For many foreigners moving to Korea, the first surprise is the size of the deposit. Under jeonse (전세), a tenant pays the landlord a large deposit instead of monthly rent and gets it back when the lease ends.
In recent years, that trust has been badly abused. Jeonse fraud has become a widespread problem in Korea. As of September 2026, the government had formally recognized more than 41,000 cases under a special law for Jeonse fraud victims.
Foreign residents face additional risks: documents written in Korean, unfamiliar registration systems, heavy reliance on brokers, and, as explained below, more limited access to some government support once fraud has occurred. This article explains what jeonse is, why jeonse fraud happens, how Korean law punishes offenders and supports victims, and, most importantly, what foreign tenants should check before handing over a deposit.
Table of Contents
What Is Jeonse?
Jeonse is a rental system that is largely unique to Korea. Instead of paying monthly rent, the tenant pays the landlord a large refundable deposit, usually 50% or more of the property’s market value, and lives in the home for the lease term, typically two years. When the lease ends, the landlord must return the full deposit.
Both sides benefit when the system works. The landlord can invest the deposit or use it to help buy property, and the tenant pays no monthly rent. If the deposit comes back in full, the tenant’s only real cost is the interest the money could have earned elsewhere.
However, this structure means that the tenant is effectively lending a large sum to the landlord, with no collateral other than the legal protections attached to the lease. If the landlord cannot or will not repay, the tenant usually has to recover the deposit from the home itself, typically through a court auction in which mortgage lenders, unpaid taxes, and tenants with earlier priority may be paid first.
Why Does Jeonse Fraud Happen?
Not every unreturned deposit is fraud. A landlord may fail to return a deposit because property prices have fallen or a new tenant cannot be found. Fraud occurs when the landlord, or someone working with the landlord, deceives the tenant at the time of signing, for example by hiding the fact that the deposit cannot realistically be returned.
“Zero-Capital” Gap Investment
In a “gap investment” (갭투자), a buyer purchases a home using mostly the tenant’s deposit and pays only the “gap” between the purchase price and the deposit. In the most abusive version, the buyer contributes no money at all. The deposit is set equal to or higher than the actual purchase price, and the tenant’s money is used to pay the seller on the same day. The buyer and the people who arranged the deal may even split the difference as a rebate. Because the landlord has no real equity and little other property, the only way to repay one tenant is with the next tenant’s deposit. When prices fall or if they cannot find new tenants, the structure collapses.
“Empty-Shell” Jeonse (깡통전세)
When the total of the mortgage debt and the tenants’ deposits exceeds the value of the home, the property is often called “깡통전세” (literally, an “empty-can” jeonse). If the home is sold at auction, the bank and other senior creditors are paid first, and later tenants may recover little or nothing.
Information Tenants Cannot Easily See
Tenants often cannot easily verify the landlord’s finances, unpaid taxes, or the deposits of other tenants in the same building. This is especially true for multi-unit houses (다가구주택), where other units’ deposits do not appear in the property registry, and for newly built villas, which have few comparable sales to show their real value.
Organized Schemes
Many large-scale cases involve a network: a landlord (sometimes only a name lender), brokers or broker assistants who recruit tenants, and others who share in the rebates. Korea’s special law on jeonse fraud reflects this by defining a “landlord, etc.” broadly to include the landlord’s agents, brokers and their assistants, tenant recruiters, and the person or organization behind multiple landlords.
How Courts Punish Jeonse Fraud: Three Recent Cases
Jeonse fraud is generally prosecuted as “Fraud” under Article 347 of the 『Criminal Act』. The key question is whether, at the time of signing, the landlord had no intention or ability to return the deposit and hid that fact from the tenant. Brokers and recruiters who knowingly take part can be punished as co-perpetrators under Article 30.
Case 1: Incheon District Court Decision 2024Godan1538, 5262 (August 20, 2024): seven years in prison for a “zero-capital” investor with about 430 homes
The defendant bought about 430 villas and multi-family units, in his own name and through a one-person company, without investing his own money. Working with brokers, he set deposits equal to or higher than the actual purchase prices, used the tenants’ deposits to pay the sellers, and shared the difference as “rebates.” The recruiters targeted young workers, newlyweds, and low-income tenants, reassuring them that their deposits would be safe. He used the same method against a public jeonse rental program run by the Korea Land and Housing Corporation (LH).
