How Korea's Jeonse Fraud Relief Actually Works

What to Clarify Before the New Window Opens on November 13

What checks stand between the news of a relief program and the moment money actually lands in your bank account?

Starting November 13, 2026, South Korea will implement a “minimum guarantee” and “advance payment, post-settlement” system in which the state guarantees a portion of deposits for victims of jeonse (lump-sum deposit lease) fraud. The National Assembly passed the amendment on April 23 (Act No. 21634, promulgated May 12), and the government approved an enforcement decree outlining calculation standards at a Cabinet meeting on October 6. The Ministry of Land, Infrastructure and Transport (MOLIT) announced that it secured approximately ₩27.9 billion (~$20.2 million) for the program in this year’s 1st supplementary budget.

At a glance, news headlines make it sound as though “the state will return 1/3 of your deposit.” Yet placing the raw text of the law, enforcement decree, and enforcement regulations side by side reveals 4 distinct hurdles before any money is actually paid out. You must be officially recognized as a victim, qualify for the minimum guarantee, apply during the window appropriate to your situation, and settle the balance against any funds recovered later. In this issue, I break down these 4 hurdles step by step. Because individual eligibility and payout amounts are decided through review by the Korea Land and Housing Corporation (LH), please use this article as a guide to organize the questions you need to check for your own situation.

The First Hurdle: Official Victim Recognition Is an Entry Ticket, and Not All Tickets Are Equal

Every layer of relief begins with an official recognition of victim status under the Special Act on the Support for Victims of Jeonse Fraud and Housing Stability (hereafter, the Special Act). Once a tenant submits an application to a municipal or provincial government, local officials conduct an investigation of the damages within 30 days. The Ministry of Land, Infrastructure and Transport (MOLIT) Jeonse Fraud Victim Support Committee then reviews and rules on the case within 30 days of receiving the docket (extendable once by up to 15 days). Once the official determination document is served, victims have a 3-year window from that date to apply for relief programs.

This threshold is far from low. According to MOLIT data, of the 1,642 cases deliberated by the committee in September alone, only 623 were approved. Another 583 cases were dismissed for failing to meet statutory requirements, and 208 were excluded because the tenants were deemed able to fully recover their deposits through deposit guarantee insurance or statutory small-deposit priority repayments (choe-useon byeonje-geum). A further 228 formal objections were rejected. As of September 30, the cumulative number of approved determinations stood at 41,559.

Here is a critical nuance that many overlook: under the Special Act, the category of “victims of jeonse (lump-sum deposit lease) fraud and related persons” is not a monolith. Article 2, Item 4 divides them into three legal tiers:

• Subparagraph (a) (Jeonse Fraud Victims): Tenants who satisfy all four statutory requirements under Article 3: opposability¹ and a fixed date (hwakjeong-ilja, an official priority stamp); a deposit of ₩500 million (~$360,000) or less (the committee can raise this cap by up to ₩200 million); damages inflicted or expected across multiple tenants; and reasonable grounds to suspect the lessor lacked intent to return the deposit.
• Subparagraph (b): Tenants who meet every criterion except the deposit cap—meaning their deposit exceeded the ceiling.
• Subparagraph (c): Tenants who meet the deposit cap and the fraudulent intent condition, and have filed a moving-in notification and obtained a fixed date. This includes tenants who entered into lease agreements with individuals lacking legitimate leasing authority.

Those eligible for the newly introduced minimum guarantee scheme—designated as “victims eligible for the minimum guarantee”—are Subparagraph (a) and Subparagraph (c) tenants. Subparagraph (b) tenants are excluded under Article 25-9, Paragraph 1, and individuals without South Korean nationality are also explicitly barred. In other words, even among those recognized as official victims, some cannot access the minimum guarantee window. Because the determination document explicitly states under which subparagraph you were designated, that ruling is the very first piece of paperwork you need to check.

Gate 2: The ‘One-Third Guarantee’ Is a Floor, Not a Bonus

The formula for the minimum guarantee program is set out in Article 4-4 of the Enforcement Decree. It is simpler than you might expect:

Minimum Support Grant = 1/3 of Deposit − (Court Auction/Public Sale Dividends and Allocations + Amount Recovered/Reimbursed from Lessors, etc. + Auction Profits Already Received² and Rent Subsidies)

In other words, the state steps in to cover only the shortfall if the total amount you have recovered to date fails to reach one-third of your deposit. If your recovered amount already exceeds one-third, you receive zero minimum support. Any money actually recovered through other channels, such as damages paid by licensed real estate brokers, is also counted toward your recovered total.

