“Special Law on Charter Fraud Passed Sub-committee of National Assembly for Victim Support: Details and Impact”

On the 22nd, the special law on charter fraud passed the subcommittee of the Land, Infrastructure and Transport Committee of the National Assembly with an agreement between the ruling and opposition parties. It was decided after a total of five meetings, 25 days after the special law was introduced to the National Land Commission on the 28th of last month. The main purpose of the special law is support such as granting priority purchase rights to victims and guaranteeing public purchases and long-term rentals. Regarding the issue of refunding the deposit, it is expected that the victims’ groups will protest as it retreats from the ‘support first, claim later’ method, in which the public purchases bonds, to interest-free loans to those who are not subject to top priority repayment.

At a meeting of the National Land Legislation Subcommittee on the morning of the same day, the National Land Commission discussed three ‘special laws to support damages from charter fraud’ and government amendments, each proposed by members of the ruling and opposition parties, and decided on an integrated and coordinated alternative.

The special law provides support for victims of charter fraud by largely dividing them into those who wish to purchase a house and those who wish to continue living. For those who wish to purchase a house among victims who have not received their deposit back due to a house auction or public sale due to charter fraud, the right to purchase a house is given first. Legal expert fees can also be supported during the auction process. If the victim wins the auction for a house, tax and financial support benefits such as local tax reduction and purchase loan support are provided.

For those who are unable to purchase a house or do not want to continue to live, the Korea Land and Housing Corporation (LH) purchases the right to purchase first and leases it for a long time to guarantee their right to reside. In addition, living expenses, medical expenses, housing expenses, and educational expenses are supported for the livelihood of victims in crisis situations. The target of application of the special law has been expanded from 450 million won or less to victims of 500 million won or less.

Regarding the issue of the return of the deposit, which was the most controversial issue, an agreement was reached by providing an interest-free loan for up to 20 years for the amount of the top priority repayment for the victims of charter fraud who were excluded from the priority reimbursement target. The right to top priority payment is the right to receive a partial refund of the deposit in preference to senior secured creditors such as the financial sector in accordance with the Housing Lease Protection Act. The opposition party pointed out that compensation could not be received in the case of victims who exceeded the deposit standard, and demanded to increase the priority reimbursement itself, but the government did not accept it. In response, the special law allowed victims who were excluded from the top priority payment loans to be paid in installments without interest for up to 20 years.

Rep. Kim Jeong-jae, the so-called chairman of People’s Power, met with reporters immediately after the meeting that day and said, “During the five meetings, the opposition parties did their best to expand the target and make support wider and more compact.” Thank you very much for giving me a lot of thoughtful suggestions.”

The opposition party welcomed the passage of the special law, but expressed regret that the proposals proposed by the opposition party were not accepted due to the government’s opposition. Democratic Party lawmaker Maeng Seong-gyu said, “The most meaningful achievement is that the range of victims is wider than the government plan, so that people who rent cans or fraudulently move into illegal buildings in neighborhood living facilities can be recognized as victims of fraud.” In terms of damage relief, the opposition party insisted on the purchase of bonds or the right to top repayment, and we came up with a compromise today.” Justice Party lawmaker Sim Sang-jeong said, “The problem is that we desperately needed support as much as the top priority repayment, and although it is an interest-free loan, I think the fact that the support plan came out in the form of a loan is what the victims are most sad about.” We will continue to make additional legislative efforts to look into and supplement this.”

Victim groups protested against the interest-free loan method agreed upon by the ruling and opposition parties. The National Countermeasures Committee for Victims of Charter Fraud and Canned Charter Lease issued a statement on the morning of the same day and said, “The government’s top-priority repayment loan plan is difficult to accept as it only increases the debt pile of victims with additional loans without responsibility.” He pointed out that the effect is insignificant because you can receive low-interest loan support in the 1-2% range if you migrate to the United States.” He criticized, “Looking at the fact that the fourth victim died while struggling to pay off excessive loans caused by charter fraud, the government’s alternative is to leave the victims in the depths of debt for a long time.”