CONTENTS
- 1. Violation of the Licensed Real Estate Agents Act | Licensed Real Estate Agents and the Scope of Brokerage Objects
- - What Is a Licensed Real Estate Agent?
- - Scope of Brokerage Objects
- - Objects Excluded from Brokerage
- 2. Violation of the Licensed Real Estate Agents Act | Prohibited Acts
- - Acts Prohibited for Licensed Real Estate Agents
- - Acts of Interference That No One May Commit
- 3. Violation of the Licensed Real Estate Agents Act | Administrative Dispositions against Licensed Real Estate Agents
- - Revocation of the License
- - Suspension of the License
- - Effects of the Disposition
- 4. Violation of the Licensed Real Estate Agents Act | Administrative Dispositions Against Operating Licensed Agents
- - Revocation of Registration
- - Suspension of Business
- 5. Violation of the Licensed Real Estate Agents Act | Administrative Criminal Penalties by Type of Act
- - Imprisonment for Up to 3 Years or a Fine of Up to 30 Million Won
- - Imprisonment for Up to 1 Year or a Fine of Up to 10 Million Won
- 6. Violation of the Licensed Real Estate Agents Act | How to Respond to a Violation
- - Confirming the Facts and Securing Materials
- - Responding to the Competent Registration Authority or Investigating Agency
- - Procedures for Appealing an Administrative Disposition
- - Measures to Prevent Recurrence
- 7. Violation of the Licensed Real Estate Agents Act | Checklist
- - Support System of Real Estate Specialist Attorneys
1. Violation of the Licensed Real Estate Agents Act | Licensed Real Estate Agents and the Scope of Brokerage Objects
The 「Licensed Real Estate Agents Act」 clearly defines the qualification requirements for licensed real estate agents and the scope of brokerage objects in order to promote transparency and fairness in real estate transactions.
When a person brokers an asset that is not a brokerage object, or an unqualified person engages in brokerage, this violates the Licensed Real Estate Agents Act and may carry serious liability.
What Is a Licensed Real Estate Agent?
A licensed real estate agent is a professional broker who has earned that status through a qualification examination, and the 「Licensed Real Estate Agents Act」 sets out strictly defined roles and distinctions.
Classification of Licensed Real Estate Agents
Type | Description |
Practicing licensed real estate agent | A person who has registered the establishment of a brokerage office in accordance with the Act |
Affiliated licensed real estate agent | A person who is affiliated with a practicing licensed real estate agent and performs or assists with brokerage work |
Brokerage assistant | A person who is not a licensed real estate agent but performs simple supporting work |
An independent brokerage act by an unqualified person is a clear violation.
Scope of Brokerage Objects
The objects that a licensed real estate agent may broker are also limited by law.
Brokerage that goes beyond this scope may violate the Licensed Real Estate Agents Act.
Objects That May Be Brokered (Licensed Real Estate Agents Act, Article 3)
▪ Buildings or other fixtures attached to land
▪ Standing timber under the Act on Standing Timber
▪ Factory foundations and mining foundations under the Factory and Mining Foundation Mortgage Act
Objects Excluded from Brokerage
If the following rights or assets are brokered, they do not qualify as statutory objects, and brokering them may violate the Licensed Real Estate Agents Act.
: A mere ‘status’ that allows one to win through a lottery application is not the building itself and therefore is not an eligible object (Supreme Court Decision 90Do1287, rendered April 23, 1991).
▪ Intangible assets such as goodwill, customer base, and know-how
: Intangible economic value that is not a building or real estate is excluded (Supreme Court Decision 2008Do9427, rendered January 15, 2009).
▪ Replacement land rights
: The right to be supplied with relocation housing land within a housing site development district under certain conditions when a house is demolished is not treated as real estate (Supreme Court Decision 2011Da23682, rendered May 26, 2011).
2. Violation of the Licensed Real Estate Agents Act | Prohibited Acts
A violation of the Licensed Real Estate Agents Act arises when a person commits an act that the Act expressly prohibits, or fails to follow the procedures the Act requires, among other situations.
The main prohibited acts are as follows.
Acts Prohibited for Licensed Real Estate Agents
Article 33(1) of the Licensed Real Estate Agents Act expressly prohibits individual licensed agents and affiliated licensed agents from engaging in the following nine acts.
