South Korea to guarantee jeonse fraud victims recover at least a third of their deposit

A new "minimum guarantee" system under which the government tops up the shortfall so that jeonse fraud victims recover at least one-third of their rental deposit takes effect Friday. Victims whose properties were already sold through court-ordered or public auctions before the system's launch are also eligible. Korea Land and Housing Corporation (LH) will begin accepting online applications Tuesday.

Victims of trust fraud and other unauthorized-contract cases may receive one-third of their deposit in advance, even before an auction is completed.

The Ministry of Land, Infrastructure and Transport announced Monday that it has established detailed subordinate regulations — covering the criteria for calculating support payments and the application and disbursement procedures — to implement the system under an amendment to the Special Act on Support for Jeonse Fraud Victims and Residential Stability, which was revised and promulgated on May 12.

The minimum support payment equals one-third of the deposit minus the amount already recovered. The recovered amount is the sum of three components: auction proceeds received, money returned by the landlord or a licensed real estate agent, and any auction profit generated when LH purchases the affected property plus any rental support payments provided.

For example, a victim with a deposit of 100 million won ($74,500) who receives 10 million won in auction proceeds would be entitled to a minimum support payment of 23.33 million won, bringing total recovery to 33.33 million won. Local government subsidies and financial support are not counted as part of the recovered amount.

Beyond victims officially recognized through the statutory process, tenants are also eligible if their landlord's deposit is 500 million won or less, the landlord's intent not to return the deposit has been confirmed, and they have completed move-in registration and obtained a fixed date.

The government will also introduce an advance payment system — pay first, settle later. Under this arrangement, victims who signed contracts with parties who had no authority to lease the property, such as in trust fraud cases, will receive a portion of their deposit upfront. These victims have long faced delays in recovering losses because they cannot rely on auction proceeds to recoup their deposits. The government will pay one-third of the deposit before the affected property is disposed of, then make additional payments if a profit arises from an LH purchase or other means, settling the balance afterward.

The advance payment is calculated by deducting the amount already recovered through the rental deposit return bond — that is, amounts collected or repaid by the landlord or related parties — as well as any rental fiscal support provided before the advance payment is made.

The timing of applications for the minimum support payment and the advance payment differs by case type. For the minimum support payment, applications may be submitted after LH completes the calculation of auction profit when it purchases the affected property; in all other cases, applications may be filed after the court-ordered or public auction of the affected property is complete. Advance payment applications may be submitted before the auction or other disposal of the affected property is concluded.

Application and disbursement process for the minimum support payment

Applications can be submitted online through LH's Cheongak Plus portal or in person at LH regional offices starting Friday. Required documents include the victim determination notice, the lease contract, a copy of the resident registration record, a national ID and a certified copy of the property register. Additional documents such as a trust register, an auction distribution statement or proof of repayment may also be required. Applicants can check their eligibility directly through Cheongak Plus.

The application window is three years from the date of the victim determination or one year from the date the auction is completed, whichever applies. Those already recognized as victims have until Nov. 13, 2029, to apply. LH will notify applicants of its decision within 90 days of the application date — extendable by 30 days if supplementary materials are needed — and applicants who disagree with the outcome may file an objection within 30 days of receiving the notice.

Baek Seung-rok, director of the Ministry of Land, Infrastructure and Transport's Victim Support Coordination Division, said the minimum guarantee and advance payment systems are designed to narrow the gap in recovery outcomes that vary depending on auction results and to ensure the state guarantees a minimum level of recovery for every victim. "We expect these measures to provide real help for the residential stability of victims who have fallen through the cracks — those who received nothing from auction proceeds or whose properties LH was unable to purchase," Baek said.

Meanwhile, the cumulative number of jeonse fraud victims surpassed 40,000 as of last month, with 623 additional cases recognized to bring the total to 41,559. Young people account for 76 percent of all victims. Victim advocacy groups have called for the guarantee to be raised to one-half of the deposit, and the National Assembly has signaled that further debate on the matter is forthcoming.