SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
2.4 Real Estate Due Diligence Buyers carry out legal due diligence based on information provided by sellers and on public information such as that acquired through the real estate registry, the real estate ledger and the certificate of land use plan issued by the municipal government. Legal due diligence typically covers the transaction structure, title, encumbrances, zoning, government permits and approvals, and taxes. 2.5 Typical Representations and Warranties Representations and warranties provided in a commercial real estate transaction typically include: • authorisation, enforceability; • title; • no encumbrances; • government approval; • no violation; • registration; • no litigation or dispute; • taxes; • environment; • no expropriation and encroachment; and • no hazardous materials. No specific warranties are statutorily required to be provided by a seller in the sale of real estate. However, the Civil Code provides that in the event that a property has defects and unless a buyer was aware of, or could have been made aware of, these defects at the time of the sale, such buyer may cancel the contract if the objec - tive of the contract cannot be achieved as a result of such defects. Otherwise, a buyer may only claim damages for the defects. A buyer’s remedies are termination of the contract, indem - nification and/or claim for damages. In many cases, security deposits are kept for a certain
period of time as security for damages claims. The survival period for the seller’s representa - tions and warranties varies by case, with a maxi - mum limit of ten years under the Civil Code and five years under tax law. In particular, for invest - ment vehicles that must be liquidated after the sale, the period is often not set at all or is set at a short period of six months. The scope of the seller’s liability for a breach of its representations and warranties is also diverse, making it difficult to speak universally, and in many cases different limits are set on liability depending on the spe - cific representations and warranties. There have been cases where representation and warranty insurance was used. COVID-19 related representations and warran - ties are not usually included in real estate trans - action documents. 2.6 Important Areas of Law for Investors As several government approvals may be required for real estate transactions, parties should ascertain which approvals are required for their deals and incorporate sufficient time into the deal timeline to obtain any such approvals. 2.7 Soil Pollution or Environmental Contamination Even if a buyer did not cause the pollution or contamination of a property, such buyer is responsible for the pollution or contamination unless such buyer was not aware of, or could not have been made aware of, the state of pol - lution or contamination of the property. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law A buyer may ascertain the permitted uses of a parcel of real estate by obtaining a certificate of land use plan issued by the relevant municipal government. It is possible to enter into specific
827 CHAMBERS.COM
Powered by FlippingBook