"Trying to Earn Commissions Amid the Recession"... What Are the Licensed Real Estate Agent Act Standards for Brokering Illegal Gambling Dens?

Amid a prolonged real estate transaction cliff, self-employed licensed real estate agents thirsty for brokerage commission income are easily exposed to the temptation of abnormal lease contracts. However, one must be mindful that turning a blind eye to a tenant's illegal purpose can lead not only to having one's agent license revoked but also to criminal punishment. In fact, recently in Ulsan, a case occurred in which a licensed real estate agent who—aiming to monopolize high commissions—consecutively brokered 18 crime venues to a multi-billion-won illegal gambling site gang and even shared crackdown information was booked together, giving great cause for alarm.

The first thing to examine is criminal liability. If a licensed real estate agent actively cooperates in securing space while being aware of the operation of an illegal gambling den, accessory liability under Article 32 of the same Act may be at issue, as an accomplice to Article 254 of the Criminal Act (opening a gambling place, etc.). Even if they did not directly operate the gambling den or share the profits, investigative agencies and courts are highly likely to evaluate the act of arranging and brokering to secure space to be used in the crime as aiding the crime. In addition, if one could sufficiently anticipate the possibility of illegal operation from the circumstances but looked away, the court may recognize willful negligence.

In fact, the Supreme Court comprehensively considers the degree of awareness of the crime, the abnormality of the transaction, and the scale of economic benefit when determining whether accessory liability is established, and there are not a few cases in which parties who arranged places to be used for operating illegal game rooms or prostitution establishments were punished as accessories. What is more of a problem for agents than criminal punishment is administrative sanctions. The act of arranging a lease contract for opening an illegal gambling den may be evaluated as falling under 'an act that significantly harms the fairness of a licensed real estate agent's duties,' prohibited by Article 33, Paragraph 1, Item 7 of the Licensed Real Estate Agent Act. Furthermore, depending on the level of criminal punishment after being brought to criminal trial, it may become grounds for revocation of the agent license or registration, potentially resulting in effectively being disgracefully expelled from the industry.

To prevent such problems, licensed real estate agents must prepare on multiple fronts. If a broker demands multi-store commercial leases while changing names within a short period, or proposes commissions excessively high relative to the local market rate, showing signs of an abnormal transaction, one should be suspicious.

When concluding a contract, a procedure to double-check the tenant's exact business type and whether licensing is possible through the local government is necessary. In addition, it is advisable to specify in the special terms of the lease contract a defensive clause to the effect that 'if the tenant uses the leased object for an illegal purpose, the lessor may immediately terminate the contract.' However, one must also remember that such a special clause only carries the meaning of securing grounds for the lessor's contract termination and does not have the effect of directly exempting the agent's criminal liability.

Kim Yong-tae, attorney at Daeryun LLC, said, "If you are unfairly placed under investigation after being deceived by a broker's clever lies, you must, from the early stage of the case, seek the assistance of a legal expert well-versed in real estate and criminal matters to objectively demonstrate that there was no 'awareness of illegality,'" and "As such, a licensed real estate agent is not merely a facilitator of contracts but a frontline expert who safeguards a lawful and transparent real estate transaction order. I urge agents to firmly reject suspicious transaction proposals with a hint of illegality, thereby protecting the career and legal safety net they have built for themselves."

Enet News Reporter Park Jeong-woo (woo@enetnews.co.kr)

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"Trying to Earn Commissions Amid the Recession"... What Are the Licensed Real Estate Agent Act Standards for Brokering Illegal Gambling Dens? (Go to link)