The amendment to the Act on Report on Real Estate Transactions, etc. (the “Real Estate Transaction Act”) was announced on August 20, 2019 and will take effect as of February 21, 2020 (the “Amended Real Estate Transaction Act”).  The Amended Real Estate Transaction Act was introduced to enhance the effectiveness of the real estate transactions reporting system and increase the accuracy of information collected through such system.  

The amendments adopted in the Amended Real Estate Transaction Act are as follows:

1.    Shortened reporting period for real estate transactions

The Real Estate Transaction Act in its current form (the “Previous Real Estate Transaction Act”) requires a party who has entered into a sale and purchase agreement concerning real properties to file a real estate transaction report that includes the actual transaction price within 60 days of executing the agreement.  Article 3 (1) of the Amended Real Estate Transaction Act reduces this filing window to 30 days.  

As a result, the Amended Real Estate Transaction Act will enable both individuals and corporations to access real estate transaction information in a more expeditious manner and allow the government to promptly incorporate the latest real estate transactions into its determinations of policies.

2.    Duty to report cancellations of previously reported real estate transaction

With respect to broken transactions, Article 3-2 of the Amended Real Estate Transaction Act newly imposes an obligation on the transaction parties to jointly file a cancellation report to the relevant governmental authority within 30 days from the date on which the relevant contract was terminated, nullified or canceled.

As a result, the Amended Real Estate Transaction Act will reduce misinformation in the market by allowing for accurate record keeping of real estate transactions.

3.    Additional prohibited acts

Under the Previous Real Estate Transaction Act, fraudulent reporting of real property transactions does not constitute a prohibited act and, thus, are not regulated. 

Under Article 4 Items 4 and 5 and Article 28 (1) 1 and 2 of the Amended Real Estate Transaction Act, fraudulent reporting now constitutes a prohibited act and a party who is in violation of this provision may be subject to an administrative fine of up to KRW 30 million.

In light of the above, it is expected that the Amended Real Estate Transaction Act will ultimately be used as a powerful tool to promote the government’s policy to stabilize the real estate market and establish a fair market by expeditiously securing and publicizing accurate information.