The chaegwon-choegoaek (maximum secured claim) recorded in section eul of a Korean property register is not the money the owner actually borrowed. It is the ceiling the collateral stands behind. Set at the customary 120% of principal, the loan itself is that figure divided by 1.2 — a ceiling of 240 million won implies a principal of roughly 200 million.
That single division matters for a plain reason. Risk in a jeonse (lump-sum deposit lease) contract is measured as 'senior claims plus my deposit' against market value, and whether you plug the principal or the ceiling into that formula moves the safe line by tens of millions of won.
Why the ceiling exceeds the principal
Unlike an ordinary mortgage, a geunjeodang (revolving mortgage) secures claims that may arise in the future as well. As Honest Fund explains, the ceiling is set to cover not only principal but interest and default damages. Interest accruing through a long delinquency stays within the bank's collateral so long as it fits under the ceiling; anything beyond it falls outside.
Bankmall notes that the ratio is customarily 110–120% of principal, so a 100 million won mortgage appears on the register as a ceiling of 110 million. Some sources cite 120–130%, reflecting different practice by loan type and lender: first-tier bank mortgages tend to sit at 110–120%, while mutual finance and second-tier lenders often use around 130%.
The structure of the register is worth noting too. Section gap covers ownership; a geunjeodang is recorded in section eul, which holds rights other than ownership. Multiple entries there are numbered by order of filing, and distribution in a foreclosure follows that ranking.
The ceiling is the maximum the bank can recover, and the tenant's turn begins only with whatever is left once that maximum is exhausted.
Working the principal back out of the ceiling
The register never states the principal, so the only route is to divide by an assumed ratio. The table below applies all three.
| Claim ceiling on register (KRW) | Implied principal at 110% | Implied principal at 120% | Implied principal at 130% |
|---|---|---|---|
| 120,000,000 | 109,090,000 | 100,000,000 | 92,310,000 |
| 240,000,000 | 218,180,000 | 200,000,000 | 184,620,000 |
| 360,000,000 | 327,270,000 | 300,000,000 | 276,920,000 |
For the same 240 million won ceiling, the implied principal ranges from 184.6 million to 218.2 million — a spread of 33.6 million. One practical conclusion follows. A back-calculated principal is only a reference figure; for judging contract safety, using the ceiling itself is the conservative and correct choice. Principal shrinks as the loan is repaid, but the ceiling stays on the register until a reduction is separately registered, and it is the maximum the bank can claim at auction.
There is exactly one way to learn the real principal: ask the landlord before signing for a loan balance certificate issued by the lender. The register cannot show repayment, and even a zero balance leaves the geunjeodang entry standing until it is formally cancelled.
How large a deposit is still safe?
The working benchmark is that senior claim ceiling plus deposit should stay under a set share of market value. Bankmall treats a combined figure above 70% of market value as increasingly risky. The table applies that line, and a looser 80% line, to a home valued at 600 million won.
| Senior claim ceiling (KRW) | Max deposit at 70% line | Max deposit at 80% line |
|---|---|---|
| None | 420,000,000 | 480,000,000 |
| 60,000,000 | 360,000,000 | 420,000,000 |
| 120,000,000 | 300,000,000 | 360,000,000 |
| 240,000,000 | 180,000,000 | 240,000,000 |
| 360,000,000 | 60,000,000 | 120,000,000 |
| 420,000,000 | 0 | 60,000,000 |
The rule the table exposes is simple. Every 100 million won added to the ceiling removes exactly 100 million from the safe deposit line. On a 600 million won home carrying a 360 million ceiling, the 70% line leaves room for a deposit of just 60 million — not viable as jeonse, though a monthly-rent contract with a deposit below that line remains an option.
Choosing between 70% and 80% is really a question of how much price decline you want to absorb. At 70%, a foreclosure clearing at 70% of value still covers the deposit; at 80% that cushion is gone. Guarantee institutions apply looser standards — comparing this with the 90% debt-ratio threshold used for deposit guarantee insurance shows how conservative the practitioner's line is. A property that qualifies for a guarantee and a property that is safe are not the same thing.
A multi-household (dagagu) building adds another layer, because senior deposits held by other tenants never appear on the register and must be added in. That structural difference is covered in the distinction between dagagu and dasedae housing.
How much does priority payment actually protect?
Even with a senior mortgage in place, a tenant whose deposit falls below a set amount can recover a fixed sum ahead of the mortgage holder. Articles 10 and 11 of the Enforcement Decree of the Housing Lease Protection Act set the following regional figures.
| Region | Small-deposit threshold (KRW) | Priority payment cap (KRW) |
|---|---|---|
| Seoul | up to 165,000,000 | 55,000,000 |
| Overconcentration control zone (ex-Seoul), Sejong, Yongin, Hwaseong, Gimpo | up to 145,000,000 | 48,000,000 |
| Metropolitan cities (ex-control zone and counties), Ansan, Gwangju, Paju, Icheon, Pyeongtaek | up to 85,000,000 | 28,000,000 |
| Elsewhere | up to 75,000,000 | 25,000,000 |
Three conditions attach. Per Easy Law, the tenant must (1) have secured opposing power — possession plus resident registration — before the foreclosure commencement is registered, (2) be facing a sale by auction or tax collection rather than a private sale, and (3) file a distribution claim or priority notice. Total priority payments also cannot exceed half the property's value, and where several tenants qualify, that cap is split in proportion to their amounts.
The reference date holds a trap of its own. What governs is not the move-in registration or the contract date but the law in force on the day the first security interest was registered against the property. Move into a home carrying a mortgage registered in 2010 and the amounts from that era's decree apply, not today's 55 million. That is why the claim ceiling is not the only thing to read in section eul.
A 200 million won jeonse in Seoul sits above the 165 million small-deposit threshold, so priority payment does not arise at all. Tenants in that band are left with ranked distribution based on a fixed date stamp and with guarantee insurance — and anyone forced to move out while the deposit is still unpaid needs the separate procedure of a lease registration order to preserve opposing power and priority.
What to check
- Pull the register twice — on signing day and on balance day — new mortgages are sometimes registered in between. Order it from the online registry office and read the ranking numbers in section eul.
- Run the calculation with the ceiling, not the principal — check whether ceiling plus deposit exceeds 70% of market value. If it does, lower the deposit or look elsewhere.
- Ask for the loan balance certificate — a landlord's word that the loan is repaid proves nothing. If the balance is zero, make cancellation of the mortgage on balance day a written special term.
- Find the date of the first security interest — it determines which decree governs your priority payment. Read the filing date of the first entry in section eul.
- Register residence and get the date stamp on balance day — opposing power takes effect at midnight following registration, so it ranks behind any mortgage registered that same day. A special term barring new mortgages on balance day closes that gap.
- For a dagagu building, total the senior deposits — they do not appear on the register. Request the fixed-date status from the landlord or obtain consent to inspect it at the community centre.
Sources
- Housing Lease Protection Act Enforcement Decree, Articles 10 and 11 — Korean Law Information Center
- Priority payment for small deposits — Easy Law
- What is the claim ceiling you must check before a jeonse contract — Bankmall
- Mortgage vs revolving mortgage: why the claim ceiling is a safeguard — Honest Fund