Across 96 lease contracts, the losses exceeded KRW 11.9 billion. The court sentenced him to seven years in prison, stressing that the deposits were effectively the victims’ entire assets.
Case 2: Daejeon District Court Decision 2025Godan1617 (October 17, 2025): lying about earlier tenants’ deposits
The defendant owned a multi-unit house acquired through a zero-capital gap investment. When renting out a unit for a KRW 140 million deposit, he told the tenant that earlier tenants’ deposits totaled only about KRW 700 million, so the new deposit would be safe. In fact, earlier tenants’ deposits totaled about KRW 1.335 billion, and the mortgage debt was about KRW 1.67 billion, while the building was appraised at about KRW 2.65 billion. Together, the debts far exceeded the value of the building.
Four tenants lost a total of KRW 476.3 million. Although the defendant confessed, settled with one victim, and deposited some money with the court for the others, he was sentenced to two years and six months in prison.
Case 3: Incheon District Court Decision 2025Godan825 (November 12, 2025): a broker’s assistant who hid a trust registration
The owner of an officetel had bought it with a loan and no money of his own and had placed it in a security trust. Under the trust, any new lease required the trust company’s prior consent, and the deposit had to be paid to the trust company. A broker’s assistant, who managed the unit using the owner’s seal and identification, told a tenant that the owner “owns many buildings, so returning the deposit is no problem” and asked the tenant to pay the KRW 85 million deposit into the owner’s personal account.
He never explained the trust or that a lease signed without the trust company’s consent could not be enforced against it. The court convicted him as a co-perpetrator of fraud and sentenced him to 10 months in prison, suspended for two years, taking into account that he had settled with the victim.
How Korea Supports Jeonse Fraud Victims
After a wave of high-profile cases, Korea enacted the 『Special Act on Support for Jeonse Fraud Victims and Housing Stability』, which took effect in June 2023. The Act is currently scheduled to remain in effect until May 31, 2027, and generally applies to tenants who signed their first lease by May 31, 2025.
Who Qualifies
To be recognized as a victim, a tenant must generally (1) have moved in, registered the address, and obtained a fixed date on the lease; (2) have a deposit of KRW 500 million or less, which may be raised by up to KRW 200 million; (3) face actual or expected losses affecting two or more tenants because of an auction, bankruptcy, or similar event; and (4) have reasonable grounds to suspect that the landlord never intended to return the deposit. Tenants who can recover their full deposit through a guarantee or their own legal priority are excluded.
Main Forms of Support
Once a tenant is recognized as a victim, the Special Act offers several forms of relief. If the home is being sold at auction, the victim may ask the court to postpone or suspend the auction (Article 17), which buys time to decide on next steps. The victim also has a priority right to buy the home at auction by matching the highest bid (Article 20), allowing the victim to keep living there as the owner.
If the victim does not wish to buy the home, he or she may ask a public housing provider such as the Korea Land and Housing Corporation (LH) to purchase it. The home then becomes public rental housing, and the victim may continue to live there for up to 10 years (Article 25). Similar relief is available to tenants who signed a lease with someone who had no authority to lease a trust-registered home. In addition, victims may receive housing loans and emergency welfare support, as well as legal consultation through Jeonse Damage and Prevention Support Centers (Articles 11, 27, and 28).
These measures have been used widely. As of September 2026, 41,559 cases had been recognized under the Act, and LH had purchased 11,148 damaged homes.
Important Limits for Foreign Victims
Foreign nationals can be recognized as jeonse fraud victims if they meet the requirements. In practice, however, foreign victims have been excluded from key forms of support, including public rental housing and low-interest jeonse and refinancing loans from the Housing and Urban Fund.
Other Protective Measures
Several measures outside the Special Act can help tenants avoid fraud in the first place. Landlords must now show tenants certain fixed-date and tax information when signing a lease. Tenants, including foreigners, can apply for a deposit return guarantee and brokers have a legal duty to check and explain the rights attached to the property. Jeonse Damage and Prevention Support Centers can also review the property registry and the lease terms before a tenant signs.
