On July 27, 2020, the Ministry of Land, Infrastructure and Transport (the “MOLIT”) announced the proposed legislation of the amendment to the Enforcement Decree and Enforcement Rules of the Act on Report on Real Estate Transactions (the “Amendment”), which includes expansion of the scope of data collected regarding corporations’ housing transactions and requirement of the submission of a financing plan when corporations buy houses. The Amendment is a follow-up measure of the “Management Plan for Stabilization of the Housing Market” that the MOLIT announced on June 17, 2020.
The changes related to corporations’ housing transactions in the Amendment are as follows:
In the event that a corporation trades a house either as the seller or the buyer, the Amendment requires the corporation to report (i) the status of its corporate registration, (ii) whether it has a special relation with the transacting counterparty, and if so, the type of special relation, and (iii) the purpose of acquiring the house (if the corporation is the buyer).
* Here, “special relation” refers to the following: (i) if the counterparty is an individual, in the case the individual is an executive/officer of the counterparty (which is a corporation) or a relative (i.e., a blood relative within the sixth degree of relationship, a relative by marriage within the fourth degree of relationship, spouse (including de facto marriage), an adopted child and his/her spouse, and lineal descendants) of an executive/officer of the counterparty (which is a corporation); or (ii) if the counterparty is a corporation, in the case the seller corporation and the buyer corporation have the same person(s) as their executive(s)/officer(s) or their respective executives/officers are relatives.
For housing transactions for which a corporation is the buyer, the Amendment requires the corporation to submit a financing plan, regardless of the region or amount of the transaction.
According to the Addendum to the Amendment, the Amendment will take effect on the date of promulgation and apply to all housing transactions executed after the effective date of the Amendment.
As the Amendment includes new reporting procedures related to a corporation’s housing transaction, in the event that the Amendment is promulgated and takes effect, corporations should be mindful of adhering to the additional procedures when carrying out housing transactions.