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highstreet
Joined: 13 Nov 2010
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 Posted: Mon Feb 06, 2012 9:32 am Post subject: What happens if you can't get a Housing Deposit back? |
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| What is the process? |
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alongway
Joined: 02 Jan 2012
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| Posted: Mon Feb 06, 2012 2:59 pm Post subject: |
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| You take them to court, assuming you win, they have a certain amount of time to pay. if they don't then you can have the court go to their house and start putting auction stickers on their stuff, at that point they'll usually pay up. |
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Yaya
Joined: 25 Feb 2003
Location: Seoul
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| Posted: Mon Feb 06, 2012 3:08 pm Post subject: |
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| Get proper legal advice and do NOT believe hearsay. There is a process in place and so your job is to find that process. Ask a knowledgable real estate agent or someone who would know, like a Korean friend or something. |
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Mon Feb 06, 2012 5:10 pm Post subject: |
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It depends.
If the propery is "owned" with no loans against it, you can get all of your money back.
If the owner owes money, then the bank gets the difference and you are only guaraneed up to a certain amount of your deposit. (When my wife worked in Real estate 7 years ago, it was around 18 million won).
One of the first things you should do when putting down a deposit is have your agent do a check on how much money is owed on the house, if they are speculators as opposed to buyers, you may be in trouble.
I hope things work out. |
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Beeyee
Joined: 29 May 2007
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| Posted: Mon Feb 06, 2012 10:36 pm Post subject: |
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| riverboy wrote: |
It depends.
If the propery is "owned" with no loans against it, you can get all of your money back.
If the owner owes money, then the bank gets the difference and you are only guaraneed up to a certain amount of your deposit. (When my wife worked in Real estate 7 years ago, it was around 18 million won).
One of the first things you should do when putting down a deposit is have your agent do a check on how much money is owed on the house, if they are speculators as opposed to buyers, you may be in trouble.
I hope things work out. |
This.
You absolutely have to get the estate agent to run a check on the owner to see how much debt they have. In the place I live now, I put down 30 million but am only guaranteed 22 of it if the s**t hits the fan because of the debts of the owner. It's a risk but one that I was willing to take. |
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motiontodismiss
Joined: 18 Dec 2011
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| Posted: Tue Feb 07, 2012 1:01 am Post subject: |
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None of this would be a problem if the law required landlords to have the deposit held in escrow. They can't touch the money, and the escrow company has it so no problems wrt to payment.....
Of course the government won't do it because they're incompetent.
Back on topic, I second the seek legal advice bit. |
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alongway
Joined: 02 Jan 2012
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| Posted: Tue Feb 07, 2012 1:03 am Post subject: |
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| motiontodismiss wrote: |
None of this would be a problem if the law required landlords to have the deposit held in escrow. They can't touch the money, and the escrow company has it so no problems wrt to payment.....
Of course the government won't do it because they're incompetent.
Back on topic, I second the seek legal advice bit. |
The entire point of the system is that the landlords can invest the money to get some return.
How can they do that if it's in escrow? |
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motiontodismiss
Joined: 18 Dec 2011
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| Posted: Tue Feb 07, 2012 3:08 am Post subject: |
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| alongway wrote: |
| motiontodismiss wrote: |
None of this would be a problem if the law required landlords to have the deposit held in escrow. They can't touch the money, and the escrow company has it so no problems wrt to payment.....
Of course the government won't do it because they're incompetent.
Back on topic, I second the seek legal advice bit. |
The entire point of the system is that the landlords can invest the money to get some return.
How can they do that if it's in escrow? |
The escrow company would invest it in an interest-bearing financial instrument of some kind and the landlord would be entitled to the interest and only the interest. One of the reasons the real estate market is such a basket case is because the landlord takes the jeonse money, buys another house with it, puts that on jeonse, and the chain goes on and on and on. This is the thing that fueled the speculation boom in real estate. The other problem is landlords sometimes pays off loans (the property's already leveraged to the hilt) with jeonse money and then have no money to return to the tenant when the contract expires.
Forcing the money to be placed in escrow would stop the speculation and protect tenants. The jeonse money is NOT the landlord's to spend on whatever. It was originally meant to be security for the home that the landlord can put in the bank account and earn interest, which would serve as "rent". Besides, people who are able to pay $300k in two or three years rent out their properties on a traditional rental arrangement. These days, someone who wants to rent out their property via jeonse is pretty desperate for money and usually doesn't have the financial ability to come up with 6 figures by the end of the contract.
Last edited by motiontodismiss on Tue Feb 07, 2012 3:12 am; edited 1 time in total |
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alongway
Joined: 02 Jan 2012
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| Posted: Tue Feb 07, 2012 3:11 am Post subject: |
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| motiontodismiss wrote: |
| alongway wrote: |
| motiontodismiss wrote: |
None of this would be a problem if the law required landlords to have the deposit held in escrow. They can't touch the money, and the escrow company has it so no problems wrt to payment.....
