Jeonse Deposit Return Guarantee Explained: What It Is, How It Works, and Key Precautions

 

Jeonse Deposit Return Guarantee System in South Korea

Jeonse Deposit Return Guarantee Explained

What It Is, How It Works, and Key Precautions

Introduction
The Jeonse deposit return guarantee is a critical safety system in South Korea’s rental market. It protects tenants from losing their large Jeonse deposit if a landlord fails to return it at the end of the lease. This article explains what the guarantee is, how to apply for it, and what tenants must watch out for.

Table of Contents

1. What the Jeonse Deposit Return Guarantee Is

2. How the Guarantee Works

3. How to Apply for the Guarantee

4. Who Is Eligible

5. Key Precautions Tenants Must Know

---

1. What the Jeonse Deposit Return Guarantee Is
   The Jeonse Deposit Return Guarantee is a government-backed insurance system that ensures tenants receive their Jeonse deposit even if the landlord cannot repay it. If the landlord defaults, the guarantor compensates the tenant first and then seeks reimbursement from the landlord.

This system exists because Jeonse deposits are often extremely large, making tenant protection essential.

2. How the Guarantee Works
   Once the guarantee is active:

• The tenant pays a small insurance premium

• The guarantor institution assumes the repayment risk

• If the landlord fails to return the deposit at contract termination, the guarantor pays the tenant directly

The tenant’s right to repayment is protected regardless of the landlord’s financial situation.

3. How to Apply for the Guarantee
   The application process generally includes the following steps:

• Sign a valid Jeonse contract

• Register the lease and obtain a confirmed date (fixed date registration)

• Apply through an approved guarantor institution

• Submit required documents, including the lease contract and property information

Approval must be completed before a specified deadline, usually early in the lease term.

4. Who Is Eligible
   Eligibility depends on factors such as:

• Property type and appraised value

• Deposit amount relative to property value

• Lease registration status

• Credit and risk assessment of the landlord

Not all properties qualify, especially if the deposit exceeds a certain percentage of the home’s value.

5. Key Precautions Tenants Must Know
   Tenants should be aware of several critical points:

• Application deadlines are strict and missing them can invalidate coverage

• Changes to the lease without notification may void the guarantee

• Properties with existing senior liens or excessive mortgages may be rejected

• Guarantee coverage has maximum limits based on region and property type

Careful verification before signing the lease is essential.

---

Reference

https://www.molit.go.kr