In Korea, the market has long demanded new methods to secure the payment because of the limitation of Civil Code, namely the statutory principle of a real right which the types and contents of real rights shall be stipulated by the Civil Act and other statutes. Especially, the mortgage is only statutorily allowed for real estate security. Yangdo-dambo or fiduciary transfer has additionally been recognized by the case law. These are not easy nor reasonable to establish them as the real right. The market has used trust law as a new way to establish a real right to avoid the statutory principle of a ral right. It is called 'trust for security on real estate(부동산담보신탁)'. After the modification of Koran trust law, the doubt that 'trust for security on real estate' is not based on trust has diluted. In fact, 'trust for security on real estate' comes from 'Trust Deed' in common law. 'Trust Deed' has not been treated as trust in common law. A trust deed is not designed to transfer ownership to real property. It is the same from a mortgage in the aspect of function. It makes a piece of real property security for a loan to the property owner. A trust deed is designed to make the property security for the loan. The property owner, when he or she borrows the money, transfer his or her property to the trustee for the lender. If the borrower defaults on the note, the trust deed allows the property to be sold by the trustee. Then, the lender is repaid from the proceeds. Any money left, after the lender is paid and the costs of sale are paid, goes to the borrower. Under a trust deed, the trustee holds the bare legal title, the borrower-owner has the equitable title, the lender has the security right. However, in trust, the trustee holds the legal title while the beneficiary not trustor has the equitable title. In this sense, a trust deed is a shame trust because the trust is not allowed for the trustor to control his or her property after the creation of trust. It is not difficult to understand why Korean law has nearly allowed the 'trust for security on real estate(부동산담보신탁)' under the scheme of trust. I believe that the strictness of Civil Law in creating a new real right is the answer. Trust law is multifaceted in performing the intent of settlor and in protecting the interests of beneficiary under certain principles. It seems that trust law in Korea is more likely to become versatile for the security rights.
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