SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
limits are set on liability depending on the spe - cific representations and warranties. There have been cases where representation and warranty insurance was used. 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 development agreements with the relevant pub - lic authorities. A typical example would be the development of non-governmental rental hous - ing in accordance with the Special Act on Non- Governmental Rental Housing. 2.9 Condemnation, Expropriation or Compulsory Purchase The government’s taking of land (including by an industrial site development project enterprise) is permitted for public interest projects as stipu - lated in the Act on Expropriation of Land, etc, for Public Works and Compensation (AELPWC). To expropriate property, the government must make a public announcement of the properties
to be expropriated, notify the property owners and implement a compensation plan. The gov - ernment must assess the compensation amount and negotiate with the property owners. If an owner agrees to transfer their property at the price offered by the government based on the government’s assessment, an agreement for the property transfer may be executed at such price. However, if an owner does not accept the government’s proposal, the government may file, or must file at the request of the owner, a motion to determine the appropriate purchase price for the relevant property with the Central Land Expropriation Committee, which will exam - ine the value of the property, assign a certified appraiser to assess the property, and consider briefs from the government and the property owner. In approximately three to four months, the Com - mittee renders a decision on the purchase price for the property subject to the expropriation. The government must then pay the purchase price as determined by the Committee. Ownership of the expropriated property is then transferred to the government on the expropriation date indi - cated in the Committee’s decision, even if the owner files an objection or a lawsuit regarding the decision. 2.10 Taxes Applicable to a Transaction Acquisition and Recordation Tax When a company or an individual acquires real property in Korea, it must pay an acquisition tax of 4.6% (inclusive of surtax) of the purchase price (ie, the actual acquisition cost) reported at the time of the acquisition. However, if the real property is located in a specific region designat - ed as an overpopulated control area, a stepped- up tax rate of 9.4% will apply. The acquisition tax is inclusive of a recordation tax. Acquisition tax
934 CHAMBERS.COM
Powered by FlippingBook