Announcement of the Results of the Second Half of 2022 Housing Fraudulent Subscription Inspection
The Ministry of Land, Infrastructure and Transport announced on the 22nd that it has detected a total of 159 cases of supply order disruption in housing subscription and supply status inspections and referred them for investigation. If confirmed as a violation of the Housing Act by investigative agencies, offenders face imprisonment of up to 3 years or fines of up to 30 million KRW.
This inspection was conducted jointly with the Korea Real Estate Board targeting 50 suspected fraudulent subscription complexes (20,352 households) among the housing complexes supplied in the first half of 2022.
The main type of disruption detected this time was fraudulent subscription by changing the address only to obtain subscription eligibility as a resident of the area or a member of a household without a home, accounting for 82 cases. This includes cases where individuals do not actually reside but report moving in to houses, commercial buildings, warehouses, factories, etc., in the area.
The Ministry of Land plans to refer the 159 detected cases of supply order disruption to the National Police Agency for investigation and will take strict measures such as contract cancellation (housing recovery) and restricting housing subscription eligibility for the next 10 years along with criminal punishment if found guilty of violating the Housing Act.
There were also 3 cases of fraudulent subscription involving false divorce (while actually living together) to evade limits on the number of special supply occurrences or re-winning restrictions. Special supply is limited to once per household, and households that win under the price ceiling housing are restricted from winning again for 10 years. Additionally, 6 cases were investigated where individuals pretended to be separate households without registering marriage (while cohabiting and raising children) to evade subscription restrictions.
Buying and selling subscription accounts was another major type. There were 10 cases where the buyer of the subscription account and the subscriber colluded to transfer financial certificates and other documents for proxy subscription or signed contracts through proxies after winning. Typically, the buyer pays the deposit to the subscriber and demands a waiver of rights and an anonymous resale contract.
Illegal supply involving the business entity colluding with winners to receive a provisional deposit (10 million KRW) and contract for a different unit (royal floor) than the originally won unit reached 55 cases. There were also 3 cases where contracts were signed with winners despite being notified (by the Korea Real Estate Board) of limits on special supply occurrences or re-winning restrictions.
Minister of Land, Infrastructure and Transport Won Hee-ryong said, "Although fraudulent subscriptions have recently decreased, there is concern that illegal supply by business entities may increase in connection with unsold units, so we will strengthen inspections on non-priority supply and other areas."
When cancellations, non-contracts, or contract terminations occur but there are no standby residents, business entities supply units through public recruitment to adult residents living in Korea under the one-household-one-unit standard.
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