The Purchase Process
Find out about the steps involved when buying a house or apartment in South Korea...
Buying property in South Korea is done through a contract between the seller and the buyer. When the buyer and the seller reach an agreement, the contract is legally enforceable. In practice, the parties make a written contract and the buyer pays a deposit as evidence of the agreement. On the day the buyer pays the remaining balance, the transaction is completed. After completion, the buyer's name can be recorded as an owner in the register. Judicial scriveners or lawyers can represent the buyers and the sellers for the purpose of registration.
The purchase is legally secured via the official registration. However, in the event the seller did not have true ownership, there is a title defect even after registration. The true owner can recover the property title through civil procedures.
Making the offer
Buyers can search for property by themselves or they can use an estate agent to look for property that meets their needs. Typically, when using an estate agent, buyers choose an agent in the area or city where they want to buy property. Buyers should visit the property the estate agent has found at least once and view it personally.
Depositing the money
An agreement for the sale of a property is concluded when the buyer and the seller agree to the terms of the contract. The payment of a deposit is not obligatory to form an agreement. However, in general, the seller asks for a deposit to secure the contract. Deposits are usually ten per cent of the purchase price. Once the deposit is paid, the seller can cancel the sale by paying double the deposit amount, or the buyer can cancel the purchase by giving up the deposit. The buyer pays the deposit at the time the written contract is signed.
Legal obligations of the buyer
The legal obligations of the buyer depend on the terms of the contract. Korean civil law does not recognise life insurance or property insurance as the buyer's obligation. The transaction is protected up to the estate agent's insurance coverage. Buyers should check the estate agent's coverage amount, and decide whether it is appropriate for the size of the transaction.
Closing the deal and making the payment
Payment of the purchase price is usually divided into two or three separate transfers of money, including the initial deposit and the remainder payment. Sometimes, more than two transfers may be required, depending on the contract terms. Intermediate payments are usually paid directly from the buyer to the seller, at times dictated by the contract. In the case that there are three or more payments in the contract, both the buyer and the seller forfeit the right to cancel the agreement when the buyer transfers the second (intermediate) payment.
When it is time for the final payment, the buyer and the seller meet in the estate agent's office to fulfil their final contractual duties. After the remaining balance is paid by the buyer, the seller gives the buyer all documents necessary to complete the transaction, and the right of possession of the property passes to the buyer. These documents are required to record the transaction in the register and after they have been supplied, the seller gives the keys of the property to the buyer.
The buyer can make payments in cash, by bank cashier's cheque, or by wire transfer. In South Korea, people do not accept personal cheques but they do accept cashier's cheques, which are guaranteed by the issuing bank. Since cash is not practical for large purchases such as property, sellers prefer bank cashier's cheques. Wire transfer is becoming more accepted as a payment method. Regardless of the method of payment, the buyer should make sure to get a receipt for all transfers of money.
The buyer can make payments in cash, by bank cashier's cheque, or by wire transfer. In South Korea, while personal cheques are not accepted, cashiers' cheques are accepted, which are guaranteed by the issuing bank. Since cash is not practical for large purchases such as property, sellers prefer bank cashiers' cheques. Wire transfer is becoming more accepted as a payment method. Regardless of the method of payment, the buyer should make sure to get a receipt for all transfers of money.