[Tracking Jeonse Fraud Reality]⑥ "The Entire Complex" Collapsed in Incheon Michuhol-gu

[Asia Economy Reporter Ryu Tae-min] "I was completely devastated at the thought that I might not get a single penny of my jeonse deposit back."

On the 5th, I met Ms. Ahn Sang-mi at an apartment complex in Sungui-dong, Michuhol-gu, Incheon, who recalled the past with frustration. Ms. Ahn, who moved into a jeonse lease in this area in 2020, was shocked last June when she heard the devastating news that the entire apartment complex she lived in had become a 'Kkangtong Jeonse' (empty shell jeonse). She said, "Suddenly, identical letters were inserted into every apartment mailbox, so I checked the residents' communication group and found out that over 50 tenant households in the complex had simultaneously received auction notices, which made me realize something was seriously wrong," recounting the situation at the time.

The Michuhol-gu area is densely populated with 'solo apartments' or 'urban-type residential housing' consisting of one or two buildings. A builder known as the so-called 'Construction King,' Mr. A, personally constructed most of the 2,700 buildings in the area over the past decade. He increased his real estate holdings by borrowing names from acquaintances to build new solo apartments or villas, then using the collected jeonse deposits and mortgage loans to build more multi-family housing.

According to tenant testimonies, Mr. A took out loans secured by these houses and invested several hundred billion won in a development project located outside the metropolitan area. He also invested tenants' jeonse deposits as project funds, but problems began when the project faltered. When Mr. A could no longer cover the costs, the houses he owned were successively auctioned off, and the house where Ms. Ahn lived was no exception.

In desperation, Ms. Ahn contacted the real estate agent who had been communicating with the landlord on her behalf, but received only answers that they did not know anything. Frustrated, she eventually sent a text message to the landlord but was met with silence. About a month after the incident, she finally received a fruitless reply saying, "Sorry. Please wait a little longer."

Determined not to just stand by, Ms. Ahn formed the 'Michuhol-gu Jeonse Fraud Countermeasure Committee' with other apartment residents to devise solutions. Currently, 66 affected complexes in the area around Subway Line 1 stations Dowon and Dohwa, including Sungui-dong, Dohwa-dong, and Juan-dong in Michuhol-gu, are participating in the committee. The committee estimates that a total of 2,805 households have been victimized by the Kkangtong Jeonse fraud. Of these, approximately 1,890 households have been auctioned off, with the expected amount of lost jeonse deposits reaching a staggering 90.7 billion won.

The committee has been consistently engaging in collective actions. Red banners demanding measures to rescue victims of jeonse fraud were prominently displayed on balconies throughout the apartment complex where Ms. Ahn lives. Inside the complex, posters indicating the apartment as a victim of jeonse fraud, such as 'Jeonse Fraud Under Investigation' and 'Contract Caution,' were plastered everywhere. They also expressed their determination to fight with slogans like 'No Eviction Without Jeonse Refund.'

Signs of these collective actions were easily found throughout the Sungui-dong area. Across the five-lane road from Ms. Ahn’s apartment complex, another complex displayed red banners on balconies. Nearby, there was even a complex where all floors united to hang a sign reading 'Return Jeonse Fraud Deposits.'

As news of this jeonse fraud spread, residents’ anxiety has been growing. Mr. Lee Seung-hee (33), who moved to a villa in Sungui-dong two and a half years ago, said, "I was shocked to hear that a large-scale jeonse fraud occurred in our neighborhood," and added, "I repeatedly checked to make sure there were no issues like Kkangtong Jeonse with the house I live in." Mr. Lee, who works at a restaurant in Sungui-dong, reported, "Since the news about the jeonse fraud came out, many customers dining here have been discussing the issue."

Concerns have also been raised among prospective tenants visiting the area. A representative from A Real Estate Agency in Sungui-dong said, "Recently, the number of people looking for jeonse properties in this area has noticeably decreased," adding, "Even those interested hesitate to sign contracts due to fears of jeonse fraud." The head of B Real Estate Agency in the area lamented, "Rumors that some real estate agencies are involved in the jeonse fraud have spread, causing innocent agencies to suffer damages as well."