"Winning the Housing Subscription" Isn't the End…Fraudulent Subscription Goes Beyond Contract Cancellation to Criminal Punishment

Attorney Kim Hyung-jin of Daeryun Law Firm: "A response strategy for the triple risk of 'contract cancellation, criminal punishment, and Resident Registration Act violation' is important"

As the government launches an intensive investigation into fraudulent housing subscriptions through fake move-ins, sham marriages, sale of qualifications, and document forgery, tension is rising in the real estate market. In particular, amid news of large-scale full investigations targeting Seoul and popular sale complexes, the anxiety of winners is deepening.

Attorney Kim Hyung-jin of Daeryun Law Firm, an expert in this field, advised, "Recent investigations are trending beyond merely reviewing documents to mobilizing even digital forensics and lifestyle-pattern analysis," adding, "Even a simple administrative mistake can expose one to the triple risk of contract cancellation, criminal punishment, and a Resident Registration Act violation, so it is important to establish a legal response strategy from the early stage."

We asked Attorney Kim about the government's recent investigation into fraudulent subscriptions.

▶What are the representative types of "fraudulent subscription" that are detected?

=The most common case is fake move-in. This is the act of merely filing a move-in report to a family member's or acquaintance's address in order to obtain priority-supply qualification for residents of the relevant area, and it can constitute a Resident Registration Act violation along with a Housing Act violation. Besides this, the main detected types include sham divorce for special-supply qualification, submission of false pregnancy diagnoses, sale of subscription accounts and qualifications, and proxy subscription by handing one's financial certificate to a broker. Recently, the act of handing a financial certificate to a broker for proxy subscription is also being severely punished.

▶How specifically does the government catch whether someone actually resides there?

=The Ministry of Land, Infrastructure and Transport and local governments extract abnormal transactions through the Real Estate Transaction Management System (RTMS), then analyze overall traces of daily life such as health insurance medical benefit records, credit card payment records, and parcel-delivery addresses. On-site verification is also conducted in parallel, such as electricity, water, and gas usage, children's school-transfer records, apartment parking-lot entry records, and elevator CCTV analysis.

▶What is the standard for being subject to criminal punishment?

=The key standard is "the intent of the act of deception." A false move-in report or submission of forged documents can be punished as a Housing Act violation with imprisonment of up to 3 years or a fine of up to 30 million won; and if three times the profit gained from the violation exceeds 30 million won, it is aggravated to a fine of up to three times that profit. In the case of a fake move-in, a Resident Registration Act violation is added as a concurrent crime, and if the fair occupant-selection work of the business entity is obstructed, the crime of obstruction of business may also apply.

▶How should one respond if unjustly suspected?

=With the careful consultation and help of a specialist attorney, one must preemptively secure objective and multidimensional evidence to prove the fact of actual residence. It is important to organize one's actual daily movements by date—such as a moving-company contract, receipts for appliance and furniture purchases, management-fee payment records, internet/TV installation records, and delivery-app order records—to achieve logical consistency at the explanation stage.

▶Any advice for those facing investigation?

=The most important thing is to respond to the criminal procedure and the administrative disposition separately. Under Article 65, Paragraph 2 of the Housing Act, once a fraudulent subscription is confirmed, the business entity must mandatorily cancel the supply contract, so even if one receives a criminal non-charge, the contract cancellation is not automatically exempted. From the early stage of the investigation, one must establish two tracks simultaneously—administrative explanation and criminal defense—and respond by legally reconstructing the facts so that a hasty answer does not lead to a result that admits intent. This is the way to minimize risk.

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