South KoreaWhat is the penalty for cancelling an apartment pre-sale?
If a buyer cancels an apartment pre-sale contract in South Korea without just cause, they forfeit 10% of the purchase price as a penalty; if the seller cancels without just cause, they must pay double the deposit.
What the Law Says
South Korean law strictly regulates cancellation of apartment pre-sale contracts to protect both buyers and sellers. The key provisions are found in the Real Estate Business Act and its enforcement decree.
Under the Real Estate Business Act, a buyer who cancels a pre-sale contract without just cause must forfeit up to 10% of the purchase price as a penalty. This is intended to deter speculative cancellations while allowing reasonable flexibility.
The seller, on the other hand, may not cancel unilaterally without just cause. If the seller cancels without legal justification, they must return the deposit and pay an additional amount equal to the deposit — effectively doubling the deposit amount.
A 30-day cooling-off period applies after signing: during this time, buyers may cancel without penalty by submitting written notice. After this period, the 10% penalty applies unless just cause (e.g., financing failure documented by a bank) is proven.
The maximum penalty that can be agreed upon in a pre-sale contract is capped at 15% of the purchase price — any clause exceeding this is void under the Enforcement Decree.
Statutory TextWhere a buyer cancels a pre-sale contract without just cause, the seller may claim damages up to 10/100 of the contract price.
— Real Estate Business Act, s. 37-2 — Penalty for Cancellation by Buyer
Statutory TextWhere a seller cancels a pre-sale contract without just cause, the seller shall return the deposit and pay an amount equal to the deposit as additional damages.
— Real Estate Business Act, s. 37-3 — Penalty for Cancellation by Seller
Statutory TextThe amount of penalty for cancellation of a pre-sale contract shall not exceed 15/100 of the contract price.
— Enforcement Decree of the Real Estate Business Act, s. 29-2 — Limitation on Penalty Amount
What to Do
Confirm whether the cancellation falls within the 30-day cooling-off period — if yes, submit written notice to the seller immediately.
If outside the cooling-off period, gather evidence of 'just cause' (e.g., official bank rejection letter for mortgage approval) before cancelling.
Review the signed pre-sale contract to verify the stated penalty clause — ensure it does not exceed the legal 15% cap.
Send formal written cancellation notice via certified mail with acknowledgment of receipt.
Consult a licensed real estate attorney or the Korea Real Estate Board for dispute resolution if the seller refuses to comply with statutory penalties.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.