안국법률사무소

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For Foreign Investors and Immigrants
Since March 9, 2001
02-3210-3330

Housing Lease on Deposit Basis : so called ‘Jeon-Se’

Housing Lease on Deposit Basis : so called ‘Jeon-Se’

Our English blog post: anguklaw.blogspot.kr

 

What’s up, guys! I am Mr. Jeong (Phone: +82-2-3210-3330 / Email : hcjeong@anguklaw.com) at Anguk Law Offices. As a Korean lawyer, I am going to talk about a special type of housing lease agreement prevailing in Korea today.

Actually, most of expatriates would be shocked by the fact that guaranty money or security money is very big while the amount of monthly payment is so small or doesn’t exist in many cases. Korean call this type of lease “Jeon-Se(전세)” which you can hear frequently from real estate agencies around you.
Of course, you can refund all the guaranty money at the time of termination of lease agreement later, so – if you do not take the bank interest rate in consideration – you might feel like residing in Korea for free!

There is absolutely no difference between Koreans and Foreigners concerning application of ‘Korean Housing Lease Protection Act.’

 

So, what’s a big deal from a legal point of view?

It’s not me. He is Segovia who was a legendary classic guitar player. However, he looks like a senior lawyer actually. ^^

The reason why landlords use this type of lease is that they want to own houses like apartments under their names because in Korea the prices of real estates tend to rise so constantly that it mostly surpasses the cost of property taxes imposed by local governments and bank interest of their loan.
In Seoul, the guaranty money is about 70~80% of selling price and house landlords could retain the ownership with only 20~30% of the price when they use ‘Jeon-Sae’ type of lease agreement.
According to Korean Housing Lease Protection Act, tenants are protected by this act thoroughly only with simple report to local government.

Sounds like WIN-WIN games, doesn’t it?

 

You should be extra-cautious about the lease term!

Anyway, you could just enjoy all the merits of Korean ‘Jeon Se’ system during the lease term. However, you need to be super-cautious about the condition of lease termination.
Of course, there are some exceptions. However, you are likely not to have any right to terminate the lease before the expiry date in advance on the ground of your side in most cases. Just imagine that your employment ends unexpectedly and you do not need lease any more!
If you use normal monthly rent, you need not worry about the deposit which generally is of small amount. But in case of Jeon-Se, it could be a big problem because you might have no choice but to refund it only at the end of the lease term. What if you should go home right away a year or so before the expiry date? When it comes to this issue, you might need your Korean lawyer.
My office deals with many cases concerning expat-related legal issues like immigration, foreign exchange, VISA, nationality, adoption, etc. I plan to publish more useful articles here in my Naver Blog site from now on.
Seeya!

Mr. Heechan Jeong 

+82-2-3210-3330 

hcjeong@anguklaw.com

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