There's a mortgage set up. Is this a problem for sale.

What the Law Says

Under South Korean law, a registered mortgage (‘chijeo’) creates a real right that binds third parties, including buyers. Sale of mortgaged property does not automatically extinguish the mortgage — the secured debt and priority remain attached to the land unless discharged or consented to by the mortgagee.

Article 349 of the Civil Act states: 'A mortgagee has the right to be paid preferentially out of the proceeds from the sale of the mortgaged property.' This means the mortgage survives transfer of ownership.

Article 352 provides: 'The mortgage follows the mortgaged property even if the ownership thereof is transferred to a third person.' So a buyer takes the property subject to the existing mortgage unless it is removed or assumed with consent.

To assume the mortgage (i.e., for the buyer to take over the debt), Article 352 requires the mortgagee’s written consent. Without it, the original debtor remains liable, and the mortgagee may still enforce against the property — even after sale.

Statutory Text

A mortgagee has the right to be paid preferentially out of the proceeds from the sale of the mortgaged property.

— Civil Act, Art. 349 — Priority of Mortgagee

Statutory Text

The mortgage follows the mortgaged property even if the ownership thereof is transferred to a third person.

— Civil Act, Art. 352 — Effect of Transfer of Mortgaged Property

What to Do

Sources