Korean Job Discussion Forums

[poet13]

Our housing allowance here has gone up to 400K. I was thinking of trying to come to an arrangement with the landlord for key money. I was thinking maybe 10 million per 100K. At the end of a year, I would make about 12 percent I reckon. I'd be willing to go a little higher, say, 45 million as well.

My only worry is that at the end of the year I might not get my money back.
Or that there might be a delay in returning it.

-Does anybody know what the "rules" are regarding key money, and what precautions I can take?
-Is there a standard contract?
-Is there a required time in which to return the money...like 30 days, or is it upon completion of rental agreement as logic dictates?
-What recourse do I have if the landlord says, "Sorry, I gambled and drank the money."
-Is this a good idea?


Thank you.

[CentralCali]

One of my friends is a Korean teacher and she told me the prudent thing is to insure the key money. To me, that's no different than purchasing loan insurance back home except in this case it's the lender (the tenant) insuring the loan instead of the borrower (the apartment owner).

[poet13]

Interesting. Did your friend say who the insurer was? A company that specializes in key money insurance, or their bank perhaps?

[CentralCali]

She said it was her bank.

[poet13]

Cool. I have a good relationship with mine.

[Jane]

This is not verified, just to give you as much info. as I know..

If you go through a real estate agency, any key money amounting to less than 30 million won, is protected by the government. I think you just have to make sure the real estate agency is.

Also, if your key money amounts to more than 30 million, then it's possible to get a paper from a lawyer saying that in the event your landlord is unable to return your key money and a lien is put on her things, you will be one of the first parties to recieve your money. This paper is not cheap however, costing 500,000won plus, so it's only a good idea if you are giving your landlord a huge sum.

Other ways to protect yourself is to ensure your landlord is in good financial standing, with little debt. To do this, you can obtain a free copy of their credit report from the real estate agency, which states all the debt then have had and still have, including when the debt was paid off. Debt is not erased from this form, strictly struct out, so it's possible to get a sense for their financial status.

Also, make sure the landlord lives locally (meaning not in another country), as in the event something happens, you want to make sure they are relatively accessible.

Key money is still the norm in Korea, and it's true people do get screwed. Protect yourself as much as you can. That's all you can do.

[poet13]

The landlord lives downstairs. I have a two bedroom villa built on the roof on his home. It's sweet. I see them often, and we swap homemade foods. They keep fobbing off their nasty kimchees (kimchee with raw mussells - ugh), and I take them baked goods etc.

Thank you for the tips. I will ask first at my bank whether they can insure it. If so, I will find out the terms....ie what period of time are they given before they have to come up with money before the bank pays. I would imagine that's a rather long period....like a year or something.

The credit check is a good idea, but I wonder how that is viewed in this culture. Do Koreans get offended if you run a check on them? I konw in the US, it was SOP in many transactions, but I don't know the situation here.

I read a year or so ago that 10 million per 100K rent was about standard. Is this still the case?

Thanks again, looking forward to hearing from more people about their experiences with this.

[RACETRAITOR]

Credit checks of landlords are standard practice.

Usually the only way a landlord can pay you back your key money is if the next tenant moves in and pays it to them. If there is no next tenant, you're in trouble.

[big_fella1]

I went to Suyoung office in Busan and registered my lease. Apparently it means I am listed on the title as being near the top of creditors. It cost me w600 (no this is not a typing error) to register. Not sure on maximums but my lawyer (read student) said I am fine with this.

[Milwaukiedave]

bigfella is right about registering the key money, but I can't remember the name of the office that you go to (I'm sure someone else will though). It was less then 1,000 won and you get a settlement date whereby the landlord needs to give you the money.

My situation is similar to Poet's in that my landlord lives in the building (above us actually) and so we have a pretty good relationship with her.

[RyanInKorea]

Hmmm, I am locking in quite a bit of money and I am starting to think I best look into it more. I was told through translation that 'they have to give it back.'

In any event, sounds like registering it would be a step in the right direction.

Ryan

[poet13]

The name of that office would be great...not just Gu office, cause they all seem to be that.

My biggest concern is what RaceT said about next tenant. I understood that landlords that accepted key money only were gambling that they could earn more with your money than they would by charging rent.
By spending it and rolling it over to the next person, it leaves the "last" person with an apartment they may not want.

I certainly don't want to be anyones creditor here.

[Hootsmon]

[JongnoGuru]

Whatever "iron-clad" guarantees you may have on getting your chonsei money back, prepare yourself for a mult-month wait when you WANT to move out if there is nobody with (your) cash in hand ready & waiting to move in.

Way it is.




Might be wiser to pony up the extra rent. Or you could roll the dice.