Let’s look at the math using an example provided by the Ministry of Land, Infrastructure and Transport (MOLIT). If your deposit was ₩150,000,000 (~$108,000), the minimum guaranteed amount—one-third—comes to ₩50,000,000. If you received ₩20,000,000 in court auction dividend payouts and ₩10,000,000 in auction profits, your total recovered amount to date is ₩30,000,000. Subtracting that ₩30,000,000 from the ₩50,000,000 floor yields a minimum support payout of ₩20,000,000, bringing your final recovered total to ₩50,000,000. Out of your initial ₩150,000,000, ₩100,000,000 still remains unrecovered.

The law also specifies cases where victims are ineligible to apply (Article 25-9, Paragraph 2 of the Act):

1. If you directly purchased the affected property yourself
2. If you neglected your right of preferential repayment³ by failing to file a dividend demand⁴ in a court auction or an allocation demand in a public sale
3. If you have already received an advance payout

The second disqualifier applies starting from cases where a decision to initiate a court auction or a public notice of public sale is issued for the first time on or after November 13 (Article 5 of the Addenda). This means you will not be disqualified merely for missing a dividend demand in an auction that was already under way. Going forward, however, failing to file a dividend demand in any newly commenced auction will shut the door to the minimum guarantee program entirely.

Those who were already officially recognized as victims are also covered. Under Article 4 of the Addenda, the new provisions apply even to minimum-guarantee victims recognized before the enforcement date, and their 3-year application window resets and starts counting from November 13.

There is one more crucial clause to weigh carefully. If you receive the minimum support grant, you are barred from receiving public rental housing assistance under Articles 25, 25-2, and 25-3 of the Special Act (Article 25-9, Paragraph 3 of the Act). Those very articles anchor existing support programs, in which the Korea Land and Housing Corporation (LH) acquires affected properties, redirects auction proceeds toward deposits, and allows victims to live rent-free for up to 10 years. Because the better choice between a cash payout and housing assistance depends on individual circumstances, anyone already residing in public rental housing or requesting an LH buyout should consult the Jeonse Fraud Victim Support Center or LH to confirm how this rule applies to their specific case before applying.

Gateway 3: When to Apply Depends on What Stage Your Home Reached

The minimum guaranteed relief cannot be calculated until the recovered amount is settled. Article 12 of the Enforcement Rule therefore breaks down the filing timeline across 4 distinct pathways:

Your Situation	When You Can Apply
Requested LH or another public housing agency purchase the affected home	After the auction profit (difference) is calculated
Public housing agency directly purchased the home under the proviso of Article 25(4) of the Act	After the purchase is completed
Requested purchase of a trust-fraud victim home	After the difference is calculated
None of the above apply	After court auction payout/public sale distribution concludes, or after the trust-fraud victim home sells to a 3rd party

LH handles intake and disbursement (Article 5(2) of the Enforcement Decree). The application packet requires the victim determination notice, a copy of the lease agreement, an abstract of the resident registration certificate, ID, the property’s certified copy of the real estate register, the auction payout statement or public sale distribution statement (if the sale concluded), and proof of any funds recovered directly from the landlord. Victims of trust-related fraud also need an official certified copy of the real estate trust register.

LH must decide whether to disburse the relief within 90 days of receiving the application. If unavoidable delays arise—such as requests for supplemental documents—the review period may be extended once by up to 30 days. Anyone disputing LH’s decision or the approved payout amount can file an objection with LH under Article 36 of the General Act on Public Administration within 30 days of receiving the disposition. Even if your paperwork is flawless from day one, it is wise to plan around a review process that could take up to 3 months before a disbursement decision arrives.

The Fourth Hurdle: Early Relief Comes with Strings Attached

If victims could apply only after an auction closed, those caught in auctions dragging on for years would be left stranded in limbo. To address this, the government introduced advance payouts. Yet eligibility remains narrow. Article 25-10 of the Act targets Category C tenants who signed leases with individuals lacking legitimate leasing authority—namely, victims of unauthorized contracts such as trust fraud⁵. While the statute allows the Presidential Decree to designate “other persons,” no provision in the newly revised Enforcement Decree appears to expand this scope.

