dong, Michuhol-gu, Incheon, is a soon-to-be newlywed couple with a wedding scheduled for the end of this year. After dating his girlfriend for over two years, they promised a lifetime together, and he was living happier days than anyone else, working diligently and saving money for a sweet married life. But the joy was short-lived. Last year, when the lease fraud committed by a construction businessman known as the “Construction King” was exposed to the public, Mr. Lee suddenly faced the risk of losing his newlywed home.

The total lease deposit Mr. Lee is at risk of losing is 73.5 million KRW. Having moved from one monthly rent place to another, he finally relocated in December 2019 to a larger apartment with a lease deposit. Although there was a mortgage of 127 million KRW on the property, he trusted the real estate agent’s assurance that the landlord owned multiple buildings and had no financial problems. Especially after the agent provided a compensation certificate promising up to 100 million KRW in case of any issues, he felt reassured and signed the contract. Since there were no problems after moving in, he even renewed the lease in December 2021 with a 5% increase in the deposit.

He found out that his home was going to be auctioned in September last year. He realized the seriousness of the situation when a resident posted a notice in the apartment elevator stating, “Our apartment is a ‘Kkangtong Jeonse’ (empty lease).” Overwhelmed with anxiety, he tried calling the landlord several times to ask what was going on, but could not reach him at all.

Eventually, Mr. Lee’s home was swiftly put up for auction. The auction started in December last year, and the first auction is scheduled for May to June this year. With less than six months until the wedding, he is about to lose his precious home. Mr. Lee said, “Until last year, my family was looking into newlywed housing subscriptions so we could move to a bigger and better new home, but now I’m about to be kicked out without even a place to live.” He added, “The loan maturity is this year, and I don’t know how long the lawsuit will take, so I feel completely helpless.”

The bigger problem is that even if the house is sold at auction, it is difficult to recover the full lease deposit. Some apartment complexes in Michuhol-gu that suffered lease fraud by the same construction businessman have already undergone court auctions, but most auctions have failed in the first and second rounds. With the overall housing market slowing down and demand decreasing, combined with complicated rights issues, bidders are reluctant to participate. It is even known that some tenants have reluctantly bid in the third auction themselves to buy the house.

Moreover, the apartment where Mr. Lee lives is not even properly maintained. The management company is suspected to be linked to the landlord, the “Construction King,” and as the lease fraud case entered investigation, they abandoned apartment management since there was no longer any profit to be made. Mr. Lee said, “There were times I had to climb stairs for a week because the broken elevator wasn’t fixed,” and added, “When the fire alarm broke, the management company took it away and some units have not had it reinstalled, making the safety situation vulnerable.”

Mr. Lee is spending anxious and bleak days. He revealed, “I heard that the landlord, as a rental business operator, did not even subscribe to the mandatory tenant deposit guarantee insurance.” He also said, “The stress caused such severe headaches that I had to take painkillers for months to endure it.” He continued, “I heard that some victims of lease fraud even contemplated extreme measures and climbed onto outdoor units,” and added, “I sincerely hope the government recognizes this tragic situation and helps resolve the problem.”