Korean Commercial Liens versus Korean Civil Liens

Korea, in short, has two major types of liens – Commercial Liens and a Civil Liens. For example, in a dispute between a contractor and a landowner or developer, a contractor make execute a Commercial Lien or Civil Lien. A Commercial Lien is governed by the Korean Commercial Code while a Civil Lien is governed by the Korean Civil Code. I shall for ease, utilize the contractor and landowner (developer) for example purposes only. For explanation of Korea’s law on attachment please see: Preliminary Attachments in Korea

Korean Civil Liens
Korean Civil Liens are governed by the Korean Civil Code. The code mandates that the contractor, to execute the lien, must be in possession of the subject property and the monetary claim must have a nexus to the subject property. It is interesting to note that the subject property does not need to be owned by the debtor.

Korean Commercial Liens
With a Commercial Lien, a nexus between the alleged debt and the property does not need to be established, however, in a Korean Commercial Lien the subject property must be owned by the debtor.

Caveats
In order to avoid these opportunities to obtain a lien, often, the right to a lien is waived via contract at the time of contracting. In larger commercial contracts, developers and property owners, often, refuse to work with contractors that refuse to execute a comprehensive waiver.

However, a court may require an owner to obtain a mortgage in order to secure a loan in order to pay an outstanding debt.

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