Auction applications filed with courts nationwide topped 120,000 last year, the most on record. About 10% of those were cases in which the Korea Housing & Urban Guarantee Corporation (HUG) first paid tenants their jeonse deposits and then put the homes up for auction to recoup the money.
According to the National Court Administration on the 26th, a total of 121,261 auction cases were filed with courts nationwide over the past year. That was up 1.6% from the previous year (119,312 cases).
The number of auction applications edged down from 78,885 in 2021 to 77,459 in 2022, but surged to 101,150 in 2023. It has been on the rise since. The National Court Administration said this was due to "high interest rates and an economic slowdown."
Among them, so-called "HUG auction cases" are rising quickly. Cases in which HUG paid tenants' jeonse deposits in place of homeowners and then sent the homes to auction totaled 11,663 last year. HUG auction cases were only 1,746 in 2022, but increased to 3,553 in 2023 and 7,101 in 2024. The share of HUG cases among all auction cases also expanded from 2.3% in 2022 to 3.5% in 2023, 6.0% in 2024, and 9.6% last year.
HUG provides a jeonse deposit return guarantee insurance to tenants. If the lease term ends and the homeowner does not return the deposit without justifiable reason, HUG pays the deposit to the tenant and then seeks reimbursement from the homeowner through a right of recourse. If the homeowner does not pay, the home goes to auction. HUG also purchases such dwellings with guarantee accidents and offers them as rental dwellings.
According to the National Court Administration, HUG auction cases are expected to reach around 18,000 this year.
As auction cases increased in March last year, the Supreme Court established 11 dedicated auction divisions at three courts where 70% of HUG cases are concentrated: the Seoul Southern District Court, the Incheon District Court, and the Bucheon Branch of the Incheon District Court. It also increased staffing at these courts, including judicial assistants and auction officers.
As a result, the processing time for HUG auction cases at the three courts was about 10 months. That was six months shorter than other auction cases (an average of 1 year and 4 months), and the number of cases handled rose 260%. The jeonse deposit recovery rate increased from 29.7% in 2024 to 71.5% last year, and the amount recovered rose from 871.3 billion won to 1.2399 trillion won over the same period.
An official at the National Court Administration said, "HUG's jeonse deposit return guarantee protects people's property rights and residential stability," adding, "Jeonse deposit claims must be recovered quickly through auction procedures so that guarantees can be provided to more people."
Going forward, the Supreme Court plans to support courts so they can handle auction cases promptly and appropriately, and to do everything necessary to address pending issues such as responding to jeonse fraud.