Nine Prohibited Acts
No. | Summary of Prohibited Act |
1 | An agent dealing directly in the buying and selling of real estate (prohibition on concurrently running a trading business) |
2 | Entrusting brokerage to an unregistered, unqualified person or lending one's own name to such a person |
3 | Receiving additional money or goods in excess of the statutory fee (whether labeled a gratuity, gift, or otherwise) |
4 | Clouding a client's judgment through false explanations or similar means |
5 | Brokering the sale or lease of real estate whose transaction is prohibited by statute |
6 | Transacting directly with a client or acting on behalf of both parties |
7 | Brokering real estate subject to resale restrictions for the purpose of tax avoidance or speculation |
8 | Fabricating a completed transaction for the purpose of manipulating market prices |
9 | Forming a group and then restricting particular brokerage or blocking joint brokerage |
Violating even one of these prohibited acts may result in administrative sanctions.
In addition, a person who violates subparagraphs 5 through 9 is also subject to administrative criminal penalties.
Acts of Interference That No One May Commit
Even a person who is not a licensed real estate agent is subject to punishment if that person unfairly interferes with a particular licensed agent's work or commits an act intended to affect market prices.
Type of Prohibited Act | Specific Content |
① Inducing restrictions on brokerage commissions | Inducing people, through notices, online communities, and similar means, not to use a particular licensed agent |
② Inducing use of particular agents | Inducing people to use only a particular agent who advertises at prices markedly higher than the market price, while unfairly discriminating against others |
③ Restricting brokerage commissions below a particular price | Inducing people, through communities and similar means, not to engage agents below a certain price |
④ Interfering with advertising activities | Interfering with a licensed agent's advertising activities without justifiable grounds |
⑤ Inducing price inflation | Coercing an agent to advertise at a markedly higher price, or inducing the agent to do so by promising compensation |
Because acts by outsiders that interfere with a licensed agent's work may also be subject to punishment, caution is needed.
3. Violation of the Licensed Real Estate Agents Act | Administrative Dispositions against Licensed Real Estate Agents
When a violation of the Licensed Real Estate Agents Act is found, it can go beyond a mere warning and lead to a serious administrative disposition, namely suspension or cancellation of the licensed real estate agent's qualification.
Such a disposition directly affects the livelihood and professional standing of the agent involved, so it is important to clearly understand the disposition criteria for each type of violation and to prepare accordingly.
Revocation of the License
A licensed real estate agent's license is necessarily revoked where a serious violation occurs as follows (Licensed Real Estate Agents Act, Article 35).
▪ Where the agent allowed another person to conduct brokerage using the agent's name, or transferred or lent the certificate
▪ Where the agent performed brokerage work during a period of license suspension
▪ Where, in connection with the agent's duties, the agent received a sentence of imprisonment without labor or heavier (including a suspended sentence) for a specific crime under the Criminal Act, such as fraud, embezzlement, or breach of trust
To revoke a license, the Mayor or Provincial Governor must hold a hearing, and the person whose license is revoked must return the certificate or submit a written explanation within 7 days.
Suspension of the License
If carelessness or a legal violation in brokerage work is found, a licensed real estate agent's license may be suspended for a certain period.
The disposition is imposed on a graduated basis according to the nature and degree of the violation (Licensed Real Estate Agents Act, Article 36(1) and (3), and Enforcement Rules of the Licensed Real Estate Agents Act, Article 22(1) and attached Table 3).
Violation | Suspension Standard |
① Being affiliated with two or more brokerage offices | License suspension of 6 months |
② Failing to register a seal or using an unregistered seal | License suspension of 3 months |
③ Failing to confirm and explain a brokerage object faithfully and accurately, or failing to present supporting materials for the explanation | License suspension of 3 months |
④ Failing to sign and seal the brokerage object confirmation and explanation statement | License suspension of 3 months |
⑤ Failing to sign and seal the transaction contract | License suspension of 3 months |
⑥ Falsely recording transaction details such as the transaction amount in the transaction contract, or preparing two or more differing transaction contracts | License suspension of 6 months |
⑦ Committing a prohibited act under any subparagraph of Article 33(1) of the Licensed Real Estate Agents Act | License suspension of 6 months |
Accordingly, committing one of the acts prohibited for licensed agents discussed above may result in suspension of the license.
In this case, the Mayor or Provincial Governor may increase or reduce the suspension period by up to one-half, considering the motive, frequency, and result of the violation, and the period may not exceed 6 months.
Effects of the Disposition
The disposition does not stop at a mere license restriction; it strongly restricts future registration of a brokerage business itself.
License Revocation | For 3 years after the disposition, the person may not obtain a licensed real estate agent's license or open a brokerage office |
License Suspension | During the suspension period, establishment registration is not permitted |
Performing brokerage work during this period results in immediate revocation of the license |
4. Violation of the Licensed Real Estate Agents Act | Administrative Dispositions Against Operating Licensed Agents
When a violation of the Licensed Real Estate Agents Act is found against an operating licensed agent, the registration of the brokerage office itself may be revoked, or a business suspension disposition may be imposed for a certain period.
