Evaluating the Premium Contract Brokerage by Licensed Real Estate Agents : Focusing on the issue of violating the Licensed Administrative Agent Act
Authors:   KOREA ASSOCIATION OF REAL ESTATE LAW, Na Hyun-sun , Kim Hack-hwan 
Published: August 2024

Licensed real estate agents have been involved in premium transactions for a long time. However, since it is not institutionalized in the Licensed Real Estate Agents Act, there are raising concerns about violations of the Licensed Administrative Agent Act.
In practice, the commercial lease brokerage objects of licensed real estate agents advertised nationwide on the Internet include a premium. Many previous studies published in past decades show that this premium brokerage is a business practice of licensed real estate agents. Judicial precedents and official documents by the Ministry of Land, Infrastructure, and Transport also demonstrate it.
In Japan, the brokerage of premiums is recognized as the work of real estate brokers, and compensation regulations are in place.
The brokerage of premium contracts by a licensed real estate agent has the nature of adjusting the rent of a lease contract, which is brokering a part of the lease contract. As such, a lease contract or a lease transfer agreement is a brokerage object under the Licensed Real Estate Agents Act. However, although a premium contract is the price of a lease transfer agreement or has the nature of rent in substance, the Licensed Real Estate Agents Act does not stipulate it as a brokerage object, which is a deficiency in the Licensed Real Estate Agents Act.
The act of brokering premium contracts is not within the scope of a licensed administrative agent’s business. Moreover, the core of the premium transaction business is the estimation of the premium and the brokerage of the mediator, and the preparation of the premium contract is a mere formality of putting the important agreement of the contracting parties in writing. Even if the preparation of a premium contract is the work of a licensed administrative agent, the brokerage of a premium transaction by a licensed real estate agent falls within “cases permitted under other laws” that allow exceptions in the Licensed Administrative Agent Act.
It is a factual convention that premiums are the brokerage object and brokerage business area of licensed real estate agents. Therefore, it can be considered the exclusive business of licensed real estate agents. Therefore, it should be interpreted that the licensed administrative agent cannot perform brokerage services for premiums but can only write the transaction contract for the contents agreed upon by the parties to the premium transaction directly on behalf of these parties.
Therefore, this study proposed “amendments to the Licensed Real Estate Agents Act to create a new brokerage object of for premium and to create a new brokerage fee” by referring to the Premium Brokerage Fee Law of the Japanese Real Estate Brokers Act and suggested to “establish a Premium Regulation in the Confirmation Document for Brokerage Objects” as an improvement measure to prevent conflicts between professional licensed agents over premiums. There is a need for an aggressive and swift legislative resolution by the Ministry of Land, Infrastructure and Transport and other ministries to prevent further conflicts over the scope of practice between professional licensed agents over premiums and ensure safe premium transactions by a licensed real estate agent, a transaction expert with more professional knowledge.