The Yangji Maeul apartment in Sunae-dong, Bundang-gu, Seongnam, jointly owned by President Lee Jae-myung and first lady Kim Hea-kyung, sold for 2.9 billion won. On the day the buyers received title, they set up a revolving mortgage in the names of the presidential couple with a maximum claim of 1.77 billion won. With the designation of the trustee company as project operator for the integrated redevelopment of Yangji Maeul imminent, there is speculation the transaction deferred payment of part of the purchase price to complete the ownership transfer first.
According to the Ministry of Land, Infrastructure and Transport's actual transaction disclosure system and Supreme Court registry records on the 20th, the 164.25-square-meter exclusive-use Yangji Maeul Kumho Complex 1 apartment in Sunae-dong, Bundang-gu, Seongnam, owned by the presidential couple, was contracted for sale for 2.9 billion won on the 14th. The ownership transfer registration was completed two days later, on the 16th.
The apartment's owners changed from joint title by the president and the first lady to joint title by a person surnamed Kim and a person surnamed Cho. The two buyers each acquired one-half equity.
On the 16th, when the ownership transfer was completed, a revolving mortgage naming the presidential couple as mortgagees was also established. The debtors are the new owners, Kim and Cho. The maximum claim recorded in the registry is 1.77 billion won, about 61% of the 2.9 billion won sale price.
A seller holding a revolving mortgage on a dwellings that became the buyer's property after the sale is a transaction structure different from a financial company loan. In the real estate industry, there is a view that the buyers agreed to pay part of the purchase price later and, to secure this, set up a revolving mortgage in the names of the presidential couple. It is a so-called "seller financing" method, in which the seller transfers title before receiving the full purchase price and takes the unpaid amount as collateral.
The timing of this transaction coincides with the procedure to designate the trustee company as project operator for the integrated redevelopment of Yangji Maeul. Yangji Maeul Kumho Complex 1, along with other complexes, is pursuing integrated redevelopment under a trust structure. The residents' representative group submitted an application to Seongnam on the 30th of last month to designate Daeshin Asset Trust as the project operator. The designation and notice of the project operator could come as early as this month.
Bundang-gu is designated as an overheated speculation zone. In such zones, a person who buys an apartment after approval to establish a reconstruction association is, in principle, not allowed to take over association membership status. In projects where a trustee company carries out the reconstruction without forming an association, the designation of the trustee company as project operator serves as the reference point equivalent to approval to establish an association.
However, if the transferor is a one-household, one-dwellings owner who has owned the dwellings for at least 10 years and lived there for at least five years, among other exceptions set by law, the transfer of status may be allowed.
Registry records show the president acquired the apartment in June 1998. The first lady received a one-half equity as a gift from the president in November 2018. As a result, the president meets the ownership requirement of at least 10 years, but the first lady's ownership period is about seven years and eight months, falling short of the same requirement.
Had the sale taken place after the project operator designation, the buyer who received Kim's equity might not have been able to succeed to the rights arising from the reconstruction. The industry views that because this transaction completed the ownership transfer registration before the project operator designation, it put the buyers in a favorable position to secure reconstruction rights.
Park Hap-soo, an adjunct professor at the Konkuk University Graduate School of Real Estate, said, "By agreement between the parties, there are cases where title is transferred before the full purchase price is received, and a revolving mortgage is set up in the seller's name to secure the unpaid amount," adding, "This transaction also appears to have completed the ownership transfer first, ahead of the project operator designation." He noted, "In that the buyer bears the debt to the seller instead of a financial company, it can be seen as a type of seller financing."