The Country Where You Need to Study to Get Your Jeonse Deposit Back [Seungseop Song's Financial Light]

To Receive Jeonse Deposit, Prepare Over 10 Documents
Citizens Bear Time and Cost for Refund
Jeonse Guarantee System Leaves User Inconvenience Unaddressed
"Citizens of Developing Countries Must Study to Avoid Loss," Lament

Imagine you are living in a Jeonse rental. The contract end date is approaching. You need to get your money back from the landlord, but they are not responding. Do you think that since you have subscribed to the ‘Jeonse Guarantee,’ there is no problem? If so, that is a big misconception. In Korea, even if you subscribe to the Jeonse Guarantee, you have to go through complicated procedures and pay various costs to get your money back. If you don’t know how, you have to study it yourself by searching the internet. Why is the Jeonse Return Guarantee system so difficult?

On the 28th, the National Assembly passed the Special Act on Jeonse Fraud through bipartisan agreement. The main points are to expand the scope of recognition for victims of Jeonse fraud and to provide the affected housing as public rental housing to victims for up to 20 years. According to the amendment, victims whose rental deposit is 500 million KRW or less can live in the affected housing as LH public rental housing for a basic period of 10 years, with an option to extend for an additional 10 years.

With the passage of the Special Act on Jeonse Fraud, victims now receive broader support. Awareness of Jeonse fraud has also increased, and various institutional improvements have been discussed. Does this mean there are no problems left in our real estate market’s Jeonse system?

Jeonse Is Too Difficult for Me

A rental and sale price list is posted at a real estate office in Seoul. Photo by Kang Jin-hyung aymsdream@

There is still a chronic problem in the Jeonse system: complexity. Many media articles or institutional promotional materials say, “Just subscribe to the return guarantee and file a claim,” which sounds very simple, but the reality is different. When you actually try to get your money back, you have to go through a complicated preparation process. For example, the Korea Housing & Urban Guarantee Corporation guides you to prepare the following documents in advance to receive money through the Jeonse Guarantee.

Guarantee Debt Performance Claim Form

Original Jeonse Contract

Resident Registration Abstract

Documents proving the termination and end of the Jeonse contract

Certificate of All Registered Matters showing the registration of the housing lease right

External Payment Certificate

Account Deposit Request Form (with bankbook copy attached)

Documents proving unpaid Jeonse deposit amounts such as distribution tables (in case of auction or public sale)

Eviction Confirmation and Move-out (Scheduled) Confirmation

Application for Withdrawal and Cancellation of Housing Lease Right Registration Order and related Power of Attorney

Power of Attorney related to receiving distribution funds

Two copies of Seal Certificate

Copy of ID

All these claim documents must be prepared and written by the claimant themselves. The person who needs to get the Jeonse deposit back must personally visit government offices to obtain them. There are costs involved in issuing these documents. Preparing and writing these documents amid a busy schedule means the time required and the stress on the claimant can be enormous. If you manage to prepare the documents perfectly at once, that’s fortunate, but if there is even a small error or deficiency, you have to go through a supplementary procedure again.

If the Landlord Doesn’t Respond, It Gets Even More Complicated

This assumes that the landlord responds well. If contact with the landlord is cut off, the problem becomes much more complicated. To receive the deposit, you need a document proving that the Jeonse contract has been terminated and ended. You must notify the landlord of your intention to terminate the contract at least two months before the contract ends. However, for the document to be effective, the landlord’s reply is required. Whether by document, phone call, or text message, you must receive the landlord’s acknowledgment of “understood.”

If the landlord does not respond, you must go through another procedure called ‘public service by posting.’ Public service by posting is a system used in court or administrative procedures when the address for service is unknown. The documents to be served are posted, and after a certain period, it is considered served. This can be done through the Korean court electronic litigation website. From finding the competent court to drafting the application purpose, submitting supporting documents, and generating the receipt certificate application, the process is difficult and complicated. Litigation costs are also borne by the claimant.

It is not immediate either. To obtain a court ruling for public service by posting, you must prove that you sent several certified letters to the landlord but were rejected. Of course, you may not know the landlord’s exact address. In that case, you need to find the landlord’s exact address. After sending the certified letter, you must obtain the returned mail documents. Bringing these documents along with the lease contract and ID to the local community service center, you can finally find out the landlord’s address.

"I Studied to Get My Jeonse Deposit Back"... Frustrated Tenants

Various Reviews on Jeonse Deposit Guarantees and Public Delivery Systems Posted on YouTube. Photo by YouTube Page Capture

People who have used the Jeonse Guarantee are overwhelmed by the complicated procedures. Kim Jisoo (29, pseudonym), who received her Jeonse deposit last month after going through public service by posting, said, “I studied the procedures by watching blogs and YouTube videos posted by people in similar situations trying to get their deposits back,” adding, “I was angry that I had to spend so much time and money just to get my own money back.” In fact, many posts on various internet communities, blogs, and YouTube introduce how troublesome the procedures were to get the Jeonse deposit back.

Why is the system for getting the Jeonse deposit back so difficult? First, it is because it is a ‘guarantee’ rather than ‘insurance.’ Insurance is a financial product that covers losses that occur by chance and cannot be controlled by the policyholder. It is relatively easy to prove one’s loss, so complicated documents are not necessary. On the other hand, guarantee products cover losses that the guarantor can control. Institutions selling guarantee products have to verify facts meticulously, which creates complicated procedures.

There is also the issue of legal effect. The hassle of having to use public service by posting due to the landlord’s unresponsiveness is a typical example. Jeonse is fundamentally a ‘private contract’ freely made between individuals. The court does not consider unilateral notification alone as conveying the intention to terminate the contract. Therefore, institutions issuing guarantee products require that the landlord’s reply must be received.

Is the Backward Jeonse Guarantee System Okay as It Is?

So, is the current Jeonse system inevitable? Jeonse Guarantee officials told Asia Economy in a phone interview, “The best thing is for users to understand the system well and prepare in advance.” However, Jeonse is a housing system closely related to our daily lives. If many citizens cannot get their deposits back and suffer inconvenience, the system should be improved for convenience rather than neglected. It is clearly problematic that citizens bear all the time and costs to get their money back even though they subscribed to a guarantee product from the government.

Earlier this year, a Ministry of Land, Infrastructure and Transport official told our reporter about the complicated Jeonse system: “In developed countries, even if citizens are ignorant of the system, there is no problem because the law protects them. On the other hand, citizens in developing countries have to know the law to avoid losses. In that sense, a difficult Jeonse system is not desirable.”

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