Real estate lawyer, “Sudden increase in tin-lease fraud... We need to get relief through refund lawsuits”

Recently, the number of victims of so-called ‘tin lease fraud’, in which a lease contract is signed at a higher price than the market price and then the title is transferred to a delinquent rental business operator, is increasing, requiring special attention.

According to data from the Housing and Urban Guarantee Corporation (HUG), from 2016 to May of this year, there were a total of 5,453 accidents nationwide involving rental deposit return guarantees, with an accident amount of approximately 1.0915 trillion won, and 77% of the accidents occurred in the metropolitan area.

In the legal world, the first method of self-rescue is to apply for a payment order. The application for a payment order can be made even without the consent of the debtor, and if the court determines that the purpose of the application and explanatory materials are appropriate, a copy of the payment order decision is immediately sent, which has the advantage of saving cost and time through a simplified litigation procedure.

However, depending on the case, we advise that a lawsuit for refund of deposit may be an appropriate solution. Real estate lawyer Shim Jae-guk of Daeryun Law Firm (Limited) said, "If a dispute over the return of the deposit is expected, it is better to file a lawsuit from the beginning. An application for a payment order will turn into a lawsuit when the other party raises an objection. If the validity of the claim is not recognized, there is a risk that it will be dismissed or an amendment order will be issued, resulting in additional waste of time and money."

In general, a lawsuit to return the deposit is known to be the most effective way to get the deposit back, but the tenant's obligation to return the deposit must be proven and supporting materials must be well prepared. This includes proof of contents, lease agreement, and all materials proving that there was no implied intention to renew.

Attorney Shim said, “As the so-called tin can lease issue is a long-standing nuisance of the real estate market, it is most important for tenants to be aware of it and deal with it.” He added, “You must proceed with the contract by looking into whether or not a lien has been established, the calculation of senior bonds, and whether it is possible to report a move-in and a confirmed date. Above all, in civil lawsuits, proof through evidence has a big impact on winning the case, so it will be helpful to get legal help when proceeding with a lawsuit for the return of the lease.”

Daeryun Law Firm (Lihan), which provided assistance, is assisting with related cases through its own real estate center. Currently, we have offices all over the country, including Seoul, Busan, Daegu, Incheon, Gwangju, Daejeon, Ulsan, Suwon, Changwon, Cheongju, Jeonju, Uijeongbu, Chuncheon, Jinju, and Jeju.

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