FSS: "Protect Your Valuable Jeonse Deposit with Return Guarantee"

Jeonse Damage Support Center located inside the Korea Chamber of Commerce and Industry in Gangseo-gu, Seoul. The photo is not related to any specific expression in the article. Photo by Jang Jin-hyeong aymsdream@

[Asia Economy Reporter Song Seung-seop] On the 5th, the Financial Supervisory Service provided guidance on precautions to take when signing a Jeonse contract and how to utilize the Jeonse deposit return guarantee.

First, caution is required when the Jeonse price-to-sale price ratio is high at 70-80% or more, or when the amount of senior mortgage on the registered copy of the real estate register is excessive. This is because it is difficult to find a new tenant at the end of the contract, and it is hard to fully recover the deposit in case of auction disposal. Special care is needed for newly built villas where it is difficult to check the housing price market value. For multi-family houses, it is necessary to check whether there is a Jeonse deposit with priority over the tenant.

It is also important to subscribe to the Jeonse deposit return guarantee in advance. Even after checking the Jeonse price ratio and the registered copy of the real estate register and moving in, there may be situations where the deposit cannot be returned due to the landlord’s deteriorating financial condition or tax arrears at the end of the contract. Even if an auction or legal action is taken, it takes a lot of time, making it difficult to fully recover the deposit. If you subscribe to the guarantee, you can receive the deposit payment from the financial company even in such situations.

Jeonse deposit guarantees can be subscribed through three guarantee institutions (Korea Housing Finance Corporation, Housing and Urban Guarantee Corporation (HUG), and Seoul Guarantee Insurance). You should reasonably choose the most advantageous guarantee institution depending on the institution. KHFC and HUG offer discounted guarantee fees for newlyweds, families with multiple children, low-income individuals, and people with disabilities. KHFC has a low guarantee fee rate but only allows subscription for borrowers using Jeonse loans guaranteed by KHFC. Seoul Guarantee Insurance is characterized by allowing subscriptions for high-priced houses.

If you use HUG’s guarantee product ‘Jeonse Deposit Safe Loan’ or live in rental housing, the return guarantee may already be subscribed, so you should first check whether the guarantee is subscribed.

Also, the return guarantee can be subscribed regardless of the landlord’s consent and must be subscribed before half of the Jeonse contract period has passed. However, for multi-family houses, cooperation from the landlord or real estate agent is required to prepare the ‘Senior Lease Confirmation’ document.

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