In Seoul's Gangnam district, the Korea Construction Technology Association (KCTA) leased an entire building to a rental company, Sovereign State, which then subleased it to 28 tenants, collecting approximately 10 billion won in deposits. Trusting the KCTA's credibility as a government-affiliated organization, the tenants signed contracts. However, when Sovereign State fell behind on rent, the contracts were terminated, leaving the tenants without their deposits and homeless. A lower court ruled that the KCTA was not liable for damages, and the victims are currently appealing the decision.
The process that led to the victims being evicted unfolded as follows: In January 2024, the KCTA filed eviction lawsuits against the tenants and employed court officials to carry out forced evictions. Notices were posted in the homes of the affected tenants, stating, "The debtor may use the property under the condition that they do not change its status and cannot transfer possession to others." Additionally, the KCTA billed the tenants for usage fees amounting to 3 million won per month after the eviction deadline.
The lives of the victims have been shattered. One victim, identified as A, said, "I had nowhere to go and moved back in with my parents, but losing all my savings was enough to break me. Even when my child came to visit, I could only feel despair instead of hope for the future." A added, "If I had just my deposit, I could have pursued other opportunities like applying for housing, but losing that lump sum has left me with no options. I feel lost about how long my whole family will have to rely on my parents' small home."
Another victim, B, experienced a relapse of a previously cured illness due to the extreme stress from the rental fraud. During the ongoing lawsuit, B's health deteriorated, and she ultimately passed away in 2024. Her husband is now continuing the legal battle on her behalf.
Victim C moved into the building with the deposit left by her mother, who had passed away after a long battle with cancer. Seeking a safe and secure environment, C chose the building but discovered the rental fraud just a month and a half after moving in. C expressed her shock, saying, "I was devastated to learn that I could lose the precious inheritance my mother left me, which is all I have."
The KCTA's annex is currently accepting new tenants and operating normally. As the victims seek to reclaim their deposits, new tenants have signed leases with the existing built-in appliances and options intact.
Zenstar Mate, the management company overseeing the KCTA building, was selected as the asset management service provider in January 2025. According to the Public Procurement Service, the KCTA announced a bid for asset management services on December 31, 2024, and Zenstar Mate was ultimately chosen through a restricted competitive bidding process.
On July 23, the Aju Investigation team conducted a rental consultation with Zenstar Mate. During the consultation, a representative stated that the building's past issues with rental fraud and forced evictions were "problems of the previous company, and we are currently in the process of resolving them."
This explanation differs somewhat from how Sovereign State previously misled tenants by claiming to be a subsidiary directly established by the KCTA. Zenstar Mate clarified its role, stating, "We are an asset management company entrusted by the KCTA to coordinate building contracts and management," emphasizing that they only review contracts and facilitate negotiations, while actual contracts are signed directly with the KCTA, which also provides the official seal.
However, the use of the term 'public' remains largely unchanged. A representative claimed, "Since the KCTA is a public institution, there are no issues with the deposit," leveraging the organization's credibility to reassure tenants. Although there is a structural difference as a formally contracted management company, the attitude of minimizing risks by relying on public credibility continues to be evident.
On July 24, the Aju Investigation team visited a real estate agency in Gangnam for rental consultation regarding the KCTA annex. The agent mentioned that the annex is a 'KCTA building' and that the actual contracting entity is the Korea Construction Technology Association, a legal entity. The agent explained, "The corporation cannot lease directly; the KCTA has outsourced the leasing work to a management company." However, the KCTA, which started as a non-profit organization in 1987, transitioned to a legal entity under the Construction Technology Promotion Act in 1995, distinguishing it from a simple private organization. Furthermore, Article 5, Section 12 of the KCTA's bylaws states that 'leasing and managing association property and other facilities' is part of the association's business purpose, so it is legally permissible for the KCTA to act as a party to lease contracts.
The agent also mentioned past rental fraud incidents involving Sovereign State, stating, "There were issues related to deposits in the past, and the company that managed the leases subsequently ceased operations, leaving several units vacant." However, the agent emphasized, "That issue has been resolved, and there are currently no problems regarding deposit protection."
This contrasts with how Sovereign State and real estate agents previously reassured tenants by emphasizing their close relationship with the KCTA. Agents failed to adequately inform tenants about the nature of the subleasing contracts. The combination of these two factors led tenants to enter into contracts without recognizing the risks involved. However, during the current consultations for the KCTA annex, explanations about the contracting parties and the contract structure are being provided. Notably, the management company and real estate agents are now mentioning the past rental fraud incidents involving Sovereign State and explaining the building's history.
Nevertheless, there are still factual discrepancies that need to be addressed. The KCTA has repeatedly stated, "There are no issues with the deposit because we are a public institution," despite not being a public entity, and has also claimed, "The corporation cannot lease directly," which is misleading. The inaccuracies underlying the claims of safety indicate that the information asymmetry regarding the contract structure remains unresolved for tenants.
Additionally, it has been confirmed that Sovereign State's rental operations were not limited to the annex. Documents obtained by the Aju Investigation team indicate that the KCTA sent a notice to the tenant companies regarding the 'Subleasing Contract Succession Notification for the New Building of the Construction Technology Center.' The document states, "Due to the termination of the lease contract between our association and Sovereign State (the sublessor), we intend to succeed the sublease contract through a succession agreement between your company and our association." This suggests that Sovereign State operated its rental business not only in the annex but also in the KCTA's new building located in Nonhyeon-dong, Seoul.
Multiple informants have indicated that the new building has also been operated under a rental structure involving Sovereign State, raising ongoing concerns about the connection between the two buildings. The recently confirmed document can be seen as evidence supporting these claims. The opaque rental management system that allowed a company with a capital of only 10 million won to obtain large-scale rental rights for both the annex and the new building has led victims to continuously raise allegations of collusion between the KCTA and Sovereign State regarding the circumstances of the fraud.
Regarding these allegations, the past contract processes, and the current rental situation, a KCTA representative stated, "As this matter is currently under civil and criminal litigation, it is difficult to provide specific answers. We will be able to explain thoroughly only after the legal proceedings are concluded."
However, the representative did assert that the forced eviction by the court officials was a "legitimate necessary measure in accordance with the prohibition of real estate possession transfer."
* This article has been translated by AI.
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