Because this is not a mere license restriction but a direct restriction on the operation of the business itself, particular caution is needed.
Revocation of Registration
Where any of the following grounds applies, the establishment registration of a brokerage office may be revoked.
Grounds for Revocation of Registration (Licensed Real Estate Agents Act, Article 38)
2. Where two or more brokerage offices are maintained
3. Where a temporary brokerage facility is installed
4. Where a concurrent business is conducted
5. Where the business is closed continuously for more than 6 months
6. Where information on a brokerage object is not disclosed, or information is disclosed despite the client's request for nondisclosure
7. Where transaction details such as the transaction amount are falsely recorded in the transaction contract, or two or more differing transaction contracts are prepared
8. Where business is commenced without taking measures to guarantee liability for damages
9. Where a prohibited act under any subparagraph of Article 33(1) of the Licensed Real Estate Agents Act is committed
10. Where, within the past 1 year, the agent has received 3 or more business suspension or administrative fine dispositions under the Licensed Real Estate Agents Act and again commits an act subject to business suspension or an administrative fine disposition (excluding cases falling under 9. among the grounds for mandatory revocation of registration)
11. Where a business operators' association organized by operating licensed agents (referring to a business operators' association under Article 2, subparagraph 2 of the regulatory Monopoly Regulation and Fair Trade Act) or an operating licensed agent who is a member thereof has violated Article 51 of the Monopoly Regulation and Fair Trade Act and received a disposition under Article 52 or 53 of the Monopoly Regulation and Fair Trade Act 2 or more times within the past 2 years
Accordingly, committing one of the acts prohibited for licensed agents discussed above may result in revocation of registration.
Suspension of Business
A business suspension disposition bars an agent from performing brokerage work for a set period, and it is imposed for up to 6 months according to the severity of the violation (Licensed Real Estate Agents Act, Article 39(1), and Enforcement Rules of the Licensed Real Estate Agents Act, Article 14 and attached Form 15).
(However, this excludes cases where the ground is resolved within 2 months from the date it arose.)
2. Where a seal is not registered or an unregistered seal is used
3. Where an exclusive brokerage contract is concluded other than by the exclusive brokerage contract form, or the contract is not preserved
4. Where information on a brokerage object is falsely disclosed, or the transaction information operator commissioned to disclose a brokerage object is not notified that the transaction of that object has been completed
5. Where the brokerage object confirmation and explanation statement is not delivered or not preserved
6. Where the brokerage object confirmation and explanation statement is not signed and sealed
7. Where the transaction contract is not properly prepared and delivered, or not preserved
8. Where the transaction contract is not signed and sealed
9. Where the agent refuses, obstructs, or evades a report, submission of materials, investigation, or inspection related to the supervisory order of the administrative authority above, or fails to comply with other orders, or makes a false report or submission of materials
10. Where any of the grounds for discretionary revocation of establishment registration above applies
11. Where, within the past 1 year, the agent has received 2 or more business suspension or administrative fine dispositions under the Licensed Real Estate Agents Act and again commits an act subject to an administrative fine disposition
12. Where a business operators' association organized by operating licensed agents or an operating licensed agent who is a member thereof has violated Article 51 of the regulatory Monopoly Regulation and Fair Trade Act and received a disposition under Article 52 or 53 of the Monopoly Regulation and Fair Trade Act
13. Where there is any other violation of the Licensed Real Estate Agents Act or of an order or disposition issued under the Licensed Real Estate Agents Act
For an operating licensed agent that is a corporation, a separate suspension disposition may be imposed on the corporation's head office or branch office.
5. Violation of the Licensed Real Estate Agents Act | Administrative Criminal Penalties by Type of Act
A violation of the Licensed Real Estate Agents Act may go beyond a mere administrative disposition and lead to punishment.
Caution is warranted because a licensed agent's trustworthiness and professional ethics are treated as a serious unlawful act that is directly subject to legal judgment.
Imprisonment for Up to 3 Years or a Fine of Up to 30 Million Won
This applies to serious market disruption, the inducement of real estate speculation, unlawful establishment registration, and similar acts (Licensed Real Estate Agents Act, Article 48, Article 33(1), subparagraphs 5 through 9, and Article 33(2)).
