"Review of Priority Purchase Rights for Tenants Victimized by Jeonse Fraud"... Negative Outlook on Public Acquisition

Operation of Pan-Ministerial TF Led by Deputy Prime Minister for Economy
Decision After Practical Consultation on Grace Period for Gyeong-Gongmae
'Visiting Counseling Bus' Support for Victims

To prevent the worst-case scenario where victims of jeonse fraud are evicted by unfamiliar owners, the government has decided to consider granting tenants a right of first refusal. By next week at the latest, the government plans to specify the suspension period for auctions and public sales and to finalize additional comprehensive measures for the victims.

Minister of Land, Infrastructure and Transport Won Hee-ryong is explaining the direction of measures at a press briefing on jeonse fraud held in the main conference room of Seoul Station on the 19th. / Photo by Ministry of Land, Infrastructure and Transport

On the 19th, Won Hee-ryong, Minister of Land, Infrastructure and Transport, held a press briefing with reporters at Seoul Station regarding jeonse fraud and said, "What good would it do for the government to drag its feet?" He added, "If we focus on reviewing related measures in this week's working-level meetings, I think we will roughly understand the difficulty and nature of the issues."

He also mentioned that the government is considering granting tenants the right of first refusal. Minister Won explained, "In the past, the right of first refusal was operated for defaulted rental housing. Buyers were required to purchase at the highest price, but there were not many cases of its operation. We have proposed this because it seems possible to apply it similarly without violating the Constitutional Court's rulings on unconstitutionality."

To enable the exercise of the right of first refusal, financial institutions, courts, and the National Assembly must act in unison. Detailed consultations are also necessary to prevent secondary damages such as infringement on property rights or misuse. Minister Won added that President Yoon Suk-yeol has instructed active consideration of this matter.

The government-wide task force (TF) formed the day before will decide on whether to support loans for auction payments and whether Korea Asset Management Corporation (KAMCO) will purchase claims and proceed with collection. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho will support the overall discussions.

Regarding the proposal circulating in political circles for advance compensation of jeonse deposits followed by claims for reimbursement, Minister Won expressed a negative stance. He emphasized, "It is uncertain whether victims would accept a loss confirmation method where only 50-70% of the deposit is recovered through advance compensation, and full repayment by the state means the taxpayers bear all the costs, so social consensus is necessary."

On public purchase rental housing, he said, "If it helps victims, there is no reason not to consider it, but in cases like the Michuhol-gu incident in Incheon, where fraud was committed by maximizing senior secured claims, even if purchases are made, the money does not go to the victims. If taxpayers' money only benefits senior creditors, I am not sure the public would be pleased."

Regarding rumors that the auction suspension period would be set at "4 months or 6 months," he responded, "Nothing has been decided." He added, "An indefinite suspension is not possible, and whether it will exceed one year or be conditional will be determined through working-level consultations."

The Ministry of Land, Infrastructure and Transport also decided to operate a 'mobile counseling bus.' This was discussed at an emergency meeting held that morning with the Korean Bar Association, Housing and Urban Guarantee Corporation (HUG), and the Korean Psychological Association to support legal and psychological counseling for victims of jeonse fraud.

Minister Won said, "We will form an advisory group of more than 100 experts, including legal professionals and disaster/crime psychology specialists, to match victims one-on-one or in small groups. Starting tomorrow, we will immediately deploy the mobile counseling bus to visit victims' homes, and if necessary, attempt individual home visits or phone consultations."

He also stated, "I apologize and feel heavy-hearted that we are only now implementing measures that were under consideration after tragic incidents occurred. I accept criticism that what is possible now was not possible a month ago."