Q1. Can a foreign national (or foreign company) acquire land in Korea? 1
A foreign national can acquire and own land in Korea just as a Korean national without any restrictions, even when not residing in Korea.
- Regulations regarding land ownership and its use and development are applied to foreign nationals under the same conditions as for Koreans.
However, exceptions exist for areas under protection for military use, cultural property protection zones as well as ecosystem preservation districts, for which prior permission is required. (Article 4 of the Foreigners Land Acquisition Act)
- In this case, the authorities shall grant permission, if land acquisition located in the districts and regions subject to prior permission does not obstruct the defined purpose of the said land. It is possible to get details about restrictions on a particular piece of land when getting a "confirmation of land use plan" from the competent office in the city, county or district.
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Q2. What procedures should a foreigner follow for acquiring land in Korea? 1
For a resident foreign national:
- The resident foreign national should file a `real estate acquisition notification` at the competent city/`gun` (county)/`gu` (district) office and register transfer of ownership
within 60 days after conclusion of the contractual agreement. It is not necessary to file notification pursuant to the Foreign Exchange Transaction Act.
- The foreigner registration certificate or transcript of branch registration replaces social registration number and documentary proof of address.
For a non-resident foreign national:
- A non-resident foreign national has to file a `real estate acquisition notification` prior to remitting the capital for real estate acquisition pursuant to the Foreign Exchange
Transaction Act.
- If the real estate is land, then a `land acquisition notification` has to be filed at the competent city/county/districts office and register transfer of ownership.
The Foreigner`s Land Acquisition Act only stipulates laws concerning the acquisition of land. If other real estate (buildings) or other rights (jonse, mortgage, etc.) are
acquired, then it is unnecessary to process notification according to the Foreigner`s Land Acquisition Act. But it is not common in Korea to buy and sell buildings and land
separately.
A registration number needed for the registration of real estate can be obtained at the immigration office (for individual non-resident foreign nationals), or at a city/`gun` (county) /`gu` (district) office (for a branch or company).
· Definition of a resident:
- Individual: an individual having a residence or address in Korea, a foreigner involved in business activities or working in a business office in Korea, a foreigner residing in Korea for more than six months.
- Corporation: a company having a physical office in Korea and a branch / office of the non-resident foreigner.
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Q3. Is it possible for a foreign corporation to acquire land without establishing a separate company or branch? 1
Acquisition for non-profit purposes
- It is possible to acquire land without establishing a separate branch or corporation.
However, in this case, leasing land or conducting other profit-making activities is not allowed.
Acquisition for profit-making purposes
- According to Art. 614 of the Commercial Act, it is obligatory to establish a branch or corporation.
Art. 614 of the Commercial Act
- Paragraph 1: A foreign company intending to engage in business in the Republic of Korea shall appoint a representative in the Republic of Korea and shall establish a business office.
If a foreign company establishes a separate branch or corporation after acquiring real estate for the purpose of lease or other profit-making activities, the company has to pay acquisition and registration tax when changing the ownership of the real estate. For that reason, it is recommended to acquire real estate after establishing the branch or corporation in order to avoid the payment of the taxes.
In recent days, companies conclude contracts of sale & lease due to lack of capital. This also is a profit-making activity and therefore the foreign company needs to set up a branch or company in Korea.
- Even if a foreign company does not have a business office in Korea, it is possible to register the acquired real estate. The registration number for real estate registration can be obtained at the competent city/"gun" (county)/"gu" (district) office.
Required documents for the issuance of a registration number are: corporate registration issued by the relevant country, proof of the status and address of the representative.
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Q5. Does land acquisition notification have to be filed if an apartment or officetel (commercial complex) was acquired by means of sale by parcels? 1
If an apartment, residence or officetel (commercial complex) was acquired by means of sale by parcels, then it is subject to the general procedure of land acquisition.
The notification has to be filed at the competent city/"gun" county)/"gu" (district) office within 60 days from the date the contract of the sale of parcels was concluded. The necessary documents are an application form for land acquisition notification with a certificate of land registration, and the contractual agreement.
- In this case, the area of acquired land will be the size of land allotted to the apartment
or officetel.
