What If Your Landlord Screws Up? Deposit & Lease Protection in Korea
Imagine—you’re settled in, loving your spot, then bam:
- Landlord sells?
- Landlord stops paying the mortgage?
- Can I stay?
- Where’s my deposit?
Unlike countries where tenant protection is automatic or tied to the property, Korea’s lease is just a contract—tied to you and the landlord. You’ve got to lock it down yourself.
Good news: The Housing Lease Protection Act has your back with two key safeguards—Countervailing Power and Preferential Repayment Rights.
Safety first. Know your rights before you sign. Let’s break it down.
Countervailing Power (대항력) – Bulletproof Protection
Lock in your lease for two solid years, no matter what happens to the property. Sold? Gifted? Inherited? Auctioned? Doesn’t matter—the new owner must honor your lease and cough up your deposit when the contract ends.
How to nail it:
Countervailing Power (대항력) = Countervailing Requirements (대항요건) + Top seniority claim position (권리 선순위 선점)
- Countervailing Requirements
✅ Move in and take possession of the unit (인도).
✅ Register your residency (체류지 등록) at the dong center (주민센터).
Once you complete these requirements, your lease and deposit safety are safe—but only against a normal property sale.
What if the landlord refuses to return your deposit at the end of the term? The court will grant you serious control over the property to enforce repayment. I’ll break this down in another post.
Warning: This isn't enough to countervail an auction sale called on by other creditors with real rights (저당권자).
- Top seniority claim position
✅ Complete the two requirements before any senior rights—known as 'Baseline Rights for Lien Cancellation' (말소기준권리)—are placed on the property. These include six types of rights:
• Mortgages (저당권)
• Fixed collateral security (근저당권)
• Provisional seizure (가압류)
• Final seizure (압류)
• Provisional mortgage registration (담보가등기)
• Auction entry registration for foreclosure (경매기입등기)
With both (1) and (2) in place, even the auction winner must respect your lease and deposit repayment—no matter how little the auction haul is. Your two-year tenancy is locked in rock solid, and your deposit is untouchable.
Risk Zones:
- Landlord sneakily adds a mortgage after you sign, but before you register your residency.
- You choose to rent a unit that already has a mortgage or other secured claims.
If either happens, you’re on shaky ground. If the property gets auctioned, the new owner can evict you—and you might not get your full deposit back.
Takeaways:
- (1) alone protects your lease if ownership changes.
- (1) + (2) = Ultimate protection, even if the landlord defaults.
- Sync your move-in and deposit payment—then register residency immediately.
- Avoid rentals with senior rights. Check the property registry (등기부등본) with your agent right up until the moment you sign.
- Extra Shield: Countervailing Power secures your right to stay and claim your deposit, but court-processed refunds can drag for six months or more. Want to avoid the hassle? Stack rental deposit insurance (전세금•월세보증금 반환보험) on top of Countervailing Power. Expats don’t have time to wait—this speeds things up. More on that later.
Preferential Repayment Right (우선변제권) – Your VIP Ticket at Auction
Signed a lease on a unit with an existing mortgage? That means you can’t complete (2), leaving your lease and deposit at risk if the landlord defaults.
This is where Preferential Payment Right (우선변제권) steps in. It converts your deposit claim from a simple contract right (채권) into a real right (물권)—giving you a stronger legal standing if the property goes to auction.
In an auction, this puts you ahead of general creditors (채권자), tax claims (당해세), and even alongside mortgage creditors (저당권자).
How to equip it:
- ✅ Nail the Countervailing Requirements: physical move-in and registered residency .
- ✅ Get a certified lease date (확정일자) at the dong center.
How it works:
- Your contractual claim transforms into a real right (채권의 물권화) when the property goes into liquidation.
- If your certified lease date beats all mortgage issuance dates? You’re golden. Remember? That means you’ve got the (countervailing) power!
- If not? You’re still near the front of the line, but now your repayment depends on the auction haul.
Takeaways:
- Certify your lease as soon as you sign it. Don't wait until the move-in date.
- Again—better avoid rentals with pre-existing mortgages.
Top Priority Repayment Protection (최우선변제권) - Your VVIP Ticket
If your deposit is under ₩165M (Seoul) and you’re already armored with Preferential Payment Rights, here’s the good news: Up to ₩55M will be repaid first—before anyone else—from the auction proceeds.
This is why most Wolse (monthly rent) leases for smaller units in Seoul are set with deposits under ₩50M—to stay within this protection range. (For larger units with multiple rooms, it’s a different game—you’re now looking at Jeonse or Ban-Jeonse.)
The Catch:
- If your priority repayment amount exceeds half the property’s market value, you can only claim up to 50%.
- Anything beyond that must be recovered through Preferential Payment Rights.
- The exact limit varies based on when the senior mortgage (근저당권) was placed on the property.
- In a multi-unit house (다가구주택), tenants within the priority repayment range must share the proceeds—limited to 50% of the final auction price. With the recent decline in Korea's home prices, this has become a major issue.
I know—it’s complicated. I’ll break this down further in another post.
Takeaways:
- Avoid rental units with a deposit over ₩50M. Staying within the protection limit is the safest bet.
- Be extra cautious when renting in a multi-unit house. Tenants must share the Top Priority Repayment, which can reduce your claim.
- A competent agent is non-negotiable. Make sure they clearly explain your lease rights and risks.
It’s Tricky—But You’ve Got Rights
This stuff is a maze, but it’s your shield. By law, your budongsan agent must spell it out—safe deal, no surprises. Their neck is on the line. So find a competent agent who actually cares.