The Party and Government Push to Amend the Special Law for Supporting Victims of Jeonse Fraud
The Democratic Party of Korea and the government have decided to ensure the recovery of a certain percentage of rental deposits to assist victims of jeonse fraud.
For victims of trust fraud and unauthorized contracts, the Korea Land and Housing Corporation (LH) and others will first provide a minimum guaranteed amount to the victims. Subsequently, based on the actual amount recovered through the sale or purchase of the property, additional payments will be made.
Bok Gi-wang, the head of the Democratic Party’s committee on jeonse fraud, announced these relief measures for fraud victims during a policy coordination meeting held at the National Assembly on the 26th.
Bok stated, “The existing special law on jeonse fraud had significant disparities in recovery rates depending on auctions and other factors, and there was virtually no way to help victims of unauthorized contracts and joint collateral housing.”
To address these issues, the party and government plan to introduce a “minimum guarantee system,” which will ensure the recovery of a certain percentage of rental deposits for victims whose properties have already gone through auctions.
They also intend to retroactively apply these measures to victims whose properties have already been auctioned.
In addition, a “pay-first-settle-later” approach will be applied to protect victims of trust fraud and unauthorized contracts.
Bok explained, “The beneficiaries of the pay-first-settle-later approach are unauthorized contract victims, who will initially receive a minimum guarantee sum, with further payments being made after LH acquisitions and appraisal if a surplus occurs.” He noted that the payment ratio will be determined during the legislative process.
Moreover, for victims of joint collateral, the government will pre-pay a portion of the auction surplus to provide relief.
If the auction for a property affected by joint collateral is completed, before the auction of other joint collateral properties concludes, a portion of the auction surplus—calculated from the difference between the LH appraisal value and the winning auction bid—will be prepaid to facilitate swift recovery for joint collateral victims.
Bok noted that the newly announced measures were developed in consultation with various entities including the Ministry of Land, Infrastructure and Transport, Ministry of Justice, Office for Government Policy Coordination, Planning and Budget Office, Financial Services Commission, Personal Information Protection Commission, and the National Assembly’s Land, Infrastructure and Transport Committee.
Going forward, the party and government plan to swiftly push for the amendment of the “Special Act on Support for Jeonse Fraud Victims and Housing Stability” to introduce and promote these support measures for fraud victims.