Usually, the registration of transferring ownership shall be filed at the competent city/county/district office within 60 days from the date of completing the remaining payments.
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Q6. Can a foreign national freely transfer proceeds overseas from selling real estate? What is the procedure? 1
Proceeds received from selling real estate, which was acquired by money transferred to Korea through a bank account, can be transferred freely to other countries without special restrictions.
* Non-resident foreign nationals
- For non-resident foreign nationals, both the carrying in of capital into Korea needed for the purchase as well as capital to be transferred to another country, which is derived
from the selling of real estate, has to be notified to a foreign exchange bank in Korea(document verifying the acquisition or sale of real estate has to be submitted).
* Resident foreign national (more than six months residence)
- For foreign nationals with residence in Korea, capital needed for the purchase of real estate can be carried into the country without any restrictions or obligation for notification.
However, capital derived from the selling or lease of real estate in Korea has to be notified to the Bank of Korea when transmitting the amount to another country.
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Q7. How much brokerage fee has to be paid to realtors? 1
Realtors receive brokerage fee from a client including costs for confirming facts related to ownership of the real estate concerned in the process of purchase, sale or lease of the real estate.
- However, the realtor cannot receive brokerage fees, if the real estate transaction was
nullified or cancelled due to the negligent or intentional action of the realtor.
In principle, the commission rate paid to realtors depends on the price at which the property is sold or purchased. The amount of commission is calculated by multiplying the price of the property by the commission rate. However, there exists a maximum limit to the amount of commission. Even if the calculated commission exceeds the maximum amount, then only the maximum amount of commission needs to be paid to the realtor.
The commission rate for general residential buildings and housing is as follows:
Purchase / Sale
Amount
Commission Rate
Less than KRW 50 million
0.6% (max. KRW 250,000)
KRW 50 ~ less than 200 million
0.5% (max. KRW 800,000)
KRW 200 million ~ less than 600 million
0.4%
Lease / Rent
Amount
Commission Rate
Less than KRW 50 million
0.5% (max. KRW 200,000)
KRW 50 ~ less than 100 million
0.4% (max. KRW 300,000)
KRW 100 million ~ less than 300 million
0.3%
The commission rate is determined separately through mutual agreement by the client and realtor (between 0.2 ~ 0.9% for sales/purchase and 0.2 ~ 0.8% for lease) for residential buildings and property of over KRW600 million purchase price or over KRW300 million lease price or for property that is non-residential in nature.
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Q8. How to get guarantee deposit on leases protected? 1
A. There are two protection systems for guarantee deposit on leases: setting up leasehold rights and granting a fixed date.
If the leaseholder wants to set up leasehold right, there should be an agreement of the lessor and the leaseholder should pay for the charges. However, the agreement of the lessor is a random matter therefore it cannot compel if the lessor refuses to agree.
On the other hand, the fixed date is stamped by institutes with public confidence in order to prove that there is a contract of guarantee deposit, so the contract holder (leaseholder) can request a fixed date without the agreement of the lessor by presenting the original copy of the contract and requesting an oral contract. However, in order to get guarantee deposit on leases protected based on the contract of fixed date, after the rental contract not only the leaseholder should complete the moving-in notification(modify the address of alien registration card into address of newly moved in residence) but also maintain the real residential condition.
Fixed date can be granted at the registry office, and rental contract and the alien registration card with a new address should be presented
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Q9. What kinds of housing arrangements are provided in Korea by INTRUFRIEND? 1
There are several kinds of housing in Korea and we have listed them as follows:
- Serviced residence – Furnished apartment buildings with hotel-like service, ideal for either short-term or long-term visitors in Seoul.
- Apartment – Most common of all and nearly all complexes have facilities nearby such as a supermarket, district office, post office, schools and easy access to public transportation.
- Officetel – High-rise buildings with both residential and office units available. They are most popular with single working-class Seoulites and students.
- Private house – Stand-alone housing on its own lot. These houses are usually two stories high and include a garden or a yard.
- Studio/One room – Similar to officetel, studio units are affordable and popular among young working class Seoulites and students. They are located in buildings four to five stories high.
- Hanok – Traditional Korean housing constructed in relation to the surroundings. Hanok are heated with the unique sub-flooring heating system called ondol.