The advance payout equals the minimum guaranteed recovery minus any funds already recovered and any rent support already received (Enforcement Decree, Article 4-5). Because the auction has not yet concluded, dividend distributions are not deducted. In an example provided by the Ministry of Land, Infrastructure and Transport (MOLIT), for a deposit of ₩150 million (~$108,000) and rent support of ₩10 million, the advance payout comes to ₩40 million. Applications must be filed before the disposal of the affected property or the purchase of the trust-fraud property is completed.

Receiving funds early, however, comes with three conditions.

First, when the state—via Korea Land and Housing Corporation (LH)—takes over the tenant’s deposit return claim, the preferential repayment right transfers along with it up to that amount, and the recipient must maintain opposing power until final settlement is completed (Act, Article 25-10, Paragraph 3). Because opposing power (daehangryeok, the legal standing to enforce lease rights against third parties) requires both physical possession of the property and maintaining resident registration, transferring resident registration before settlement can cause serious legal problems. If losing opposing power obstructs LH from exercising the preferential repayment right, the tenant may be forced to return the relief funds (Act, Article 25-11, Paragraph 2).

Second, a final settlement occurs downstream. If the actual amount recovered through court auctions or public sales (the settlement base amount) exceeds the advance payout, the tenant receives the difference; if it is equal or less, the matter closes without additional disbursement (Enforcement Decree, Article 4-5, Paragraph 2). The system does not demand clawbacks if the final recovery falls short of the advance payment. However, if the tenant subsequently recovers additional deposit money directly from the landlord, that portion must be returned.

Third, recipients face strict reporting obligations. Anyone who recovers additional deposit money after receiving the minimum relief payment or an advance payout, or who directly purchases the affected property after receiving an advance payout, must report it without delay and return the required funds. Failing to report, filing a false report, or failing to repay within the deadline carries an administrative fine of up to ₩30 million (Act, Article 34). Any unreturned amounts are collected under procedures governing delinquent national tax collection.

The Four Gateways at a Glance

Stage	Responsible Body	Statutory Deadline	Key Things to Check
Victim designation	Municipal/provincial intake → MOLIT (Ministry of Land, Infrastructure and Transport) Committee	30 days for investigation, 30 days (+15 days) for deliberation	Classification type stated in the official decision notice (Subparagraphs a, b, or c)
Eligibility check for minimum guarantee	Statutory provisions	None	Whether classified under Subparagraph a or c, nationality requirement, grounds for exclusion
Minimum relief application & determination	LH (Korea Land and Housing Corporation)	90 days (+30 days) for decision, 30 days for objection	Application timing tailored to individual situation, proof of recovered amounts
Advance payment & final settlement	LH	90 days (+30 days) for decision	Whether victimized by an unauthorized contract, maintaining daehangnyeok (opposing power against third parties)

Oswarld’s Lens

What struck me most while reading through this framework is the gulf between the term “minimum guarantee” and how it actually operates in practice. While the label sounds as though the state guarantees a set amount, the statutory text merely establishes a floor that fills in the shortfall after tallying everything a victim has already recovered. Even reaching that floor requires clearing a gauntlet of conditions: determination category, nationality, whether a formal demand for distribution was filed in auction, and application timing.

I do not view the sheer number of conditions as an issue in itself. Any scheme using public funds to offset private losses naturally requires formulas to prevent double payouts and clawback mechanisms for post-settlement adjustments. It is also worth noting that this threshold was a line drawn after debate between the National Assembly and the government over 1/3 versus 1/2. Yet I must point out that the burden of navigating these conditions falls almost entirely on the victims. People who have just lost their deposits must parse the sub-clauses in official determination notices, verify which procedural stage their auction has reached, and choose between cash relief and public rental housing all on their own. Rather than trumpeting the headline figure of “guaranteeing 1/3,” official guidance would serve people far better by first answering a simpler question: “Which hurdle are you standing before right now?”

Closing

What this policy actually changes is the floor for recovery. It does not open a path to recovering deposits in full; instead, it establishes a mechanism to bridge the gap for victims whose recovery falls short of 1/3. For official application notices, forms, and filing counters after November 13, please check the announcements from the Korea Land and Housing Corporation (LH) and the Ministry of Land, Infrastructure and Transport (MOLIT). Individual consultations on specific cases are available at Jeonse Fraud Victim Support Centers nationwide.