▪ Obtaining establishment registration by false or improper means
▪ Brokering real estate prohibited by statute, such as real estate subject to resale restrictions on housing subscription rights
▪ Transacting directly with a client or acting on behalf of both parties
▪ Brokering unregistered real estate to encourage speculation
▪ Falsely pretending that a transaction has been completed, or acting to exert an undue influence on market prices
▪ Forming a group to restrict joint brokerage or to induce the exclusion of particular agents
▪ Inducing or coercing labeling or advertising at a price markedly higher than the market price, among others
Imprisonment for Up to 1 Year or a Fine of Up to 10 Million Won
This applies to abuse of a licensed agent's qualifications, violations of office operation rules, disclosure of secrets, and similar acts (Licensed Real Estate Agents Act, Article 49(1), Article 24(4), Article 29(2), and Article 33(1), subparagraphs 1 through 4).
▪ A person who is not a licensed real estate agent using a license certificate or title
▪ Double registration, or operating or being affiliated with multiple offices
▪ Installing an unauthorized temporary brokerage facility
▪ Excessive employment of brokerage assistants
▪ Misappropriating a title, or advertising by an unqualified person
▪ Disclosing information discriminatorily on a transaction information network
▪ Disclosing a secret learned while performing brokerage work
▪ Commissioning brokerage through a person who conducted a brokerage business without registering a brokerage office
▪ Receiving money or goods in excess of expenses or fees
▪ Misleading a client through false statements about material facts
6. Violation of the Licensed Real Estate Agents Act | How to Respond to a Violation
When a violation of the Licensed Real Estate Agents Act is detected, a prompt and systematic response is needed before it leads to an administrative disposition or punishment.
Even where the violation is acknowledged, the level of the disposition may be reduced by showing the circumstances, whether there was intent, the measures taken afterward, and similar factors.
The following are practical, step-by-step methods of response that may be used.
Confirming the Facts and Securing Materials
When a suspected violation is reported, first confirm the notice from the competent authority or investigative agency.
If the violation resulted from a simple mistake, a system error, or an oversight, you should prepare supporting materials that can explain this in detail.
Responding to the Competent Registration Authority or Investigating Agency
If you are asked to submit a fact confirmation statement or a written explanation, submit it within the set deadline, focusing on the circumstances of the violation, whether there was intent, whether subsequent measures were taken, and similar points.
If a sufficient explanation is not provided during the investigation stage, this may later lead to revocation of registration or similar outcomes, so the initial response is very important.
Procedures for Appealing an Administrative Disposition
If an administrative disposition is issued, you may appeal through an administrative adjudication or administrative litigation within a set deadline.
In particular, serious dispositions such as revocation of establishment registration or a 6-month business suspension are directly tied to the interruption of one's livelihood, so the possibility of an appeal should be reviewed promptly.
Means of Response | Filing Deadline |
Administrative Adjudication | Within 90 days from the day one becomes aware that a disposition has been made |
Within 180 days from the day a disposition was made | |
Where an adjudication has been pursued, within 90 days from the day the certified copy of the ruling is served | |
Administrative Litigation | |
Within 90 days from the day a disposition was made |
Measures to Prevent Recurrence
To prevent similar violations from recurring, maintain practical systems such as improving internal operating procedures, managing brokerage assistants, and reviewing the procedures for preparing and retaining contracts.
7. Violation of the Licensed Real Estate Agents Act | Checklist
Because a violation of the Licensed Real Estate Agents Act may result in serious disadvantages such as license suspension, revocation of registration, and criminal punishment, it is important to check for and prevent potential violations in advance.
Please review your brokerage work as a whole using the checklist below.
Item to Check | Key Content |
Establishment registration | Are you conducting a brokerage business without registration? |
Certificate management | Have you lent your certificate to another person or borrowed one? |
Employment of brokerage assistants | Are you employing within the permitted number of personnel? |
Labeling and advertising | Are you markedly distorting market prices or discriminating against others in labeling and advertising? |
Management of contracts and statements | Are you preparing, delivering, and retaining the brokerage object confirmation and explanation statement and the transaction contract? |
Compliance with the work area | Are you brokering only within the jurisdiction of the designated brokerage office location? |
Handling of brokerage commissions | Has there been any act of discriminating against clients or transacting directly? |
Receipt of fees and commissions | Have you received money or goods in excess of the statutory limit? |
Support System of Real Estate Specialist Attorneys
This law firm has many real estate specialist attorneys registered with the Korean Bar Association, as well as numerous specialist attorneys with an average of more than 10 years of experience.
From responding to the risk of brokerage office registration revocation or business suspension to defending against the risk of criminal punishment, and through procedures for objections and administrative adjudication, effective legal responses to protect brokers are possible.
Because a strategic response by legal specialists, rather than handling the matter alone, can be a significant turning point, we suggest pursuing your legal response with the help of a real estate specialist attorney.
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