Of course the government won't do it because they're incompetent.
Back on topic, I second the seek legal advice bit. |
The entire point of the system is that the landlords can invest the money to get some return.
How can they do that if it's in escrow? |
The escrow company would invest it in an interest-bearing financial instrument of some kind and the landlord would be entitled to the interest and only the interest. One of the reasons the real estate market is such a basket case is because the landlord takes the jeonse money, buys another house with it, puts that on jeonse, and the chain goes on and on and on. This is the thing that fueled the speculation boom in real estate. The other problem is landlords sometimes pays off loans (the property's already leveraged to the hilt) with jeonse money and then have no money to return to the tenant when the contract expires.
Forcing the money to be placed in escrow would stop the speculation and protect tenants. The jeonse money is NOT the landlord's to spend: it's an interest-free loan to the landlord that has to be paid back when the tenant vacates the house. People who are able to pay $300k in two or three years rent out their properties on a traditional rental arrangement. |
Except as it stands now landlords are free to invest it in many different kinds of ways. Some landlords might want to take a larger risk, they have to be responsible for it, but they could make more money out of it in the long run.
That's why the entire system works the way it does. If the landlords were getting only a pittance in interest, they'd probably be charging a much higher rate for the monthly on top of huge deposit.
All you would do would drive prices higher as landlords looked to make up the loss. |
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motiontodismiss
Joined: 18 Dec 2011
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| Posted: Tue Feb 07, 2012 3:15 am Post subject: |
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| alongway wrote: |
| motiontodismiss wrote: |
| alongway wrote: |
| motiontodismiss wrote: |
None of this would be a problem if the law required landlords to have the deposit held in escrow. They can't touch the money, and the escrow company has it so no problems wrt to payment.....
Of course the government won't do it because they're incompetent.
Back on topic, I second the seek legal advice bit. |
The entire point of the system is that the landlords can invest the money to get some return.
How can they do that if it's in escrow? |
The escrow company would invest it in an interest-bearing financial instrument of some kind and the landlord would be entitled to the interest and only the interest. One of the reasons the real estate market is such a basket case is because the landlord takes the jeonse money, buys another house with it, puts that on jeonse, and the chain goes on and on and on. This is the thing that fueled the speculation boom in real estate. The other problem is landlords sometimes pays off loans (the property's already leveraged to the hilt) with jeonse money and then have no money to return to the tenant when the contract expires.
Forcing the money to be placed in escrow would stop the speculation and protect tenants. The jeonse money is NOT the landlord's to spend: it's an interest-free loan to the landlord that has to be paid back when the tenant vacates the house. People who are able to pay $300k in two or three years rent out their properties on a traditional rental arrangement. |
Except as it stands now landlords are free to invest it in many different kinds of ways. Some landlords might want to take a larger risk, they have to be responsible for it, but they could make more money out of it in the long run.
That's why the entire system works the way it does. If the landlords were getting only a pittance in interest, they'd probably be charging a much higher rate for the monthly on top of huge deposit.
All you would do would drive prices higher as landlords looked to make up the loss. |
This would obviously have to be coupled with strict rent controls (and a rise in interest rates). The problem is that with nobody looking to buy, and most landlords who want jeonse tenants either broke or leveraged to the eyeballs, they can't come up with the money. And the tenant ends up SOL.
By the way, I never said they couldn't borrow against the escrow account. There's also cases of jeonse fraud where either the real estate agent gets power of attorney from the landlord and then disappears with the jeonse. If the money were held in escrow, the agent can't touch it, so they can't really disappear with that money.
And since landlords aren't able to speculate, they wouldn't have the money to buy up properties and this would depress prices, which would serve as a natural rent control, as if the rents were too high, potential tenants would just buy. |
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chuckster
Joined: 12 Feb 2007
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| Posted: Tue Feb 07, 2012 5:31 am Post subject: |
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| motiontodismiss wrote: |
| These days, someone who wants to rent out their property via jeonse is pretty desperate for money and usually doesn't have the financial ability to come up with 6 figures by the end of the contract. |
Most Korean people I know think that paying 월세/rent is a huge waste of money and strongly prefer jeonse. More and more owners prefer getting some rent, but the tenants push for the jeonse system in many cases.
And to the OP, if you're only putting down 10M won, it shouldn't be a big concern to get your money back. That's very small compared to the money they have invested in the apt/room/.... However, still check to see how much money is owed on the property before signing any housing contracts. |
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definitely maybe
Joined: 16 Feb 2008
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| Posted: Tue Feb 07, 2012 6:04 am Post subject: |
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| chuckster wrote: |
| Most Korean people I know think that paying 월세/rent is a huge waste of money and strongly prefer jeonse. More and more owners prefer getting some rent, but the tenants push for the jeonse system in many cases. |
The system is on its way out. Full eonse in the Seoul region is ballooning out of control and the number of apartments being made available for jeonse are shrinking rapidly. |
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