Jeonse
lastmod 2025-01-15created 2020-11-087 edits
Jeonse! It is actually listed on Wikipedia as Jeonse.
The jeonse right (傳貰權, English: jeonse) system is a distinctive South Korean real-property right similar to a real estate lease. When the jeonse right is established, the jeonse holder pays a set jeonse deposit to the jeonse grantor (the owner of the property), and in return the holder gains the right to use the property for a fixed period, while the grantor covers the cost of that use with interest income on the deposit. It is a system that developed under Korea's particular circumstances of housing shortage after the Korean War: the current Civil Act, in response to demands for stronger rights of use, newly established as a real right the contractual jeonse system that had customarily existed as "a combination of lease and loan for consumption". According to the legislators, it was created out of "the need to give the lease right the effect of a real right" and "the need to legislate the common people's practice of mutually lending houses and money to each other, exchanging what one has for what one lacks". At the very least, the jeonse right is particularly significant in that it legislated a system that had developed within Korean society. Under the provisions of the Civil Act, the jeonse right is the right to pay a jeonse deposit, use and profit from another person's real estate according to its purpose, and, when the jeonse right is extinguished, receive repayment of the deposit from the subject property with priority. (Civil Act, Article 303, Paragraph 1)
Caveats when signing a contract
Check the Certificate of Real Estate Register (Certificate of All Registered Matters)
Section A (gapgu) of the certificate of real estate register shows who the owner of the property is. When writing the contract, it is best to meet the owner in person and sign with them directly. Owners often send an agent for their own reasons. In that case, check the items required for a contract through an agent: the power of attorney, the certificate of seal impression, the agent's personal details, ID card, and so on. In particular, make sure the seal stamped on the power of attorney matches the seal on the owner's certificate of seal impression.
- Sign with the owner!
- For a contract through an agent, check the power of attorney, etc.!
Section B (eulgu) of the certificate of real estate register shows loans the owner has taken out with the house as collateral and other debts. If the loan amount is risky relative to the market price of the house, avoid it. If the owner's situation later worsens and they cannot repay their debts, the house can go to auction.
- Check the loan amount! (= "loan-free")
See Certificate of Real Estate Register for details on how to check.
- The address on the certificate of register and the address on the contract must match 100%!
They must of course be exactly the same; if they differ subtly even while meaning the same thing, you may have trouble when getting the "fixed date (hwakjeong ilja)". So write it so that it matches exactly.
When a married couple holds joint title
These days you often see houses registered under the joint names of a married couple. There is something to watch out for here!
Usually, the contract often goes ahead with one spouse citing the spousal agency right for daily household matters, i.e. that they have been delegated authority. However, this can leave room for disputes later.
If possible, it is best for both spouses to attend and write the contract. In this case, when you move out after the contract ends, you can claim the return of the deposit from both spouses.
But if only one spouse can come to sign the contract, check the power of attorney and the certificate of seal impression. Make sure the seal stamped on the power of attorney matches the registered seal on the certificate of seal impression. The lease contract lists the personal details of both spouses as landlords. It is a good idea to add a special term stating that the balance will be paid into one spouse's account, and to send the balance to the account of the spouse who did not attend the signing.
Write the special terms carefully
In real estate contracts, including jeonse contracts, both parties go through a process of negotiating each other's requests. Items agreed on verbally should be recorded in detail in the contract. Special terms in the contract are legally binding, so they can remove room for later disputes.
For example:
- for a tenant who needs a jeonse loan, a term that the contract is cancelled and the down payment returned if the jeonse loan is not approved,
- for a house with a collateral security right (geunjeodang) registered, a term that the collateral security right will be cancelled before the balance is paid,
- a term that the landlord settles utility bills up to the day before the tenant moves in,
- if registering a jeonse right has been agreed, a term that the landlord consents to and cooperates with registering the jeonse right,
- terms on restoring the property to its original condition,
- terms on handling defects
Fixed date, move-in report
Once you have written the lease contract, you can get the fixed date and file the move-in report. That means you can do it even before moving. If it is late in the evening or falls on a weekend or holiday, you can do it online 24 hours a day. The move-in report can be filed on the Minwon24 site, and the fixed date can be processed at the Supreme Court Internet Registry Office.
These days, because of this kind of anxiety, many people sign up for jeonse deposit return guarantee insurance. It costs a guarantee insurance premium, but it is a way to keep your deposit safe, so it is worth considering.