At 10 a.m. on the 24th on the 2nd floor, courtroom 13, at the Incheon District Court in Hakik-dong, Michuhol-gu, Incheon, the auction court was packed with prospective bidders preparing to bid. People of various ages, from those appearing to be in their 20s and 30s to middle-aged in their 40s to 60s, gathered holding bid envelopes. They carefully analyzed the real estate up for auction that day and wrote down their bid prices.
At 11:20 a.m., when it was time to announce the winning bids after closing all bidding, the courtroom was so full there were no empty seats. People were lined up outside the courtroom waiting to hear the results.
In the Incheon auction market, where jeonse fraud has concentrated over the past three years, a series of apartments and low-rise apartment listings appeared in which the creditor, Korea Housing & Urban Guarantee Corporation (HUG), waived the tenant's right to oppose. Auctions continued for listings under "change of takeover conditions," in which HUG said it would provide a "letter of commitment stating that it will waive the right to oppose regarding the jeonse deposit and cancel the tenant's registered right even if full reimbursement is not made."
HUG repays the jeonse deposit in place of the landlord and files for auction to recover the claim. The right to oppose refers to the right to assert tenancy and continue to reside even if the owner changes, and homes for which HUG has repaid the tenant's deposit acquire this right to oppose. The problem is that such homes are not preferred at auction and often fail to sell. To prevent this, HUG applies to the court to waive the right to oppose. If a home with the right to oppose waived is sold, HUG gains a chance to recover at least part of the deposit it repaid.
In this way, HUG either waives the right to oppose and transfers the home to someone else, or it wins the auction itself and takes ownership. The reason HUG makes a "self-bid" is to use the acquired homes for the "Reliable Jeonse Dwellings" program that supplies them on jeonse. After supplying them as rental dwellings, if real estate prices recover, HUG can sell them at a price exceeding the expense it paid as a subrogated repayment.
A total of 28 listings came up in courtroom 13 at the Incheon District Court that day, and about 20% (six listings) were HUG change-of-takeover-condition (waiver of right to oppose) listings. Some HUG waiver listings drew as many as nine bidders, leading to fierce competition.
Among the HUG change-of-takeover-condition listings, an apartment in Ganseok-dong, Namdong-gu, Incheon drew the most bidders. Appraised at 186 million won, it failed to sell twice, and the third auction was held that day. The minimum bid was 91.14 million won, 49% of the appraised value. A total of nine bidders participated, and the winner was HUG. As the creditor, HUG wrote 125.96 million won (68% of appraised value) and won a "self-bid." For another apartment in Ganseok-dong and one in Guwol-dong, both in Incheon, HUG as the creditor also won self-bids at about 68% of the appraised value.
A person in their 40s met at the auction court said, "There are many people who focus exclusively on HUG waiver-of-right-to-oppose listings," but added, "Bidders are flocking in the judgment that if you win only listings with clean title relations at a discount to current market prices and resell, you can earn a tidy capital gain."
Shin Bo-yeon, a professor in the Department of Real Estate AI Convergence at Sejong University, said, "For listings where HUG has waived the right to oppose, the condition is that HUG waives taking over the remaining amount other than the auction winning price, so the winning bidder has no burden to take over the jeonse deposit," and explained, "HUG also directly participates in bidding and operates a program to supply the listings as jeonse dwellings, so price competition often occurs."