‘8 billion won lease fraud’ destroys tenants’ daily lives… King Villa, sentenced to 8 years in prison

# In 2021, through a real estate app, Mr. Park signed a contract for a 1.5-room newly built officetel with a deposit of 230 million won. Received a bank loan for 50 million won in cash. He trusted the landlord who said he would sign up for rental business guarantee insurance, but before two years had passed since he lived in the house, he learned of the lease fraud along with the news of the landlord’s death. Ms. Park complained, “After finding out that she had been scammed for rent, she couldn’t sleep,” and “she couldn’t even talk to her family, and her normal daily life was ruined.”

The representative of a real estate consulting company who was identified as the mastermind behind the ‘Villa King’ incident, which committed a lease fraud by purchasing hundreds of villas through gap investment without capital in the Hwagok-dong area of ​​Gangseo-gu, Seoul, was sentenced to eight years in prison.

According to the legal community on the 24th, the 2nd Division of the Supreme Court (Chief Justice Kwon Young-jun) confirmed the original trial (2nd trial) sentence that sentenced Mr. A (40), CEO of a real estate consulting company, who was accused of fraud, to 8 years in prison. From July 2019 to September 2020, Mr. A was accused of buying a building through a gap investment without capital through a landlord who only lends his name, and stealing deposits for rent amounting to 8.03 billion won from 87 tenants.

Mr. A was pointed out as the mastermind behind seven people, including Villa Wang, who died in Jeju while purchasing 240 villas and officetels in the Gangseo and Yangcheon-gu areas of Seoul and renting them out. Mr. A and others received a higher amount of rent from the tenant than the sale price, paid this money to the building owner, and then divided the remaining money as a rebate.

During the trial, Mr. A reportedly denied committing the crime. Mr. A’s side claimed, “I cannot be said to be the main culprit.” He continued, “It cannot be said that there is an obligation to notify the tenant of the rebate payment, and it cannot be concluded that the victims would not have entered into a contract even if they had known that the sale price was the same as the jeonse price.”

However, the first trial court found Mr. A guilty on all charges and sentenced him to eight years in prison. Chief Judge Kang Min-ho of the 10th Criminal Division of the Seoul Central District Court, who was in charge of the first trial, sentenced Mr. A to eight years in prison in July of last year.

Mr. A and the prosecution both appealed after the first trial, but the appellate court upheld the first trial sentence. The second trial court said, “Mr. A’s logic can be applied in the case of a natural lease contract,” and “it cannot be applied to an abnormal and artificial transaction structure such as a gap investment structure where risk to the tenant is expected to occur.” pointed out. He then criticized, “None of the accomplices, including Mr. A, did not properly inform the victims of important circumstances, such as the fact that the actual transaction price was lower than the deposit and that the buyer was making a gap investment without capital.” The Supreme Court also dismissed the defendant’s appeal.

The Supreme Court also confirmed the second trial ruling, saying, “There was no mistake in misunderstanding the legal principles in the original judgment.”

Villa avoidance side effects ing

The aftermath of the ‘Villa King’ incident continues, with the villa phenomenon continuing throughout society. The phenomenon of non-apartments avoiding jeonse continues and they are becoming more focused on monthly rent. On the 24th, real estate information provider Economic Man Lab analyzed the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system, and found that among 123,669 housing rental transactions in Seoul from January to March, 57,997 were rental transactions and 65,672 were monthly rent transactions. It turned out to be a case.

The proportion of jeonse is 46.9%, which is the smallest since the Ministry of Land, Infrastructure and Transport began compiling related statistics in 2011 (as of the first quarter of each year). There is about a week left until the deadline (30 days) for reporting actual transactions for March contracts, but the proportion of jeonse is not expected to increase significantly. The proportion of housing leases in Seoul was 61.6% in 2020, but continues to decline to 58.0% in 2021, 50.3% in 2022, and 47.6% in 2023.

In particular, in the first quarter of last year, the monthly rent transaction volume for villas and single-family homes in Seoul was 66,170, with 24,002 leases (36.3%) and 42,168 monthly rents (63.7%). The proportion of jeonse has reached an all-time low. During the same period, the transaction volume of apartment jeonse and monthly rent in Seoul was 57,499, of which 33,995 (59.1%) were jeonse and 23,504 (40.9%) were monthly rent.

Experts diagnosed that tenants’ preference for monthly rent continues due to the burden of jeonse fraud. Hwang Han-sol, a research fellow at Economic Man Lab, explained, “As subscription to rental guarantee insurance has been strengthened and non-apartments are continuing to avoid renting, the housing rental market is being reorganized to focus on monthly rent.” Song Seung-hyeon, CEO of City and Economy, also said, “In order to avoid jeonse fraud, the tendency to prefer monthly rent even if it costs 100,000 to 200,000 won more has become stronger. Even if they pay 1.2 million won per month, they are choosing monthly rent over jeonse.”

Reporter Cho Yoo-jeong [email protected] View all articles