"Breaking the Law Is Still Profitable"... Real Estate Deceiving Youth Again

[Suspicious New Villa King: The Second Jeonse Fraud Fear]④
Jeonse Fraud Villa Contracts Brokered Without Risk Warning
"Evidence of Knowing Brokerage, Should Face Severe Punishment"
Real Estate Agent Act Strengthened Last July but Insufficient
"Incomplete Real Estate Brokerage System Needs Comprehensive Review"

"The realtor provided all the necessary documents such as the certified copy of the register and the building ledger, and said there was nothing wrong with the house." (Tenant A, in their 30s, Bucheon, Gyeonggi Province)

"There was no mention that the house was dangerous or that we shouldn't sign the contract." (Kim, late 20s, Bucheon, Gyeonggi Province)

Tenants met by Asia Economy in July and August at homes in Bucheon, Gyeonggi Province, that were victims of jeonse fraud shared these accounts.

The villas they moved into were high-risk properties where rights such as leasehold registration (a system where tenants can apply to the court to secure their jeonse deposit repayment from the owner) had not been extinguished due to past jeonse fraud. However, they signed contracts without knowing this because the real estate agents who brokered the contracts did not provide any explanation about these issues.

"It's like pushing tenants into a pit of fire to die"

Real estate agents in the areas affected by jeonse fraud expressed concerns about such brokerage practices. They stated that properties with remaining rights should neither be occupied by tenants nor introduced by real estate agents. The head of S Real Estate Agency in Simgok-dong, Bucheon said, "For a real estate agent to tell someone to move into a house with leasehold registration is insane. It's like pushing (the tenant) into a pit of fire to die, and such brokerage should never happen."

A representative from T Real Estate Agency in Bucheon also said, "If leasehold registration is set on a typical jeonse property, that might be understandable, but if it is on a foreclosed property, tenants should never move in," adding, "It is basic common sense that the rights of a new tenant are subordinated to the leasehold registration, which means they might not get their deposit back." They emphasized, "Real estate agents must clearly inform their clients about such facts."

Regarding this, Professor Kim Cheon-il from the Department of Real Estate and Construction at Gangnam University explained, "Brokerage of a house with leasehold registration despite knowing the fact is a violation of the agent’s duty," and added, "If it is revealed that the risk was not disclosed in advance, the real estate agent should face severe punishment."

"If the owner refuses, that's the end"?Limits of strengthened laws

After the jeonse fraud incidents, the government amended the Real Estate Agent Act to strengthen the duties of real estate agents, but the revised law only came into effect in July this year.

The government increased regulatory measures after real estate agents were identified as 'accomplices' in the 2022 jeonse fraud cases. According to the National Police Agency’s National Investigation Headquarters, which conducted special crackdowns for over two years following the jeonse fraud incidents, among the 8,323 suspects identified so far, 2,081 (25%) were 'real estate agents or brokerage assistants.' When suspects were categorized by fraud type, 'illegal brokerage and appraisal' accounted for 1,575 (18.9%).

The amendment, which further strengthens the confirmation and explanation duties of real estate agents, has been in effect since July. It requires agents to verify rights such as leasehold priority that are not disclosed in the certified copy of the register and to explain these to tenants.

Experts pointed out that the amendment is still an 'unfinished measure' that fails to protect tenants from jeonse fraud. Professor Han Mundo from the Department of Real Estate at Soongsil Cyber University said, "Despite tougher punishments for those involved in jeonse fraud, agents still use cunning language to disguise their actions as non-fraudulent and evade legal consequences," criticizing, "They collect brokerage fees without caring whether young people get scammed or not." He added, "Even if agents are caught violating the law, the profits outweigh the losses. The current law has many blind spots that enable the facilitation of jeonse fraud."

Professor Kwon Dae-jung from the Department of Real Estate at Sogang University also pointed out, "Even if the agent’s duty to explain and verify is strengthened, if the owner refuses to provide information such as tax delinquencies, the agent cannot verify everything, making the duty practically meaningless." He explained, "From the agent’s perspective, receiving brokerage fees is more important, so they proceed with contracts even if all information is not confirmed."

There are also calls for fundamental improvements to the real estate brokerage system. Professor Kim emphasized, "The incomplete system that produces agents lacking competence and ethical awareness must be reconsidered," and stressed, "There should be supervision and evaluation of agents’ brokerage activities, and legal review of the entire contract process should be made available to the public."