South Korean Real Estate: Procedures and Regulations Guide

South Korea, renowned for its vibrant culture and robust economy, has increasingly emerged as an enticing destination for real estate investments from international individuals and corporations. Nevertheless, successfully navigating South Korea's real estate market necessitates a thorough understanding of the procedures and laws governing such investments. In this comprehensive guide, we will provide an insightful walkthrough of the steps and regulatory frameworks involved in venturing into South Korean real estate.

Investment Categories

Investing in South Korean real estate is divided based on residency status, and these distinct categories encompass a diverse range of potential investors, each subject to specific regulations and procedures tailored to their unique circumstances and objectives.

• Foreign-Invested Companies:

For foreign-invested companies seeking to engage in profit-oriented activities in South Korea, a set of pivotal regulations come into play, including:

1. Notification and Registration of Foreign Investment: Foreign investments necessitate notification and registration at either the primary office or branch of a foreign exchange bank or the Korea Trade-Investment Promotion Agency (KOTRA).
2. Real Estate Acquisition Contracts and Payment: Payment follows the conclusion of a real estate acquisition contract.
3. Notification of Real Estate Acquisition: Within 60 days of finalizing the contract, notification of the acquisition must be forwarded to the local si/gun/gu office responsible for the real estate. This notification should be accompanied by the real estate acquisition contract.
4. Real Estate Registration: Ownership transfer must be officially registered at a competent registry office within 60 days of concluding the contract or settling the balance.

• Resident Foreigners (Foreign Individuals and Domestic Branches of Foreign Corporations):

Resident foreigners, encompassing foreign individuals and domestic branches of foreign corporations, adhere to the following procedures:

1. Real Estate Acquisition Contracts and Payment: Payment is executed subsequent to the finalization of a real estate acquisition contract.
2. Notification of Real Estate Acquisition: Notification of the acquisition should be submitted to the local si/gun/gu office overseeing the real estate within 60 days of concluding the contract, alongside the real estate acquisition contract.
3. Real Estate Registration: The transfer of ownership is required to be formally registered at a capable registry office within 60 days of contract finalization or payment completion.

• Non-Resident Foreigners:

Non-resident foreigners interested in investing in South Korean real estate should adhere to the ensuing steps:

1. Real Estate Acquisition Contracts and Payment: Initiating a real estate acquisition contract and making the requisite payment.
2. Notification of Real Acquisition: Notify the acquisition to the head or branch office of a foreign exchange bank as stipulated by the Foreign Exchange Transactions Act during the withdrawal of real estate acquisition funds. This notification encompasses the real estate acquisition contract, a real estate appraisal report or publicly disclosed land price certificate, and an authenticated copy of the real estate registration. Furthermore, the acquisition of rights to real estate (real rights, right to lease, etc.) must be filed for overseas remittance of any gains derived from real estate disposal.
3. Property Registration Number Application: A real estate registration number will be designated by the head of the local immigration office with jurisdiction over the place of residence. For individuals, requisite documents entail a certificate confirming the completion of land acquisition notification and a copy of a passport. Corporations necessitate documents validating the company's representatives and their addresses issued by authorities in their home country. In instances where an agent submits the application, a power of attorney and the agent's ID card are also mandated.
4. Real Estate Registration: Register the transfer of ownership at a capable registry office within 60 days of concluding a contract or settling the balance.

• Permanent Residents:

Permanent residents in South Korea, holding Republic of Korea nationality, enjoy equal treatment with other Korean nationals. They abide by the ensuing procedures:

1. Real Estate Acquisition Contracts and Payment: Payment follows the conclusion of a real estate acquisition contract.
2. Notification of Real Estate Acquisition: Notify the acquisition to the local si/gun/gu office overseeing the real estate within 60 days of concluding the contract, alongside the real estate acquisition contract.
3. Property Registration Number Application (Resident Registration Number upon Expungement): When a resident registration number has been canceled, permanent residents have the option to apply for a real estate registration number through the Seoul District Court. The necessary documents differ based on individual circumstances.
4. Real Estate Registration: Register the transfer of ownership at a capable registry office within 60 days of concluding a contract or settling the balance.

Related Laws

A comprehensive framework of laws and regulations plays a pivotal role in regulating and facilitating real estate transactions in South Korea. These crucial legal provisions encompass:

• Act on Real Estate Transactions, Etc.: 

  This legislation governs real estate transactions in South Korea and applies to a diverse array of parties, including foreign individuals, foreign corporations, domestic corporations with foreign shareholding of 50% or more, foreign governments, and international economic cooperation organizations. Central regulations include real estate acquisition notification, particularly concerning the acquisition of domestic real estate by foreign individuals. Reports pursuant to this law must be submitted to the Si/gun/gu office with jurisdiction over the respective land within 60 days of contract finalization. The Ministry of Land, Infrastructure, and Transport presides over this law.
  
  

• Foreign Investment Promotion Act: 

  The Foreign Investment Promotion Act predominantly pertains to foreign individuals, foreign corporations, foreign permanent residents, and international economic cooperation organizations. Its principal regulation revolves around foreign investment notification, particularly in scenarios where a foreign investor acquires domestic real estate through a foreign-invested company. Reporting for this act is mandated at foreign exchange banks or the Korea Trade-Investment Promotion Agency (KOTRA). This notification is obligatory before the commencement of investment fund inflow. Oversight of this act lies within the jurisdiction of the Ministry of Trade, Industry, and Energy.
  
  

• Foreign Exchange Transactions Act: 

  This act pertains to non-residents and primarily addresses real estate acquisition notification concerning rights related to domestic real estate, such as the right to lease on a deposit basis or mortgage. Foreign exchange banks are the designated recipients for these reports. Reporting typically occurs during the withdrawal of funds for real estate acquisition. The Ministry of Economy and Finance supervises the implementation of this act.

Understanding these related laws and their respective regulations is imperative for anyone contemplating real estate investment in South Korea. Compliance with these legal provisions is indispensable for effectively navigating the market and ensuring a seamless investment process.

Reference: Invest Korea

Conclusion

South Korea has become an attractive destination for real estate investments, drawing interest from individuals and corporations worldwide. However, success in South Korea's real estate market hinges on understanding the procedures and legal regulations that govern these investments. This guide has provided a comprehensive overview of the steps involved in investing in South Korean real estate, along with specific regulations for different investor categories based on residency status.

For personalized guidance and expert assistance in navigating the South Korean real estate market, Pearson & Partners is here to help. With our extensive knowledge and experience, we can provide valuable insights and support to ensure a smooth and successful investment journey. Unlock the full potential of South Korean real estate with Pearson & Partners by your side. Contact us today.