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[Real Reality]

Your rights as a tenant
Many newcomers to Korea quickly face the question of what to do about their housing. One option is to pay a relatively small deposit and a monthly payment (weolse) while another method is to pay a very large deposit and no monthly rent (jeonse). At first glance, it might seem a lot less risky to go the weolse route. It's natural to be wary of giving up a lot of cash to a landlord you do not know well. What if the owner bets wrong on KOSPI futures and goes bankrupt, after all?

The Housing Lease Protection Act of Korea was enacted in 1981 to protect the rights of tenants in Korea. Under the act, Korean citizen lessees have the right of "opposing power" once they physically move into the rental property and file a moving-in report with the local dong (district) office or register their lease agreement with a local building registry office. Opposing power means the renter maintains his or her right to the rental property without having to sign a new lease if the owner changes.

Under the Immigration Act of Korea, foreign residents of Korea must register their address on their certificate of alien registration and when moving to a new address the alien registration card must be updated within 14 days at the nearest gu (ward) or gun (county) office, city hall (for smaller cities) or regional immigration office such as the one in Mok-dong. The Seoul Civil District Court has ruled that the foreigner's initial registration or residence update report can be considered as the above "moving-in report" necessary to have opposing power under the Housing Lease Protection Act.

The right of preferential repayment is also reserved for tenants under the Housing Lease Protection Act, provided the foreign or Korean renter establishes opposing power and takes the lease agreement to the local dong office for a date stamp. In case the landlord goes bankrupt and the rental property is put up for auction, the lessee will have priority in getting his deposit back over any creditors who made claims after the lease date. Before signing a lease the prospective renter should check for existing liens, or legal claims, against the property, including from a mortgage, as existing lien holders would have priority in getting debts repaid. Usually real estate agents handle checks for liens, although renters can check for themselves at the nearest gu office, which usually have foreigner help desks. To get the deposit money back, renters must demand payment under the Civil Execution Act of Korea. Since the typical jeonse is worth 60 to 80 percent of the rental property value, the tenant should get his money back.

As can be seen, making a large rental deposit, or jeonse, in lieu of a monthly payment is a low-risk investment provided all the necessary steps are taken. In this era of low interest rates, making a jeonse payment and going rent-free can be a much better investment than paying monthly rent to the owner.
By Jung-Myung Lee
Ms. Jung-Myung Lee from Hwang Mok Park P.C., one of Korea's leading law firms. HMP provides effective legal solutions that allow its clients to adapt and thrive in Korea's rapidly changing business environment. Tel: 02-772-2700.
Korea Herald (April 23, 2005)
http://www.koreaherald.co.kr/SITE/data/html_dir/2005/04/23/200504230022.asp