Court: "Hiding Unpaid Jeonse Loan from Landlord Constitutes Fraud"

Landlord Gives Entire 500 Million Deposit and Takes on 400 Million Loan
Appeals Court: "Victim Deceived"... Sentenced to 1 Year and 6 Months Imprisonment

An apartment in Apgujeong-dong, Seoul

[Asia Economy Reporter Seongpil Cho] A tenant who received a jeonse deposit with a loan from the landlord but did not use it to repay the loan was sentenced to prison. The tenant did not inform the landlord that he had failed to repay the loan debt. The court ruled that fraud by omission was established.

The Seoul High Court Criminal Division 5 (Presiding Judge Kang-yeol Yoon) on the 10th sentenced Kim, who was indicted for fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, to 1 year and 6 months in prison and ordered his immediate detention. The court stated, "Kim had an obligation to inform the landlord that he did not repay the loan while receiving the return of the jeonse deposit," and "by not informing, he deceived the landlord, which constitutes fraud."

In December 2015, Kim rented an apartment owned by Choi in Apgujeong-dong, Seoul, for 500 million won and took out a 400 million won loan. Choi cooperated with Kim's jeonse loan and signed a 'Consent to Establish a Pledge and Confirmation of Return of Jeonse Deposit' with the insurance company. It stated that the loaned deposit would be repaid directly to the financial institution.

However, in July 2017, Choi forgot about the consent to establish the pledge and returned the full 500 million won jeonse deposit to Kim. Kim did not inform Choi that he had not repaid the 400 million won loan and invested most of the deposit in options trading, resulting in losses. Consequently, the insurance company seized Choi's apartment and filed a return lawsuit. In the lawsuit, the court ruled that Choi must pay the insurance company 400 million won plus interest. From Choi's perspective, he suffered a loss by returning 500 million won to Kim and also paying 400 million won to the insurance company.

The court judged that Kim's actions, which caused such damage to Choi, constituted criminal fraud. Kim argued during the trial that he had no obligation to notify the landlord of his failure to repay the loan, so he could not be considered to have deceived Choi, but the court rejected this. The court criticized, "The nature of the crime, which caused the landlord to bear the burden of his loan debt, is very serious." However, it added, "Considering that Kim continued to repay the loan to the insurance company, reducing the balance to about 190 million won."

This content was produced with the assistance of AI translation services.