Series Index
Part 1 | Attorney Hong Seung-kwon: “AI Arrives in the Legal Profession”
Part 2 | How Should Lawyers Use AI?
Part 3 | Dividing Roles Between AI and Lawyers
Part 4 | AI Legal Advice Isn’t Enough—Here’s Why Lawyers Still Matter
Part 5 | Attorney Hong Seung-kwon: Korea’s AI Law—KRW 30 Million Fine Threshold
Part 7 | You Can’t Remove a Co-CEO Just Because You Want To
Part 8 | Why ₩10M Deposit May Not Qualify as Small Tenant
Part 9 | Hong Seung-kwon | Why Korea’s Property Registry Still Lacks Public Credibility
By Hong Seung-kwon
Principal Attorney, PAN Law Firm (skh@law-pan.com)
Recently, I received a request to review a contract. Requests for contract reviews are common, but this was the first time someone had asked me to review a real estate sales agreement—especially one drafted exactly according to the standard contract form.
The background was as follows. The property’s registry showed that a mortgage had once existed and was later cancelled. However, because Korea’s property registry does not carry public credibility, the client found it difficult to trust whether the mortgage had truly been removed. To prepare for any potential dispute, the client asked that I review the contract and examine the overall transaction so that compensation could be sought if problems arose later.
Public credibility refers to the legal principle that a person who conducts a transaction relying on publicly disclosed information—such as a registry—should be protected, even if the disclosed information later turns out not to match the actual legal rights. Put simply, if someone relied on the registry in a transaction, they should receive legal protection even if the registry later proves inaccurate.
However, the concept of public credibility has both a bright and a darker side. On the one hand, it protects the safety and stability of transactions. On the other hand, it can disadvantage the true rights holder. To illustrate, if public credibility were recognized in the example above, the buyer would not need to worry about whether the mortgage cancellation had been falsely recorded. A person who relied on the registry would be protected by the registry’s public credibility. But what about the mortgage holder whose rights were falsely cancelled? That party would also be a legitimate rights holder, yet might end up unprotected. In this particular case the mortgage holder happened to be a bank, so the problem may not appear as serious. But situations like this can involve many different types of rights holders.
There is another issue as well. In Korea, registry officials currently conduct only a formal review when registering property. They do not examine whether the submitted documents correspond to the actual legal reality; they simply verify whether the formal requirements are met. If public credibility were to be recognized, a substantive review ensuring the accuracy of registry information would likely become essential. This would inevitably increase the time required to complete registrations. Alternatively, the number of registry officials would have to be expanded. Either way, significant institutional reforms would be required.
In the past, discrepancies between registry records and actual property rights were not uncommon in Korea. At that time the registry system was not computerized, making real estate transactions far less transparent than they are today. It was also common for people to register property under someone else’s name in order to avoid taxes or conceal assets.
Today, however, the situation has changed significantly. With the implementation of the Real Name Act for real estate transactions, the use of borrowed names has been prohibited by law, and violations can result in administrative fines as well as criminal penalties. The registry system has also been fully digitized, allowing anyone to easily access registry records. As a result, real estate transactions have become far more transparent. In practice, the registry now reflects actual legal relationships with considerable accuracy. For example, in my own experience, I have never encountered a case in which the registry itself was incorrect.
Within the legal community, discussions about granting public credibility to the property registry have continued for many years. Several countries with legal systems similar to Korea’s—such as Germany, Switzerland, and Austria—already recognize the public credibility of property registries. Advocates argue that doing so could strengthen trust in real estate transactions and reduce unnecessary disputes. Of course, as mentioned earlier, several issues would need to be addressed before such recognition could be implemented. Nevertheless, the matter cannot be postponed indefinitely. A possible approach would be to amend the Civil Code to recognize public credibility first, followed by a transitional period during which the necessary institutional reforms could be completed.
Until such reforms occur, however, public credibility is still not recognized in Korea’s property registry system. Therefore, if you encounter a situation similar to the case described earlier and find it difficult to rely solely on the registry, several precautions may be helpful.
First, you may inquire with a financial institution whether a loan secured by the property would be possible. This can provide a rough indication of whether the mortgage has truly been cancelled. However, this method is not definitive. The most reliable approach is to obtain the cooperation of the transaction counterpart and confirm directly with the bank whether the mortgage has been formally removed.
Before signing the contract and paying the deposit, direct communication with the other party may be difficult, so cooperation may need to be requested through a real estate broker. After the deposit has been paid, however, it becomes easier to contact the other party directly and request confirmation.
If the investigation reveals that the mortgage has not in fact been cancelled, the outcome will depend on the terms of the contract. In most cases, however, the buyer would be able to terminate the contract and recover double the deposit.
About the author
Hong Seung-kwon is the managing attorney of Pan Law Office in South Korea. His work focuses on civil litigation, real estate law, and emerging legal issues in the digital era. He writes regularly on legal developments affecting technology, property rights, and regulatory policy.
