Hundreds of Jeonse Fraud Villas 'Shopping' by Villa King: "Will Quickly Issue Deposit Payment Orders" [2024 National Audit]

Assemblywoman Kim Eun-hye: "There is a Returned Villa King Who Doesn't Repay Money to HUG"
"Signs of Organized and Intelligent Crime"
Yoo Byung-tae, HUG President: "We Will Swiftly Issue Deposit Payment Orders"

"We will promptly issue payment orders to prevent these corporations (villa kings who have won dozens of bids on jeonse fraud houses) from leasing out the properties."

Yoo Byung-tae, president of the Housing and Urban Guarantee Corporation (HUG), stated this on the 16th during the HUG audit held at the National Assembly. This was in response to People Power Party lawmaker Kim Eun-hye pointing out the possibility of a second wave of jeonse fraud, based on Asia Economy’s investigative report on the emergence of suspicious new ‘villa kings’.

Yoo Byung-tae, President of the Housing and Urban Guarantee Corporation (HUG), is speaking at the HUG national audit held on the 16th.
[Photo by Yonhap News]

Lawmaker Kim said, "While HUG struggles to recover deposits from the winning bidders of the victimized houses, there are corporations ‘shopping’ for these properties at rock-bottom prices." He added, "These corporations are re-leasing the auctioned houses without repaying the deposits to HUG, thereby earning profits," emphasizing, "If HUG proceeds with re-auctioning these houses, tenants will inevitably be left homeless."

Since the jeonse fraud incidents in 2022, HUG has reimbursed the deposits to victims who had subscribed to jeonse guarantees on behalf of the landlords. Subsequently, the victimized houses were put up for court auctions. Because the lessee’s registration rights set by the victims remain valid, HUG can recover the support funds it paid by issuing payment orders to the winning bidders. When HUG fully recovers the deposits through this process, the lessee’s registration rights are extinguished. Typically, such houses are auctioned off at low prices due to HUG’s payment orders. However, Asia Economy recently reported that new ‘corporate villa kings’ have emerged who win dozens of bids on these victimized houses but refuse to comply with payment orders. There are as many as 44 such companies in the Seoul metropolitan area.

Lawmaker Kim explained, "In Bucheon, one corporation purchased a victimized house appraised at 230 million KRW for only 4.8 million KRW. They are re-leasing it for a deposit of 15 million KRW and monthly rent of 600,000 KRW without repaying the deposit to HUG, thus making a profit." He added, "The winning bidder who assumed the debt is not repaying the deposit at all," and "HUG has not notified the repayment period, so even when they claim subrogation rights, the corporation does not respond."

Appearance of Kim Eun-hye, member of the People Power Party. [Photo by Kim Eun-hye, Office of the People Power Party]

Especially, Lawmaker Kim said, "There are 144 main lawsuits filed refusing HUG’s payment orders," and "Considering that one law firm represents all these lawsuits, it appears that dozens of corporations buying victimized houses are colluding to avoid repaying debts to HUG and collectively continuing litigation." He added, "Even the first trial takes nearly two years, and sometimes the corporations win in the first trial," calling it "an intelligent and organized criminal act that drags out time and exhausts HUG, which has limited personnel."

Regarding this, President Yoo responded, "When the auction price of jeonse fraud victim houses is lower than the appraised value and the lease deposit is assumed, such problems can occur." He continued, "We are conducting many auctions with changed acquisition conditions so that the winning bidder does not assume the lease deposit," adding, "This prevents the risk of another jeonse fraud incident." He said, "Those familiar with the law know that houses with lessee registration rights can be auctioned, which is risky, but the general public may not be aware, so we will strengthen related publicity." He emphasized, "We will take immediate action against corporations that do not repay deposits by issuing payment orders and swiftly proceeding with litigation to exercise subrogation rights."

In response, Lawmaker Kim criticized, "Young people and newlyweds signed contracts introduced by real estate agents, but saying they did not know the law or check lessee registration rights is something President Yoo should apologize for," pointing out, "Jeonse fraud occurred because of such issues, yet it seems acceptable for fraud to happen again." President Yoo replied, "That is not the intention. We will promptly issue payment orders to prevent such corporations from leasing out properties." He also mentioned plans to discuss revoking the ‘rental business operator’ qualifications of malicious landlords. Yoo stated, "Regarding the maintenance of rental business operator qualifications for malicious landlords, legal amendments are necessary," and "We will consult with the Ministry of Land, Infrastructure and Transport."

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