Background
In February 2025, our client signed a jeonse lease (a lump-sum deposit lease) for a newly built apartment in Gyeonggi Province with a deposit of KRW 320 million and paid a KRW 80 million down payment. A special clause barred the landlord from creating any mortgage or other security interest on the home until the day after the balance was paid.
Just 19 days later, in March 2025, the landlord registered ownership and simultaneously created a mortgage with a maximum secured amount of KRW 390 million. Our client discovered this on moving day at the end of April, refused to move in, and sent a certified letter terminating the lease.
What Was at Stake
The lease said a party could terminate after a written demand for performance. The landlord argued that termination without such a demand was invalid and that the mortgage was an unavoidable part of the ownership transfer.
How Changchun Helped
The court accepted the following arguments on our client's side:
The breach was fundamental. The mortgage directly violated a clause protecting the tenant's priority.
The landlord never intended to comply. A court inquiry to the lender showed that the landlord applied for the loan on February 21, before signing the lease, and was approved in March. Where a party shows no intention to perform, termination without a prior demand is allowed.
Liquidated damages were owed. The lease set the down payment as the measure of damages, so the landlord had to pay that amount on top of returning the down payment.
Outcome
In November 2025, the first-instance court ordered the landlord to pay KRW 160 million—the KRW 80 million down payment plus KRW 80 million in damages—with delay damages. The claim was granted in full, the landlord bore the costs, and the judgment was made provisionally enforceable.
A no-mortgage clause and a registry check before paying the balance can protect tenants. (Outcomes depend on the facts of each case.)