Han Moon-do, professor of real estate studies at Seoul Digital University, at the 2022 Herald Real Estate Forum on May 17, 2022. [Photo by Lim Se-jun]
Han Moon-do, professor of real estate studies at Seoul Digital University, at the 2022 Herald Real Estate Forum on May 17, 2022. [Photo by Lim Se-jun]

As opposition politicians denounce President Lee Jae Myung's sale of his Bundang apartment in Seongnam, Gyeonggi Province — co-owned with his wife Kim Hye-kyung — as a "trick" for setting a mortgage lien before the transfer, a real estate expert has called the arrangement entirely natural.

Han Moon-do, a professor of real estate studies at Seoul Digital University, appeared Monday on YTN Radio's "Lee Dong-hyeong's News Face-Off" and said attaching a 1.77 billion won mortgage lien to the 2.9 billion won ($1.96 million) sale of the Bundang apartment was "standard in the industry."

Han said the buyer needed to complete the ownership transfer quickly. "The transfer has to happen fast for the purchase to mean anything — otherwise the buyer becomes subject to cash liquidation," he said.

The apartment — a 164-square-meter unit in Kumho Complex 1 of Yangjimaeul in Sunae-dong, Bundang-gu, Seongnam — is part of a first-generation new town reconstruction pilot district and is undergoing a trust-based integrated reconstruction process. In such projects, eligibility to inherit cooperative membership status changes around the time the project operator is officially designated. Only those registered as owners before that designation can receive a new apartment unit through the reconstruction; those who are not become subject to forced cash settlement. Real estate industry consensus holds that buyers rarely purchase apartments in reconstruction complexes knowing they will face cash liquidation.

The official designation of the project operator for the complex is expected next week.

Han said the buyer's proceeds from selling their previous home were not due until October, and the buyer would likely have told the licensed real estate agent, who in turn would have advised Lee's side to set a lien for the shortfall. "If the money doesn't come in by October, you can put it up for auction. It's a natural transaction in the real estate industry," he said. He added that when funds are temporarily misaligned, parties trust each other and accommodate the situation while still taking legal precautions — such as registering a mortgage lien — and that "this is a basic way of doing business."

According to Supreme Court registry records, Lee purchased the 164-square-meter unit in Kumho Complex 1 in June 1998 and transferred a half share to his wife Kim Hye-kyung in December 2018. The couple signed a sale contract for 2.9 billion won on July 14 and completed the ownership transfer on July 16. The buyer assumed the existing jeonse deposit of 1.13 billion won from the previous tenant. The buyers — a couple surnamed Kim and Jo, born in the 1970s and also residents of Sunae-dong in Bundang-gu — purchased the apartment in joint ownership with equal shares. Lee and his wife registered a maximum mortgage lien of 1.77 billion won against the buyers, equivalent to about 61 percent of the sale price.

Meanwhile, opposition politicians have sharply criticized the arrangement. Some called it a "trick to circumvent real estate lending regulations."

People Power Party leader Jang Dong-hyeok wrote on Facebook Tuesday that "as citizens struggle under real estate lending regulations, President Lee Jae Myung has personally offered a solution — a seller's loan he calls the 'Together Mortgage.'"

Jang went on to say that people should "stop worrying about loans not coming through, and stop worrying about land transaction permits," adding sarcastically that all one needs to do is "write 'Together Mortgage.'" He also said, "He makes the regulations and he makes the tricks," and asked why Lee should not share the "excess profit" with the public, given that the capital gain reportedly exceeded 2 billion won.

Kim Tae-gyu, the PPP's floor spokesperson, also issued a statement saying, "Don't cry because your bank loan fell through — the president will lend you the money himself," and claimed that the buyer in effect covered the entire purchase price by assuming the existing jeonse deposit of 1.13 billion won while the presidential couple set a mortgage lien for the remaining 1.77 billion won.

Kim added that the president had criticized jeonse as "private lending" yet ultimately sold his own home by leveraging both a jeonse deposit and a mortgage lien.


jshan@heraldcorp.com