"Buyer Who Raised Price by 200 Million Won Received Deposit and Extra Money After Canceling Contract" [Real Estate AtoZ]

Ministry of Land Refers Suspected Price Manipulation Cases to Police for Investigation

Person A sold an apartment to Person B for 2.2 billion won. Similar units had previously sold for 2 billion won, making this a contract at a new record-high price, up by 200 million won. After reporting the transaction, the contract was canceled after a certain period. Subsequently, the apartment was sold to another buyer for 2.27 billion won, which was 70 million won higher than the previous price.

In the earlier transaction that was canceled between Person A and Person B, the contract was terminated for reasons attributable to the buyer, Person B. Nevertheless, Person A returned both the deposit and the interim payment. Typically, if a contract is canceled due to the buyer's fault, the deposit is not refunded. Additionally, it was found that Person A had provided extra money to Person B. The police have decided to launch an investigation, viewing this as a suspected case of price manipulation using false real estate transaction reports.

Apartments in the Seocho and Yongsan areas as seen from Namsan, Seoul. Photo by Yonhap News

The Ministry of Land, Infrastructure and Transport announced on October 12 that, after investigating this year's reports of canceled apartment contracts in Seoul, it had identified eight cases suspected of price manipulation. In one case, a transaction between relatives was reported and then canceled, after which the property was sold to another party at a price 100 million won higher. Along with the transaction between Person A and Person B, the Ministry referred these two cases to the National Police Agency for investigation on October 10. The Ministry also plans to refer the remaining six cases for investigation by next week.

The Ministry has recently launched a special investigation targeting canceled transactions over the past two and a half years, starting from March 2023, in certain areas of Seoul where such illegal activities are believed to be frequent. The focus is on 425 suspicious transactions in which contracts were reported at high prices and then canceled without the deposit being forfeited.

If a real estate transaction is falsely reported for the purpose of gaining profit-for example, to inflate prices-both licensed real estate agents and ordinary individuals can face up to three years in prison or a fine of up to 30 million won, according to relevant laws and penalties.

Lee Sang-kyung, the First Vice Minister of the Ministry of Land, Infrastructure and Transport, and Park Sung-joo, the Chief of the National Police Agency's Criminal Investigation Headquarters, met at the National Police Agency on the 10th to discuss cooperation measures to eradicate real estate crime. Provided by the Ministry of Land, Infrastructure and Transport

Lee Sang-kyung, the First Vice Minister of the Ministry of Land, Infrastructure and Transport, met with Park Sung-joo, the Chief of the National Police Agency's Criminal Investigation Headquarters, on October 10 to discuss cooperation measures to eradicate price manipulation and other real estate crimes. The Ministry stated that it will continue to respond strictly, immediately referring cases to the police for investigation as soon as illegal activity is confirmed through its special investigations.

Chief Park said, "We will thoroughly and swiftly investigate intentional market manipulation and other acts that disrupt the market." Vice Minister Lee stated, "We will work with the National Police Agency and the National Tax Service to root out speculative forces, treating maliciously false housing price reports as criminal acts that disturb the real estate market and undermine the motivation of those seeking to buy a home."