The government has completed the purchase process for the first time regarding the houses damaged by trust rental fraud.
The Ministry of Land, Infrastructure and Transport announced on the 2nd that it has completed the purchase process for the first multi-family dwelling located in Buk-gu, Daegu, among the trust fraud damaged houses.
Trust rental fraud occurs when a trustee (the previous owner) without legitimate leasing authority enters into a lease contract without the consent of the trustor (real estate trust company) and primary beneficiary (financial institution). If the landlord conceals the fact of their real estate trust and enters into a rental contract with a tenant, the tenant will not receive legal protection under the Housing Lease Protection Act. Forcible execution, such as court auction, is also impossible.
The government amended the law for victims of rental fraud to enable the purchase of houses damaged by trust fraud. Public housing providers, such as Korea Land & Housing Corporation (LH), held individual negotiations regarding price and contract terms with trust companies that hold ownership to acquire the houses damaged by trust fraud.
A Ministry of Land, Infrastructure and Transport official noted, "As a result has emerged from the purchase of trust fraud damaged houses, which could not be purchased before the amendment of the law for victims of rental fraud, we expect the continuous expansion of purchasing houses damaged by rental fraud without any blind spots."
The project for purchasing damaged houses by LH supports victims of rental fraud to reside without rent burdens for up to 10 years by converting the auction profit obtained from purchasing at a lower bid price than the normal purchasing price into a deposit. Upon eviction, the auction profit will be immediately paid to maximize the recovery of deposit losses.
As of the 26th of last month, a total of 16,122 requests for prior consultation regarding the purchase of damaged houses were received from victims. Of these, 9,217 requests have completed purchase review, including on-site investigations, and the victims have been notified that purchase is possible. So far, a total of 1,924 damaged houses have been purchased through consultations and auctions.
The Rental Fraud Victims Support Committee held three general meetings over the month of August to review 2,008 cases and ultimately confirmed 950 cases as victims of rental fraud. Tenants suffering from rental fraud can apply for victim status in their respective jurisdictions.
Of the 950 confirmed cases, 857 are new applications (including reapplications). Ninety-three cases raised objections to existing decisions, leading to an additional verification of the eligibility of victims of rental fraud, resulting in their designation as victims of rental fraud.
Among the remaining 1,058 cases, 615 were rejected due to unmet criteria. One hundred eighty-nine cases were excluded from coverage as full refunds of deposits were possible through guarantee insurance and priority repayment. Additionally, 254 cases that raised objections were deemed not to meet the criteria and were dismissed.
The total number of confirmed victims of rental fraud is 33,135 cases (cumulative), while the total number of requests for cooperation to defer urgent auction and sale decisions is 1,106 cases (cumulative).