Seoul City to Identify Real Estate Agents Involved in Jeonse Fraud

Zero Tolerance Policy for Involvement in Illegal Activities Upon Detection

Unqualified brokerage assistant A conducted brokerage activities such as agreeing not to receive brokerage fees from the buyer and adjusting the price with the seller to finalize the sale price. Licensed real estate agent B only attended the contract signing site and signed the sales contract and the brokerage object confirmation form. The court ruled, "In substance, the unqualified brokerage assistant mediated the sale, and the licensed real estate agent passively tolerated it," sentencing A and B to fines of 500,000 won each. If a licensed real estate agent lends their name to another person to conduct brokerage activities or transfers or rents out their brokerage license, it constitutes an illegal act. Accordingly, Seoul City is responding strongly by canceling the registration of the relevant real estate brokerage office along with revoking the licensed real estate agent's qualification.

On the 8th, Seoul City announced that it will conduct a large-scale full investigation to identify real estate agencies involved in jeonse fraud. It plans to respond strictly to brokers involved in illegal activities.

First, Seoul City will closely gather information on suspicious brokerage offices through organic cooperation with the Ministry of Land, Infrastructure and Transport and the Korea Association of Realtors, and then conduct on-site investigations of all suspicious brokerage offices. If illegal cases are found on-site, it plans to respond strictly with a zero-tolerance policy, including cancellation of the registered real estate brokerage office registration and revocation of qualifications.

Meanwhile, Seoul City is conducting on-site investigations of suspicious jeonse fraud advertisements received through the Real Estate Advertising Market Monitoring Center, and is also requesting investigations into advertisements by unregistered brokers. Therefore, it urged citizens to actively report and provide information when illegal advertisements are discovered.

Additionally, in cooperation with 25 autonomous districts, Seoul City is conducting on-site guidance and inspections focusing on real estate brokerage offices in areas with newly built villas that have a high risk of fraud. The inspection targets are suspicious offices specializing in brokerage of newly constructed buildings in areas where the jeonse price is high compared to the sale price, and offices where brokerage assistants frequently conduct brokerage activities, causing many complaints.

Seoul City also plans to actively recommend the obligations and responsibilities of licensed real estate agents regarding special agreements when drafting contracts and the planned legal amendments, as announced by the Ministry of Land, Infrastructure and Transport on the 2nd in the ‘Jeonse Fraud Prevention and Damage Support Measures.’ This includes adding special clauses that allow contract termination if the landlord sets a mortgage before securing the tenant's legal priority and that allow contract termination and refund of the deposit if the new landlord cannot obtain a guarantee due to a history of guarantee accidents. Furthermore, with the landlord's consent, agents will check and explain to tenants the tenant move-in records, issuance status of fixed dates, and landlord tax payment status, and guide tenants to subscribe to jeonse deposit return guarantees to protect tenants from jeonse fraud risks.

Meanwhile, the ‘Seoul City Jeonse and Monthly Rent Comprehensive Support Center’ is promoting financial support and free legal services for victims of jeonse fraud, and provides on-site consultations by licensed real estate agents and online consultations by appraisers regarding the appropriateness of jeonse contract prices before signing the contract.

Jo Nam-jun, Director of the Seoul City Urban Planning Bureau, said, “Since jeonse fraud continues unabated, we will conduct thorough on-site investigations,” and added, “We will actively cooperate with the recently announced government comprehensive measures and prepare multifaceted city-level plans to eradicate jeonse fraud.”