SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
2.5 Typical Representations and Warranties
will be important to monitor the progress of the enactment and amendment of these laws and regulations. 2. Sale and Purchase 2.1 Categories of Property Rights Property rights that may be acquired include: • ownership rights; • superficies ( jeesang-kwon ); • easements ( jeeyeok-kwon ); • jeonse-kwon (a deposit-based lease right recorded in the registry); and • mortgages. 2.2 Laws Applicable to Transfer of Title RERA applies to the transfer of title of all real estate. 2.3 Effecting Lawful and Proper Transfer of Title To be lawful and proper, transfers of real estate must be registered in the real property registry. Title insurance is not common in Korea. 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.
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
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