Land Trust

Summary of deed of trust

The trust company shall receive the consignment of real estate from the grantor through the trust contract and manage the value of the consigned real estate to be conserved and maintained for the creditor (priority beneficiary) for certain period of time
*Real estate available for trust :Land, building, land surface right, key-money right, real estate lease right, and other real estate related rights (However, paddy field and dry field other than the urban planning zone is impossible for trust.)
Normal undertaking of debts
  • The real estate in trust is returned th the grantor
Default on debts
  • Add the personal estate in trust is returned to the grantor
  • Remaining proceeds of the disposition is distributed to the beneficiary (in ordinary case, the grantor)

Strength of deed of trust

The trust company shall receive the consignment of real estate from the grantor through the trust contract and manage the value of the consigned real estate to be conserved and maintained for the creditor (priority beneficiary) for certain period of time
*Real estate available for trust :Land, building, land surface right, key-money right, real estate lease right, and other real estate related rights (However, paddy field and dry field other than the urban planning zone is impossible for trust.)
Strengths
  • Inexpensive costs required for loans (exemption of purchasing national housing bond and others)
  • Possible to calculate appropriate loans by not applying the priority bond on wages for the real estate for collateral
  • Property right is protected by excluding various security interests, such as garnishment, auction and others on the trust assets
  • In the event that the secured real estate has to be disposed inevitably due to the worsening of economic situation, minimize the loss with the prompt and high-priced disposition through various public auction methods.
  • Excluded from the bankruptcy proceeding
Utilization
  • When procuring the fund from financial institution with the collateral attached on the real estate that required sustainable and planned management for office building, land scheduled for development, remodeling building and others
  • When the unsold properties are held as collateral for new loans after the real estate development business
  • When requesting for refinancing (simultaneously apply for the arrangement company for financial institution) [Work procedure for deed of trust]

Work procedure of deed of trust

  • Reception of consultation
  • Survey and evaluation of secured real estate
  • Trust contract and trust register
  • Loan implementation
  • Issuance of
    beneficiary certificate
1. Reception of consultation
  • Reception of document and individual interview
[Institution in charge] Consignor / Consignee / Beneficiary with Priority
2. Survey and evaluation of secured real estate
  • Confirmation of original copy of trust and various rights and interests through the received real estate register.
  • 법무사와 함께 현장 확인
[Institution in charge] Consignor / Consignee / Beneficiary with Priority
3. Trust contract and trust register
  • Trust contract between the consignor and the consignee, at this time, confirm the beneficiary with priority and the consignor
[Institution in charge] Consignor / Consignee / Beneficiary with Priority
4. Loan implementation
  • Loan implementation of the beneficiary with priority
[Institution in charge] Beneficiary with Priority
5. Issuance of beneficiary certificate
  • Forwarding the copies of beneficiary certificate and trust contract to the beneficiary with priority
[Institution in charge] Consignee / Beneficiary with Priority

Business structure for deed of trust

Basic structure Chart

When undertaking the debt (repayment of loans and return of title) Chart

When defaulting on debets (Payment of public sales and loan proceeds) Chart

Comparison of collateral trust and pledge

Classification Deed of trust KUN-MORTGAGE
Method of seting the security interset
  • Trust registration [title trnsfer]
  • Indication of 'Gapgu' on the registry
  • Setting of mortgage right
  • Indication of 'Eulgu' on the registry
Conservation of security value Management and conservation by the trust company Management and conservation by the credit institution
Method of credit implementation Public sales by trust company Auction by the court
Procedure of credit implementation
  • Simple procedure/require short period of time
  • Public sales at the general open market
  • Function of high-priced disposition of secured real estate
  • Complicated procedure/require long period of time
  • Auction in closed market
  • Impossible for hing-priced disposition of the secured real estate
Organization of bankruptcy proceeding Excluded from the bankruptcy proceeding Included in the bankruptcy proceeding
Setting of subordinate priority right for new leasehold
  • Exclusion function
  • Advantage in maintaining the collateral value
Exclusion not permitted
Required expenses
  • Exemption of registration tax, local education surtax, purchase of national housing bond
  • Trust compensation [cheaper than the kun-mortgage cost]
  • No need of setting for ground surface right
  • Registration tax, local education surtax: 0.24% of highest credit amount
  • National housing bond: 1% of highest amount of bond
  • Need of setting for ground surface right