FOHO Blog – Global Housing & Living Guide for Foreigners

How to Avoid Deposit Scams in Korea: A Guide

Avoid deposit scams in Korea with our step-by-step guide. Learn to check property debt, understand the 'Deung-gibu,' and secure your deposit.

Evan Han

CEO & Founder of FOHO, a housing platform for foreigners in Korea. Experienced in rental market trends, proptech innovation, and foreign tenant support.

Oct 30, 2025

TIP

Table of contents

01The Foreigner's Guide to Avoiding Jeonse Scams in Korea
•Section 1: How the Scams Work (The 2-Minute Briefing)
•Section 2: Your 3-Step Due Diligence Protocol
•Section 3: Your Two-Part Safety Net (Do NOT Skip This)
•Section 4: If the Worst Happens: Getting Help

The Foreigner's Guide to Avoiding Jeonse Scams in Korea

If you're moving to Korea, you’ll quickly hear about jeonse. It’s a unique rental system where you pay a massive deposit (often 50-80% of the property's value) instead of monthly rent. At the end of your two-year contract, you get the entire deposit back.

For decades, this system worked. It allowed tenants to live rent-free and gave landlords access to large, interest-free capital.

Today, the system is under stress. A combination of a cooling property market, high interest rates, and organized crime has led to a surge in jeonse fraud. News headlines are filled with stories of "Villa Kings" who built entire empires of "no-money" investments, ultimately costing thousands of tenants their life savings.

This has created a widespread fear known as "jeonsephobia." But jeonse can still be a viable option, if you treat it like a high-stakes financial transaction. This is not a simple rental. This is you, giving someone an unsecured loan worth hundreds of thousands of dollars.

This guide is your survival kit. We will provide a step-by-step, practical protocol to protect your deposit and avoid a financial catastrophe.

Section 1: How the Scams Work (The 2-Minute Briefing)

To beat a scam, you need to know the playbook. Scammers rely on two main tactics.

1. The 'Kkangtong Jeonse' (Empty-Can Lease)

This is the most common trap. A property is called an "empty can" when its total debt is worth more than the building itself.

The Math: (Landlord's Mortgage) + (Other Tenants' Deposits) > Property's Market Value

The Problem: If the landlord defaults, the property is auctioned. The bank and any senior-priority tenants get paid first. By the time it’s your turn, the "can" is empty. There is no money left to repay your deposit.

2. The 'Mujabon Gap-tuja' (No-Money Gap Investment)

This is a full-blown Ponzi scheme. A scammer "buys" a property and "leases" it at the exact same time. They use your jeonse deposit to pay the original seller.

The Problem: The scammer never invested a single won of their own money. Their entire "business" relies on finding new tenants to pay back old tenants. When the market slows, the scheme collapses. The landlord—who has no money and may own hundreds of homes this way—vanishes, and you are left with an unpayable debt.

Key Risk Areas: These scams are most common with newly built villas (sinchuk-villa) and multi-family homes (dagagu-jutaek). Why? Unlike apartments, their market prices are not transparent, making it easy for scammers to inflate the jeonse price above the property's actual sale value.

Section 2: Your 3-Step Due Diligence Protocol

Do not trust anyone to do this for you. Not the landlord, and not even the realtor (some are, unfortunately, complicit). You must verify these three things yourself.

Step 1: Analyze the Property Register (The Deung-gibu-deungbon)

This document is the property's official ID, financial history, and legal record, all in one. It is the single most important document you will read. Your realtor must provide it, or you can get it from the Supreme Court's Internet Registry Office (Korean-only).

It's split into three parts. Here is your checklist.

Pyojebu (Cover Page): Shows the physical address and details.

Check: Is the "Building Use" listed as 주택 (Jutaek / Housing)? If it says 근린생활시설 (Neighborhood Facility) or anything else, you may not be protected by housing laws.

Gap-gu (Ownership Section): Shows all owners, past and present.

Check: Does the "Current Owner's Name" exactly match the ID of the person you are signing the contract with?
Red Flag: Look for any record of 가압류 (Gamnyu / Provisional Seizure), 압류 (Amnyu / Seizure), or 신탁 (Sintak / Trust). These are giant, flashing "DANGER" signs of financial distress or complex ownership. Walk away.

Eul-gu (Debt Section): Shows all non-ownership rights, like mortgages.

Check: Look for 근저당권 (Geun-jeodang / Mortgage).
Action: Write down the 채권최고액 (Chaekwon-choego-aek). This is the "Maximum Debt Amount," typically 120-130% of the actual loan. You must use this higher number in your calculation.

Step 2: The "Kkangtong" Test: Do the Math

Now you will use the numbers from Step 1 to see if this is an "empty can." The golden rule is:

(Total Debt + Your Jeonse Deposit) must be ≤ 80% of the Property's Market Value.

To be extra safe, many experts recommend a 70% limit.

A) Find the Property's Market Value (Sise)

Apartments: Easy. Check KB Real Estate or Naver Real Estate for the official, bank-trusted market price.
Villas/Officetels: Difficult. This is the danger zone. You must ask multiple realtors in the area for the estimated maemae-ga (sale price), not the jeonse-ga (jeonse price). Use apps like Zigbang or Dabang to cross-check recent sale prices (not lease prices) for similar buildings.

