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When people hear about rental fraud, they usually think of tenants losing their security deposits. As a result, many landlords assume that once they receive the full deposit, everything is safe.

However, a new type of fraud is emerging. In some cases, landlords who have already received the full deposit may still suffer serious financial damage.

One scheme involves a corporate tenant requesting the registration of jeonse rights and then using those rights as collateral for a loan. Even though the landlord has done nothing wrong, the property may become entangled in legal claims, making it difficult to sell or lease again.

In this article, we will look at a real damage case, explain how this new reverse jeonse fraud scheme works, and review the essential contract clauses and registration precautions that every landlord should know.

| Can Landlords Also Become Victims of Rental Fraud?

When people think about rental fraud, they usually imagine tenants losing their deposits. Because of this, many landlords believe they are in a safer position.

However, a new type of fraud is targeting landlords themselves. This scheme is often referred to as "reverse jeonse fraud" or "jeonse right collateral loan fraud."

What makes this fraud particularly dangerous is that it can occur even after the landlord has already received the full deposit. Receiving the money does not necessarily mean all risks have disappeared.

In many cases, a corporate tenant requests the registration of jeonse rights as a condition of the lease. Since the landlord has already received the deposit, the request may seem harmless.

Unfortunately, some fraudsters exploit the legal rights attached to registered jeonse rights to obtain loans and create serious complications for the property owner.

The next real-life case shows how a landlord suffered substantial losses despite receiving the full deposit at the beginning of the lease.

| Real Case｜How a Landlord Ended Up Facing a 250 Million Won Loss

A landlord in Ulsan signed a jeonse contract with a corporate tenant for a deposit of 250 million won. The deposit was paid in full, and everything appeared normal.

The tenant then requested the registration of jeonse rights, claiming it would provide additional protection for the corporate lease. The landlord agreed because the deposit had already been received.

About a month later, the landlord received a court notice regarding a seizure claim. The tenant had used the registered jeonse rights as collateral for a loan and later defaulted.

As a result, the property became tied up in legal disputes, making it difficult to sell or lease. The landlord eventually had to spend significant time and money resolving the issue.

This case demonstrates that receiving the full deposit does not automatically eliminate all risks associated with a lease agreement.

| Why Registering Jeonse Rights Can Be Risky

Many landlords wonder how a tenant can obtain another loan after already paying the full deposit. The answer lies in the legal nature of registered jeonse rights.

Unlike an ordinary lease agreement, a registered jeonse right is a real property right recorded in the land registry. It provides stronger legal powers to the holder.

Under Korean Civil Code Article 306, a jeonse right holder may transfer the right or use it as collateral unless restrictions are specifically imposed.

This does not mean that jeonse registration itself is dangerous. The real problem arises when the registration is completed without restrictions on transfer or collateral use.

Fortunately, landlords can protect themselves by including specific prohibitions in both the lease agreement and the registration documents.

| Essential Clauses and Registration Steps for Landlords

The good news is that this risk can be significantly reduced through proper contract wording and registration restrictions.

Many landlords believe that adding a clause to the lease agreement is enough. In reality, the restriction should also be reflected in the registered jeonse right.

Banks and third parties often rely on registry records rather than private contracts. If the restriction is not registered, they may not be aware of it.

For stronger protection, the same prohibition should be included in both the lease agreement and the registration documents.

After registration is completed, landlords should personally review the registry record to ensure that transfer, collateral, and sublease restrictions have been properly recorded.

| Landlord Checklist Before Signing

Registering jeonse rights is not inherently dangerous. The real risk arises when the rights are registered without proper restrictions.

Before agreeing to a tenant's request for jeonse registration, landlords should carefully review the contract terms and registration details.

A few additional clauses and a quick registry check can prevent significant legal and financial problems in the future.

The key takeaway is simple: Always ensure that transfer, collateral, and sublease restrictions are included in both the lease agreement and the registry record.

| Final Thoughts

Fraud schemes continue to evolve. Today, landlords can also become targets if they overlook important legal details.

Jeonse registration can be useful, but it should always include proper restrictions on transfer, collateral use, and subleasing.

A few minutes spent reviewing contract clauses and registry records may protect your property from serious future risks.