"Landlord Credit Information Inquiry Promotion... Addition of Special Clause to Prevent Jeonse Fraud in Contract"

Kongin Junggaesa Association Announces Plan to Prevent Jeonse Fraud
Ministry of Land, Infrastructure and Transport: "Hope to Restore Trust in Kongin Junggaesa through Self-Regulation Efforts"

Choi Woo-sun, Secretary General of the Korea Association of Realtors, is announcing the work plan to prevent jeonse fraud at the "Jeonse Fraud Prevention Measures Announcement and Resolution Meeting" held on the 11th at the Association Central Hall Conference Room in Gwanak-gu, Seoul. / Photo by Noh Kyung-jo felizkj@

[Asia Economy Reporter Noh Kyung-jo] A system that allows real estate agents to check landlords' delinquency history and credit ratings when signing housing lease contracts will be established in the first half of this year. Special clauses to prevent jeonse fraud will be inserted into lease contracts.

The Korea Association of Realtors held a "Jeonse Fraud Prevention Measures Announcement and Resolution Meeting" on the 11th at the central conference hall of the association in Gwanak-gu, Seoul, and announced a business promotion plan with these details.

Landlord credit information will be accessible through the association's self-operated real estate transaction information network called "Hanbang." The association has signed a memorandum of understanding (MOU) with NICE Credit Information and is currently implementing the system, expecting it to be launched as early as March.

Starting this month, special clauses such as "the landlord cannot establish a mortgage or other security rights until the day after the tenant registers their residence and obtains a certified date" will be included in contracts. This is to prevent landlords from abusing the system since the legal effect of the certified date begins the day after the tenant obtains it, even if it is received on the contract day.

A special clause stating "the landlord declares that there are no outstanding national or local taxes or delinquent mortgage interest" will also be introduced. The landlord must sign this directly. If delinquency is discovered after the main contract is signed without prior notice from the landlord, the tenant can cancel the contract. In this case, any money received by the landlord (such as deposits) must be returned to the tenant as principal without separate compensation.

Additionally, a special clause asking whether the parties agree to apply for mediation with the Housing Lease Dispute Mediation Committee before filing a lawsuit in court in case of disputes will be created. It also specifies that landlords must notify tenants in advance if they sell the property.

Real estate agents who intentionally commit fraud or embezzlement will be restricted from joining the compensation system based on civil and criminal judgments. Offices with 10 or more assistant agents or those frequently changing names or offices will be subject to focused inspections. To expand price monitoring from apartments to villas and other housing types, the number of agents will be increased from about 5,000 to 10,000.

Lee Jong-hyuk, president of the Korea Association of Realtors, said, "Real estate agents should be able to share landlord-related information with tenants," adding, "Multi-family houses with fewer than 30 households are the main targets of sales and lease fraud, so the system should be improved to allow qualified individuals to handle related tasks."

The Ministry of Land, Infrastructure and Transport is preparing measures at the government-wide level and said it will further strengthen victim support through additional measures around the end of next month.

Nam Young-woo, Director of Land Policy at the Ministry of Land, Infrastructure and Transport, said, "A significant number of contracts in jeonse fraud cases are conducted through brokerage transactions, and the qualification system for real estate agents and trust in brokers are in a crisis," adding, "I hope today's midnight resolution meeting will be the start of restoring trust in real estate agents."