"Priority Repayment Retroactively Applied to Jeonse Fraud"... Government Begins Review Following Opposition Proposal

Ruling and Opposition Parties Agree to Pass Special Law on Jeonse Fraud on the 25th
Minimum Deposit Protection Plan Opposed by Government and Ruling Party

The Democratic Party of Korea proposed retroactive application of the priority repayment amount along with an expansion of its scope during discussions on the special law against jeonse fraud in the National Assembly, prompting the government to begin review work. The Land, Infrastructure and Transport Committee’s subcommittee, which initially planned to review the bill on the 16th, may delay the session due to the need for time to simulate multiple proposals presented by the opposition party.

According to multiple ruling and opposition party officials on the 12th, the Democratic Party confirmed that it requested related ministries to consider retroactive application of priority repayment and expansion of eligible recipients during the subcommittee meeting held on the 10th regarding the 'Special Act on Jeonse Fraud.' A People Power Party official explained, "The government said it needs about a week to report to the subcommittee," adding, "It was decided to determine whether to apply priority repayment of deposits based on the simulation results."

On the 3rd, at the National Assembly in Yeouido, Seoul, Kim Jeongjae, the subcommittee chairman of the Land, Infrastructure and Transport Committee, presided over the meeting. On this day, the subcommittee reviewed a bill related to the Special Act on Jeonse Fraud. Photo by Kim Hyunmin kimhyun81@

The priority repayment amount is the minimum amount a tenant can receive ahead of senior creditors such as banks when the house they lived in is auctioned or sold publicly. It serves as a minimum safeguard to protect small-scale tenants. The upper limit of the deposit eligible for priority repayment varies by region. For example, in Michuhol-gu, Incheon, where jeonse fraud damage was severe, tenants can receive up to 48 million KRW if their deposit is 145 million KRW or less. It is estimated that only about 35% of the jeonse fraud victims in Michuhol-gu, Incheon, are eligible for priority repayment.

Until now, the ruling party has opposed this measure, citing concerns that it infringes on the property rights of senior creditors. The government has also expressed opposition to priority repayment, calling it "an act that undermines the cornerstone of the market economy." A Democratic Party official said, "The Democratic Party judged that the government’s plan lacks effectiveness, so we said the deposits should be returned through bond purchases, but since that is not possible, we brought up retroactive priority repayment," adding, "If this is also unacceptable, the government side should propose an alternative."

The government and ruling party are reportedly pushing for a plan to include victims of 'capital-free gap speculation' as subjects under the special law against jeonse fraud. A ruling party official from the Land, Infrastructure and Transport Committee said, "Even if there is only one victim, there may be someone engaging in gap speculation with fraudulent intent," and added, "If the risk of victim occurrence is very high, the government and ruling party explained that even one victim should be included as a victim under the criteria."

The opposition party also proposed a post-settlement method for jeonse deposits similar to the mistaken remittance system operated by the Korea Deposit Insurance Corporation. Democratic Party lawmaker Kim Byung-wook introduced a bill on the same day that includes a method where tenants apply to the Housing and Urban Guarantee Corporation (HUG) for deposit recovery, and HUG purchases the tenant’s deposit return claims against the landlord through post-settlement or other methods, then notifies or requests the landlord to return the deposit. A People Power Party official conveyed the atmosphere, saying, "At the subcommittee, all possible options regarding HUG and other financial institutions are being discussed."

Meanwhile, both ruling and opposition parties agreed to pass the special law against jeonse fraud by the 25th of this month, considering the seriousness of the issue as victims of jeonse fraud have consecutively taken their own lives.

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