A Checklist for Foreign Tenants: What to Verify Before You Pay
Foreign tenants face the same scams as Korean tenants, but with added disadvantages. The documents are in Korean, legal protection depends on registration systems designed for Korean citizens, and support after the fact may be limited. The following checklist focuses on the points that matter most for foreigners.
1. Register Your Residence and Get a Fixed Date on Move-In Day
A Korean tenant gains legal priority by moving in, reporting the move-in (전입신고), and obtaining a fixed date (확정일자) on the lease. For a foreigner, alien registration and a report of change of residence (체류지 변경신고) take the place of resident registration and the move-in report. Report your new address and obtain a fixed date on the day you move in. Your protection against later creditors begins only the day after you have both moved in and registered, so any delay creates a window in which a new mortgage could rank ahead of you.
2. Read the Property Registry Yourself, Twice
Obtain a certified copy of the property registry (등기사항증명서) and confirm that the owner is the person signing the lease, or that any agent has a valid power of attorney and seal certificate. Check for mortgages, seizures, provisional attachments, and any trust registration. If the property is held in trust, do not sign unless the trust company has consented in writing and the deposit is paid as the trust terms require. Check the registry again immediately before you pay the balance.
3. Ask the Landlord for Tax and Fixed-Date Information
Under the 『Housing Lease Protection Act』, landlords must show tenants, when signing a lease, information on the fixed dates, rents, and deposits recorded for the home, as well as tax payment certificates, unless they consent in advance to the tenant viewing this information. Unpaid national and local taxes can be collected ahead of your deposit in an auction. A landlord who refuses to provide this information is a serious red flag.
4. Check Who Already Lives in the Building, Including Foreign Tenants
In a multi-unit house, earlier tenants’ deposits are repaid before yours. The Korean move-in household confirmation (전입세대확인서) shows registered Korean households, but foreign residents with priority rights have not appeared on it. Since 2023, the Ministry of Justice has allowed parties to a lease to request a confirmation of foreign residents registered at an address (외국인 체류 확인서). Use both documents and add up the mortgage debt, the earlier deposits, and your deposit, and compare the total with a realistic value of the building.
5. Compare the Deposit with the Real Value of the Home
Be cautious if the deposit is close to, or higher than, recent sale prices, especially for newly built villas with few comparable sales. A deposit at or near the purchase price is the signature of a zero-capital gap investment.
6. Get a Deposit Return Guarantee, and Confirm It Before Paying the Balance
Foreign tenants can apply for the jeonse deposit return guarantee offered by the Korea Housing & Urban Guarantee Corporation (HUG) if they have completed alien registration, reported their residence, and obtained a fixed date. Since 2023, the guarantee has generally required the deposit to be no more than 90% of the home’s value.
7. Pay Only the Registered Owner, Through a Verified Broker
Transfer the deposit only to an account in the registered owner’s name, or to the trust company where the trust terms require it. Confirm that the brokerage office is registered and know whether you are dealing with a licensed broker or an assistant.
8. Understand Everything You Sign and Get Independent Advice
Do not rely on a summary from the broker or the landlord. Get a translation of the lease and any special terms, and have the registry and contract reviewed by an independent professional. Jeonse Damage and Prevention Support Centers can now provide consultations on the property registry and lease terms before you sign, and some local centers have published victim application guides in English, Chinese, and Russian.
9. Plan for Your Visa and Your Departure
If your visa or job may end before the lease does, discuss this with the landlord before signing. If the lease has ended and the deposit has not been returned, do not simply move out or leave Korea, because moving out or changing your registered address can cost you your priority. Apply first for a lease registration order (임차권등기명령).
Once the lease is registered, you keep your existing priority even after you move out. It is also wise to keep a Korean bank account open and to consider granting a power of attorney to a lawyer.
Conclusion
Jeonse can still be a sensible choice, but it requires a tenant to entrust a large sum to someone he or she barely knows. Korean law punishes jeonse fraud heavily and offers special support to victims. However, criminal sentences rarely return the money, and foreign victims currently have more limited access to some forms of support.
The best protection is to verify everything before you pay. Register your residence and get a fixed date immediately, read the registry and tax information yourself, check earlier tenants, secure a deposit return guarantee, and get independent advice on any document you do not fully understand. If you are planning to sign a jeonse lease or are worried about getting your deposit back, contact Seoul Law Group to discuss your situation and arrange a consultation.