[비즈한국] It has been confirmed that a developer, acting as the seller, has established a collateral security (geunjeodang) with a maximum bond amount of 7.2 billion won on an ultra-luxury apartment in Hannam-dong, Seoul, purchased by BGF CEO Hong Jung-hyuk for 9.2 billion won. This is a case in residential real estate where the seller, rather than a financial institution, has become the collateral holder. However, details regarding whether the final payment was deferred or the specific nature of the debt have not been confirmed.
According to Bizhankook’s report, BGF CEO Hong Jung-hyuk purchased a unit at Le Garden The Main Hannam in Hannam-dong, Yongsan-gu, Seoul, with an exclusive area of 269㎡, for 9.2 billion won last April. CEO Hong completed the transfer of ownership about eight months after signing the sales contract in July of last year. The unit is the second largest among the 16 households in the apartment complex, which consists of various sizes. It was also the last remaining unit held under the developer's name.
What stands out is the collateral security established simultaneously with the transfer of ownership. On the final payment date in April, the developer who sold the apartment established a collateral security with a maximum bond amount of 7.2 billion won, with CEO Hong as the debtor. Typically, banking institutions set the maximum bond amount at around 120% of the loan amount. Applying this standard practice, the estimated principal of the secured debt is approximately 6 billion won. However, the exact size and nature of the debt have not been verified.
Le Garden The Main Hannam is an ultra-luxury apartment complex located in the UN Village of Hannam-dong, Yongsan-gu, Seoul. It was completed in June 2019 on a hillside overlooking the Han River, consisting of one building (16 households) with two basement levels and six floors above ground. The area is a prominent wealthy neighborhood in Seoul, densely packed with ultra-luxury apartments such as Hannam The Hill, Nine One Hannam, and Parc Hannam. Its strengths include Han River views, privacy, and the scarcity of having only a small number of households. All 16 households are large residences with an exclusive area ranging from 213㎡ to 274㎡.
When asked by Bizhankook about the background of this transaction and the collateral setup, the developer stated only that they would not provide an official response.
With the recent series of tightened real estate loan regulations, financing conditions for high-end homes have become significantly more difficult. In June last year, the government capped mortgage loans for home purchases in the Seoul metropolitan area and regulated regions at a maximum of 600 million won. Starting in October, the limit was further lowered to 400 million won for homes valued between 1.5 billion and 2.5 billion won, and to 200 million won for homes exceeding 2.5 billion won. In September of the same year, the Loan-to-Value (LTV) ratio for non-homeowners in the "Gangnam 3-gu" and Yongsan-gu, which were designated as regulated regions, was lowered from 50% to 40%.
Funding channels outside of mortgage loans have also narrowed. In June last year, jeonse loans conditional on the transfer of ownership were banned in the metropolitan and regulated areas, and credit loans were restricted to within one's annual income. In September, an LTV of 0% was applied in principle to loans for housing sales and rental businesses collateralized by homes in those same regions. Amidst these regulations, the method of the seller deferring a portion of the final payment and establishing a collateral security has emerged as an alternative.
A prominent example is the sale of President Yoon Suk-yeol’s Bundang apartment. President Yoon and First Lady Kim Keon-hee sold their apartment in Yangji Village, Sunae-dong, Seongnam-si, Gyeonggi-do (164.25㎡ exclusive area) for 2.9 billion won on the 16th. On the same day, a collateral security with a maximum bond amount of 1.77 billion won was established on the property, with the buyers as debtors and the President and First Lady as the collateral holders. This is known as a case of "seller financing," where a portion of the payment was deferred.
Eom Jeong-sook, a representative attorney at Lawdo Comprehensive Law Firm, stated, "It is legally permissible to convert the final payment debt into a loan debt and establish a collateral security based on an agreement between the parties. While this method of deferring the final payment and setting up a collateral during a real estate transaction is not common, it is a form of trading that has existed for some time." She added, "However, if a monetary debt is created, it is necessary to clearly define specific conditions, such as the interest rate."