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💬 When you first heard that the government would “guarantee 1/3 of the deposit,” Reader, how did you interpret it? Did you see it as a baseline floor, or as an additional payout? Let us know in the comments.

📨 If someone around you is preparing to sign a jeonse (lump-sum deposit lease) contract or worried about their deposit, please share this analysis with them.

References & Further Reading

Primary sources

• Korea Ministry of Government Legislation’s National Law Information Center, Special Act on the Support for Victims of Jeonse Fraud and Housing Stability (Act No. 21634, promulgated May 12, 2026; relevant provisions effective Nov. 13, 2026) ··· Examined Articles 2, 3, 12 through 14-2, 25-9 through 25-11, 34, and Addenda Articles 4 and 5.
• Korea Ministry of Government Legislation’s National Law Information Center, Enforcement Decree of the same act (Presidential Decree No. 36754, promulgated Oct. 13, 2026; effective Nov. 13, 2026) ··· Sets out the calculation of minimum support (Article 4-4), advance payment calculation and settlement (Article 4-5), and delegation to LH (Article 5(2)).
• Korea Ministry of Government Legislation’s National Law Information Center, Enforcement Rule of the same act (promulgated Oct. 13, 2026; effective Nov. 13, 2026) ··· Specifies application documents, filing schedules by scenario (Articles 12 and 13), and appeal procedures (Article 14).
• Ministry of Land, Infrastructure and Transport (MOLIT), “Cabinet Approves Amendment to Enforcement Decree of Special Act on Jeonse Fraud on the 6th,” Oct. 6, 2026. Read on KDI Economic Bulletin & Information Centereiec.kdi.re.kr
• Ministry of Land, Infrastructure and Transport (MOLIT), “623 Additional Cases Designated as Victims of Jeonse Fraud in September,” Oct. 12, 2026. Read on KDI Economic Bulletin & Information Centereiec.kdi.re.kr

Background

• Financial News, “Victims of Jeonse Fraud Guaranteed at Least 1/3 of Deposit… Effective Nov. 13,” Oct. 6, 2026. Read articlefnnews.com
• Gyeonggi Shinmun, “Land and Infrastructure Committee Passes ‘Amendment to Special Act on Jeonse Fraud’ Guaranteeing 1/3 of Lease Deposit by the State,” Apr. 16, 2026. ··· Documents how a 1/2 support option was debated in the subcommittee. Read articlekgnews.co.kr

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The author is Oswarld (Kwangseob Ahn). Current roles: Adjunct Professor at Sejong University, Strategy Consultant at INLEVEL9. Career, research, books, and recent work are kept current on the About page. Latest · July 2026: HEMA-2: A Consolidation-Aware Tri-Memory Architecture with Multi-Channel Scheduling for Lifelong Conversational AI.

📝 Glossary

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Footnotes

1. Enforceability against third parties (daehangnyeok): The legal right of a tenant to assert their leasehold against a new property owner even after ownership transfers. It takes effect the day after moving in (taking physical possession) and completing resident registration (moving-in report). Moving out or changing resident registration forfeits this protection. ↩

2. Auction margin: The difference between the assessed valuation of an affected home and the actual winning auction bid when a public housing agency like LH acquires the property. Victims have received relief by converting this spread into a rental deposit to continue residing in the home, or by collecting it as a cash settlement upon moving out. ↩

3. Preferential repayment right (useon-byeonjegwon): The statutory right of a tenant who holds both enforceability against third parties and a certified fixed date (hwakjeong-ilja) on their lease agreement to be paid out from court auction or public sale proceeds ahead of junior lienholders. ↩

4. Demand for distribution (baedang-yogu): The formal application submitted to court in auction proceedings asserting a legal right to payout from the proceeds. Even tenants with preferential repayment rights can lose their share if they fail to file by the court deadline. In public tax-lien auctions, this procedure is called a demand for allocation (baebun-yogu). ↩

5. Trust fraud: A scheme where a property has been transferred to a real estate trust, legally depriving the original owner (the trustor) of leasing authority, yet the owner signs lease agreements and takes deposits without the trust company’s authorization. Because these leases were executed without valid legal authority, recovering deposits through standard auction proceedings has proven extraordinarily difficult. ↩