Types of Contracts

Monthly Rent

Renting a residence is the most common, and frequently only option, for international residents. Called 월세 (月貰, wolse) in Korean, a deposit is given and then monthly rent is paid to the landlord on a predetermined day. The term “key money” is frequently used instead of “deposit.” Deposit and rent price are displayed on housing websites, specialty smartphone apps, and in the windows of real estate offices (부동산, 不動産, budongsan). Despite the price being set, negotiation is sometimes possible. A common negotiation is paying a higher deposit for a lower monthly rent. This is easier to do when banks offer higher interest rates as the deposit is placed into a bank and the interest is collected by the landlord.

 

A rare version of monthly rent is paying your rent in advance for the entire length of your stay. Before moving in, your deposit and all rent payments are given to the landlord. Each month’s rent is subtracted for the lump sum. Upon completion of the contract the remaining deposit is returned. As this requires a substantial deposit, and rent doesn’t come back to the renter, people with this much money usually opt for a “jeonse” arrangement instead.

 

Large Deposit – No Rent

The jeonse system (전세, 傳貰) involves putting a deposit roughly the price of the property. Such a large deposit is provided that no rent is paid and the deposit is returned to the renter at the end of a two-year contract. As most people don’t have 200,000,000 won (roughly 200,000 USD or 200,000 Euro) or more in cash for a deposit, some or all of the deposit is borrowed from a bank. The interest payments to the bank are significantly less than one would pay for normal rent, say monthly 200,000 won to a bank instead of 450,000 to a landlord in rent. This system is advantageous as your “rent” is to the bank, is smaller than normal rent, and your deposit is returned to you at the end of the contract period, again, usually two years. The landlord makes money on this arrangement via interest payments on your deposit in a locked two-year savings account. The large deposit also protects the property owner from financial losses due to potential damage that occur at the hands of a renter.

 

While this is the preferred method for Koreans, it is nearly impossible for international individuals to do as banks have a higher risk involved with foreign nationals. Unless you are able to put up collateral worth the price of the loan, the banks will decline your request for a jeonse loan.

 

Partial Jeonse

As interest rates in banks remain low, landlords are wanting to do the jeonse system less than decades prior as the rate of return has diminished. In recent years the 반전세 (반傳貰, banjeonse), or literally “half jeonse” system has emerged. This is basically a low monthly rent system with substantial deposit; roughly half of a normal jeonse deposit. Cheaper than a normal rented property, the landlord can collect both rent and interest off of the large deposit given.

 

Creating a Lease Agreement

Real Estate Agent

Many real estate offices exist (부동산, 不動産, budongsan) in Korea. Each office will have their own listings and also have access to the same network of available residences throughout the city. To avoid communication issues, it would be beneficial to visit a real estate agent who can speak another language and have experience with international clients. Some cities have a list of Global Real Estate Agencies (글로벌 부동산중개소, 글로벌不動産仲介所, geullobeol budongsan junggaeso) and we have provided a list of them in the Appendix at the end of this book. As this is expanded, we will expand this section accordingly. Even if you can find a real estate agent who speaks a global language, consider going with a fellow researcher or admin staff who can provide background information and insight.

 

Financial Stability of Landlord

Prior to signing a contract, you should confirm that the financial situation of the property owner in relation to the target residence; how much is the property worth, how much debt exists on it, etc. Real estate agents are required to clearly and accurately explain this to tenants before signing a contract. They must also present documents, such as certified copies of real estate registers, to prospective tenants. Under law, if a tenant suffers a loss because the real estate agent fails to assist the tenant in checking these items, the real estate agent must compensate the tenant for the loss. This helps tenants to get the pertinent information aids in signing or not signing the contract.

 

Details of Contract

If you would like to continue with the process on the property you are interested in, you need to discuss all pertinent details with the lessor. This can include:
- Lease period - usually 1 or 2 years, less is difficult to find
- Address
- Breaking a contract early
- Deposit amount
- Rent amount, due date, and payment information
- Move in date
- Garbage disposal/schedule
- Pets
- Parking
- Provided furniture
- Keycards and/or passcode for building access
- Brokerage fee to be paid to the realtor - usually renter and landlord both pay the same amount of brokerage fee

 

As this is where you will live for one or two years, it is vital that you understand everything. Ask as many questions as needed, take as many notes as needed, and don’t allow others to push you into signing something you do not understand.

 

Signing and Contract Copies

The real estate agent, renter, and landlord all need to sign or stamp the contract. Sometimes a proxy will be used if the landlord lives in another city and/or is unable to visit the real estate office as the creation of a contract is frequently done very quickly. All parties must provide identification prior to signing. Bring your passport or Alien Registration Card if you have already made it.

 

The real estate agent will usually use a name stamp (도장, 圖章, dojang) registered with the government instead of signing the document by hand. This is frequently also the case with the landlord. A handwritten signature is also legally binding, so don’t feel out of place using a pen.

 

Three copies of the contract will exist so each signing party has a legal copy. After signing all three on the designated lines, the real estate agent stacks and slightly offsets the three contracts and all three parties sign the documents in a way that their stamp or signature overlap all three contracts. If a legal dispute occurs, all three contracts are produced and lined up to confirm if they are original or forged. If you or the landlord lose their copy of the contract, the realtor can provide a photocopy of the contract.

 

Registering your New Address

You need to update Immigration of your new residence within two weeks of moving. You can update your residency location by visiting Immigration or various local government offices, including city hall (시청, 市廳, sicheong), district office (구청, 區廳, gucheong), neighborhood office (동사무소, 洞事務所, dongsamuso –or– 주민센터, 住民센터, jumin senteo), town office (읍사무소, 邑事務所, eupsamuso), or township office (면사무소, 面事務所, myeonsamuso). Also some community centers can do this but not all, so contact them ahead of time to confirm. If you are trying to update your address more than two weeks after moving, you are only allowed to update your address with Immigration as you are in violation of Immigration law and only Immigration is allowed to deal with that situation.