B) Find the "Total Debt"

This includes the Geun-jeodang (Mortgage) you found in Step 1.
It also includes a hidden trap: 선순위 보증금 (Seon-sunwi Bojeung-geum), or "Senior-Priority Deposits." If you are in a dagagu (multi-family) building owned by one person, all the tenants who moved in before you get paid before you in an auction.
Your Action: You must ask the landlord or realtor for the 확정일자 부여현황 (Hwakjeong-ilja buyeo-hyeonhwang / List of Secured Leases). This official document from the community center shows all other deposits in the building. If they refuse to show you this, walk away immediately.

C) Do the Calculation

(Mortgage) + (Senior Deposits) + (Your Deposit) = ?
(That Total) ÷ (Market Value) = ?
If that final number is over 0.8 (80%), this is a high-risk "Kkangtong Jeonse."

Step 3: Verify the People

The Landlord: Ask for a 국세완납증명서 (Gukse-wannap-jeungmyeongseo / Certificate of National Tax Payment). In an auction, unpaid national taxes are often paid before your deposit. A landlord who can't provide this is a red flag.

The Realtor: Look for their 공인중개사 (Gong-in Junggaesa / Certified Realtor) license on the wall. A trustworthy realtor is registered with the government and has insurance. Be very suspicious of realtors who are "friends" with the landlord or work directly for the construction company of a new villa.

Section 3: Your Two-Part Safety Net (Do NOT Skip This)

Due diligence is vital, but it's not enough. You need to build a legal and financial fortress around your deposit.

Part 1: The Legal Basics (On Move-In Day)

The moment you get your keys, your first stop is the local community center (Jumin-senteo). Take your contract and your ARC (Alien Registration Card). This is free and non-negotiable.

File 전입신고 (Jeonip-singo / Move-in Report): This gives you 대항력 (Daehang-ryeok), or "Countervailing Power." It means that even if the building is sold, your lease is protected, and the new owner owes you your deposit. This power takes effect at midnight after the day you file.

Get 확정일자 (Hwakjeong-ilja / Fixed Date): This is a stamp on your contract. It gives you 우선변제권 (Useon-byeonje-kwon), or "Preferential Repayment Right." It secures your place in line to be paid in an auction, based on the date of the stamp.

Together, these two actions secure your legal claim to the deposit.

Part 2: The Ultimate Protection: Jeonse Guarantee Insurance

This is the most important advice in this entire article.

This insurance, offered by government-backed (HUG) and private (SGI) companies, is your ultimate safety net. If your landlord fails to return your deposit, the insurance company pays you back first and then deals with the landlord themselves.

The "Golden" Strategy: The Insurance Clause

The best way to avoid a scam is to let the insurance company do the final, professional-grade inspection for you. You do this by adding a "special clause," or 특약 (Teuk-yak), to your contract.

Ask your realtor to add this exact clause (or a verified translation) to your lease:

"This contract is conditional on the tenant's successful application for a HUG (or SGI) jeonse guarantee insurance policy. If the application is rejected due to issues with the property (e.g., high debt ratio, legal issues), this contract is void, and the landlord must immediately return the full deposit and any fees."

Why this works: If the property is a high-risk "Kkangtong Jeonse" or the landlord has legal issues, the insurance company will reject the application. This clause gives you a legal, penalty-free exit from a dangerous deal. It is the single most powerful tool you have.

Section 4: If the Worst Happens: Getting Help

If your contract is ending and your landlord is non-responsive, you must act quickly.

DO NOT MOVE OUT: The moment you move your official address, you can lose all your legal protections (Daehang-ryeok).

If You Must Move: Before you go, you must file an 임차권등기명령 (Imcha-kwon-deunggi-myeong-ryeong / Leasehold Registration Order) at the local court. This legal action "freezes" your status as the tenant, allowing you to move out while keeping your legal priority and rights intact.

Get Free Legal Help:

Korea Legal Aid Corporation (KLAC): Call 132 (no area code). They provide free legal counseling for foreigners.
Immigration Contact Center: Call 1345. They can connect you to legal aid and translation services.
Seoul Global Center: Many municipal governments run global centers with free legal and real estate counseling.

Final Glossary: Key Terms to Know

Jeonse (전세): The unique Korean lease system (large deposit, no monthly rent).

Wolse (월세): A standard monthly rental with a smaller deposit.

Dagagu-jutaek (다가구주택): A multi-family building with a single owner. (High-risk for scams).

Sinchuk-villa (신축빌라): A newly built villa. (High-risk due to unclear market price).

Deung-gibu-deungbon (등기부등본): The official property register (your most important document).

Geun-jeodang (근저당권): A mortgage.

Chaekwon-choego-aek (채권최고액): The maximum debt amount listed for a mortgage.

Seon-sunwi Bojeung-geum (선순위 보증금): "Senior" deposits from other tenants who get paid before you.

Jeonip-singo (전입신고): Your official move-in report. (Gives you the right to stay).

Hwakjeong-ilja (확정일자): The fixed-date stamp on your contract. (Gives you priority to get paid).

Teuk-yak (특약): A special clause or condition in your contract. (Your key offensive weapon).

Currency: All transactions will be in Korean Won (KRW). As a general reference, 1,000,000 KRW is approximately $770 USD (assuming 1 USD = 1,300 KRW), but you should check current rates.

A Simpler, More Affordable Way to Find Your Home

All this talk of financial risk, legal checks, and complex procedures can feel overwhelming. Finding a home in a new country shouldn't be a source of stress. The process should be exciting, secure, and affordable.

That's where FOHO can help.

We provide a smarter way to find verified, affordable listings across Korea. With FOHO, you spend less on service fees and gain a trusted partner. We're here to provide reliable support and ensure smooth communication with landlords, helping you settle in with confidence—both before and after you move.

Explore FOHO's listings today and see how simple finding your next home can be.

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