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Types of Lease Contracts

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  • Contract forms for residential housing
    Jeonse (Key money deposit)img1
    Jeonse or key money deposit is a housing rental system specific to Korea. Instead of paying monthly rent to a landlord, a large lump sum payment is deposited to the landlord’s bank account for the duration of the contract. At the end of the contract, the deposited amount is returned to the renter. For lessors, they can earn considerable profits by utilizing the large sum of money paid in advance by the lessees. For lessees, they tend to prefer Jeonse-type contracts because they will get the entire deposit back later even though they have to pay a considerable amount of money in advance. Note, however, that lessees are beginning to prefer the Wolse lease type to Jeonse for diverse reasons.
  • Wolse (Monthly payment + deposit)img2
    Wolse requires renters to deposit an arranged amount of money with the landlord, with the monthly rent paid on a specified date each month. There are three types of Wolse contracts. One is simply paying monthly. Another is to pay in advance a deposit that is less than Jeonse plus a monthly rental fee. You get the total amount of the deposit money back when the lease period is over. The other one is to pay a specific sum of money in advance and some amount of money for the lease deducted from the paid money every month; you will get the remaining money back when the lease period comes to an end. In general, most people pay a deposit in advance.
  • Signing the lease
    How to conclude a lease contractimg3
    Before signing the contract, be sure to check the right relations (debtor and creditor relation) for the target house. These days, real estate agencies are supposed to explain the state, location, and right relations for the target house to the tenants sincerely and accurately. They must also present evidentiary documents such as certified copy of real estate register to the tenants. Under the law, if loss is sustained by the tenant because the real estate agent does not help the tenant check these, the real estate agent must compensate for the loss. This makes it easy for the tenants to verify the right relations for the target house.

    When you want to conclude the lease contract after the right relations are ascertained, discuss with the lessor all the details (including the lease period, standard to apply in case of termination before the expiration date of the contract, etc.) and clearly enter what both parties agreed upon into the lease contract before drawing up the contract or signing or sealing the contract. Then, each party keeps one set of the contract. At the same time, because the real estate agent is supposed to issue the confirmed and explained details for the target house (right relations, state of the house and location, etc.) in writing to both lessor and lessee, the tenant should request the explanatory documents other than the lease contract and keep them along with the contract.

  • How to conclude a lease contractimg4
    Before signing the contract, be sure to check the right relations (debtor and creditor relation) for the target house. These days, real estate agencies are supposed to explain the state, location, and right relations for the target house to the tenants sincerely and accurately. They must also present evidentiary documents such as certified copy of real estate register to the tenants. Under the law, if loss is sustained by the tenant because the real estate agent does not help the tenant check these, the real estate agent must compensate for the loss. This makes it easy for the tenants to verify the right relations for the target house.

    When you want to conclude the lease contract after the right relations are ascertained, discuss with the lessor all the details (including the lease period, standard to apply in case of termination before the expiration date of the contract, etc.) and clearly enter what both parties agreed upon into the lease contract before drawing up the contract or signing or sealing the contract. Then, each party keeps one set of the contract. At the same time, because the real estate agent is supposed to issue the confirmed and explained details for the target house (right relations, state of the house and location, etc.) in writing to both lessor and lessee, the tenant should request the explanatory documents other than the lease contract and keep them along with the contract.

    In concluding the contract, the amount of down payment and date and method of paying the remainder are discussed and entered in the contract. Normally, about 10% of the key money deposit will be paid as down payment, with the remainder to be paid when moving in. At this time, the amount of commission for the real estate agent and payment method will be discussed and agreed upon. The commission for the real estate agent varies slightly depending on the type of real estate transaction and type of target object to mediate. In other words, the commission rate changes depending on whether it is lease, sale, or exchange and whether it is a residential building or a commercial building. The commission rate for sales or exchanges is higher than that for leases. Moreover, for leases, the commission rate for a business residential building or an officetel classified as a commercial building is higher than that of a house or an apartment classified as residential building.

  • Lease periodimg4
    The lease period is usually two years to protect the lessee. When both contractors agree on a period of less than two years, however, the validity of the contract is also declared. 

    If there is no declaration of intention regarding contract renewal or termination of the 2-year contract from either the lessor or the lessee between six months and 1 month before the termination of the contract, the lease contract is deemed renewed under the same conditions as the previous contract as of the date of the termination. 

    If there is an agreement on premature termination at the time of drawing up the contract, actions will be taken according to the agreement. Without an advanced agreement, however, disputes over compensation for loss incurred from the contravention of contract often arise between the lessor and the lessee. The best resolution to the dispute is to minimize mutual loss through smooth negotiation between the contractors. In case the negotiation between the contractors breaks down with regard to premature termination for reasons attributable to the lessee, the lessor has the right to refuse to return the key money deposit until the lease period ends. For wolse, even though the tenant has vacated the premises, the landlord has the right to enforce the monthly rental agreement until a new tenant moves in.
  • Things to do after moving inimg4
    You have to update the address on your alien registration card with the address of the new house you moved in to at the public service center of the local ward (gu) office or the Immigration Office.

    Visit a Registry Office with your updated alien registration card and the lease contract to get a fixed date for the contract. The fixed date is intended to have the existence of the lease contract assured by authorities. For this, the authority puts a confirmation seal on the contract and enters the serial number of the fixed date register into the contract. Getting a fixed date is important because it is a basic requirement. Action is taken to exercise the right to obtain preferential satisfaction with subordinated bondholders and other creditors with regard to the money into which the leased house is converted. A fixed date gives you the right to repossess the key money deposit if the lease relation gets extinguished due to the sell-out of the leased house by auction or delinquency disposition

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