Korea Consumer Agency Received 190 Consultations Over 2 Years and 6 Months
52% of Cases Involved Contract Cancellation or Termination
"Thorough Review Needed Before Signing a Contract"
On July 13, the Korea Consumer Agency announced that consumers should exercise caution, as there have been recent cases where individuals, after seeing advertisements for private rental housing tenant recruitment and paying a contract deposit, later discovered that the payment was classified as a membership fee or investment, resulting in their inability to recover the deposit.
Notice Advising Caution for Investment in ‘Long-Term General Private Rental Housing’. Provided by Pocheon City
From 2023 through last month, over the past two years and six months, a total of 190 consultations related to private rental housing were received at the 1372 Consumer Consultation Center. The number increased from 46 cases in 2023 to 85 cases in 2024. In the first half of this year alone, 59 cases were reported, marking a 40.5% increase compared to the same period last year.
Examining the reasons for consultation, the most common was 'contract cancellation or termination,' with 98 cases (51.6%), followed by 'contract non-fulfillment' with 20 cases (10.5%), and 'unfair practices' with 14 cases (7.4%).
Major consultation examples included: cases where consumers believed they were entering into a private rental housing lease contract, paid a deposit, and then requested cancellation but were denied a refund on the grounds that the payment was a cooperative investment; cases where, after paying a deposit related to private rental housing, consumers discovered that the project had not received business approval and the construction site could not be used; and cases where all contact was lost after the contract was signed.
The Korea Consumer Agency emphasized that particular caution is needed regarding false advertisements by unofficial organizations that have not undergone proper authorization, which recruit members, investors, or promoters but falsely present this as official cooperative membership, tenant recruitment, or sales.
The agency explained that, at this stage, there is no business plan approval, and it is impossible to verify whether there are legal rights to use the land (such as ownership or usage rights necessary to proceed with the construction project on the site). As a result, there is a risk that the project could be delayed or canceled, leading to financial losses such as membership or investment fees.
In particular, consumers should be wary of advertisements promising 'unit designation' or 'fixed deposit' before business plan approval, or those that induce contracts at prices significantly lower than market value. Caution is also advised if pressured to sign a contract by claims that only a few units remain, or if asked to pay a deposit in advance without being provided with a contract.
As similar cases are spreading nationwide, local governments in Sejong, Goyang, Yongin, Cheonan, Gwangju, and other regions are providing guidance on precautions related to private rental housing membership recruitment through their websites and other channels.
Before signing a contract, consumers should always check with the relevant local government to confirm whether the private rental housing project has received business plan approval, whether the site is eligible for private rental housing construction, and whether the contract includes provisions for the return of membership or investment fees. After signing, it is important to retain all relevant documents, such as the contract, explanatory materials (brochures, etc.), and transaction records.
The Korea Consumer Agency advised, "If you join an unofficial organization without proper authorization, it is difficult to receive legal protection, and the return of membership or investment fees must be resolved civilly between the parties according to the contract. Therefore, it is essential to thoroughly review and carefully consider all aspects before signing a contract."
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