Korea - Property Title and Transaction Risks
 
The Korean government does not guarantee the validity or accuracy of its deeds registry. Additional risks include fraud and forgery, beneficial interests and absence of due corporate authority; which cannot be detected from the records. Typically, Korean courts will unwind fraudulent transactions, regardless of the bona fides of the purchaser, without compensation to the purchaser. This also applies to mistakes or omissions made by land registration officials. Further, Korean law acknowledges off-title lease claims that would not be revealed by a search of the registry records alone.
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Legal opinions on title in Korea do not usually include off-title risks such as land boundaries. There is no legally accepted procedure for obtaining a full boundary survey of the property that would disclose encroachments, easements and other defects. Over half of the Korean properties that First American have had surveyed for clients had encroachment issues.
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Korean lawyers are not traditionally involved in searching title and giving a certificate of title. The parties to the transaction, even in commercial transactions, are simply left to make their own title search. Lawyers and law firms in Korea are not required to carry professional indemnity insurance and there is no case law or customary practice on the level of responsibility the lawyer owes to the client as it concerns title matters. This means that proving negligence by a lawyer is particularly difficult and this is not a viable remedy in the case of loss.
 
Title Insurance
 
Title insurance protects against defects both covered by and excluded from a legal opinion on title. First American guarantees the validity of title as insured: we cover any intervening liens or defects that arise in the "gap" between the closing date and the actual registration of the title transfer. This is an important consideration for our international clients investing in Korea, where there is no escrow system.
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In Korea, First American has developed a land survey endorsement process that covers against encroachments, easements and other defects. We also offer endorsements to cover against off-title lease claims.
 

 
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