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Jeonse Fraud

⚖️ Law By CampusDown Wiki Editorial Team Last updated Views 13
Jeonse fraud is the theft of a tenant's lump-sum deposit by a landlord who signs a jeonse lease without the will or means to repay it.
Contents
  1. 1. How jeonse made it possible
  2. 2. Common tactics
  3. 3. Support and economics
  4. 4. Checklist
  5. 5. FAQ
  6. 6. References

How jeonse made it possible

Under jeonse, unique to Korea, a tenant pays no monthly rent but lends the landlord a deposit often worth most of the home's price, returned at lease end (Ambrose & Kim, 2003). It works while prices rise, but the deposit is effectively an unsecured loan. As the market shifted (Ronald & Jin, 2015), the early 2020s brought 'villa king' cases, owners who bought hundreds of units with tenants' money, and mass losses in Incheon. Korea enacted a special support act effective 1 June 2023.

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Common tactics

  • 'Empty-can' jeonse: the deposit is near or above the sale price.
  • No-capital gap investing funded by deposits.
  • Hidden senior claims such as mortgages or tax arrears.
  • Exploiting the one-day gap: move-in registration takes effect at midnight the next day, so a mortgage registered the same day ranks first.

Support and economics

Victims are generally those with legal priority via move-in registration, deposits up to 500 million won, multiple victims, and signs of no intent to repay. Support includes auction deferral, priority purchase rights, public purchase of homes by LH, low-rate loans and legal help; 34,481 cases had been decided by October 2025 (Ministry of Land, Infrastructure and Transport, 2025). Economically it is an information asymmetry problem like Akerlof's (1970) lemons, and Becker's (1968) deterrence logic drives calls for tougher fraud sentencing.

Checklist

  • Check the property register for mortgages and trusts.
  • Ask for proof of paid taxes and senior deposits.
  • Avoid deposits close to the sale price.
  • Confirm eligibility for a deposit return guarantee.
  • Register your move-in and get a fixed date on day one; see the Housing Lease Protection Act.

FAQ

How do I spot an 'empty-can' lease?
Add senior mortgages and deposits; if the total nears the sale price, walk away.
What if my deposit isn't returned?
Seek a lease-registration order, claim on any guarantee, and contact the victim support center.

Sources reviewed: 2026-11-02

References

  1. Ambrose, B. W., & Kim, S. (2003). Modeling the Korean chonsei lease contract. Real Estate Economics, 31(1), 53–74. Leading economic model of Korea's lump-sum jeonse lease.
  2. Ronald, R., & Jin, M.-Y. (2015). Rental market restructuring in South Korea: The decline of the chonsei sector and its implications. Housing Studies, 30(3), 413–432. Analyzes the decline of jeonse and the shift to monthly rent.
  3. Akerlof, G. A. (1970). The market for "lemons": Quality uncertainty and the market mechanism. The Quarterly Journal of Economics, 84(3), 488–500. Classic on markets with hidden information.
  4. Becker, G. S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169–217. Economic model of crime and deterrence.
  5. 국가법령정보센터. (n.d.). 전세사기피해자 지원 및 주거안정에 관한 특별법. Full text of the Jeonse Fraud Victims Support Act.
  6. 국가법령정보센터. (n.d.). 주택임대차보호법. Full text of the Housing Lease Protection Act.
  7. 국토교통부. (2025). 10월중 전세사기피해자등 503건 추가 결정 [보도자료]. Government tally of victim determinations through October 2025.

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Reports and materials that use this theory (Korean)

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Korea's Housing Lease Protection ActKey tenant protections under Korea's Housing Lease Protection Act: opposability through move-in plus resident registration, fixed-date priority for deposits, the 2+2 renewal right with a 5% rent cap, and tips to avoid jeonse fraud.⚖️ LawJeonse deposit return guaranteeHow South Korea's jeonse deposit return guarantee works: why HUG launched it in 2013, the 2022–23 jeonse fraud wave, the 126% eligibility rule, fees, HUG vs. HF vs. SGI, and how tenants claim their deposit when a landlord won't pay.⚖️ LawCriminal fraud (South Korea)Fraud under South Korea's Criminal Act (Art. 347): its Roman and European roots, the four elements of deception, mistake, disposition, and gain, sentences and aggravated penalties for large sums, common scams (secondhand trades, voice phishing, jeonse fraud), and recovery options.⚖️ LawInformation asymmetryWhat information asymmetry means, Akerlof's market for lemons, how adverse selection differs from moral hazard, signaling and screening, examples from insurance, credit, labor markets and corporate finance, and the 2001 Nobel Prize.📈 EconomicsLease Registration Order (Korea)A lease registration order lets a Korean tenant who has not been repaid their deposit register the lease by court order, keeping priority rights after moving out. Learn eligibility, e-filing, the 2023 pre-service reform, move-out timing and next steps.⚖️ LawFixed-Date Confirmation (Korea)A fixed-date stamp (hwakjeong ilja) certifies the date of a Korean lease contract and, with move-in and resident registration, gives tenants priority repayment of their deposit. Learn its 1989 origins, how it differs from opposability, where to get it, and remaining risks.⚖️ Law

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This article was last updated on November 2, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.