KB Real Estate Trust
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The trust company independently carries out the improvement projects (reconstruction, redevelopment) or acts on behalf of the association or landowners to carry out the project.
If a person who meets the consent requirements for establishing an association pursuant to Article 27 (1) of the Urban and Residential Environment Maintenance Act agrees to designate a trust as the project implementer, the trust, which is the designated developer, implements the project by itself after receiving the business designation
※ No need to establish a promotion committee or association
A method in which a trust company that is a designated developer implements a project on behalf of an association or land registry holder if requested by a majority of the land registry holders (members if an association has been established) pursuant to Article 28 (1) of the Urban and Residential Environment Maintenance Act.
※ Formation of an Association Required
| Category | Trust Method | Association Method |
|---|---|---|
| Designation Timing | After designation of redevelopment zone | After establishment of the association |
| Designation Conditions | · Consent of 3/4 or more of landowners and 3/4 or more of land area (1/2 or more for reconstruction) · Consent from majority landowners by area · Trust of at least 1/3 of land area | · Consent from majority landowners · Trust of at least 1/3 of land area |
| Project Executor | Trustee company | Association |
| Landowner | Trustee company | Association |
| Responsibility for Initial Project Cost | Trustee company | Promotion committee, Association |
| Contractor Selection Timing | After designation of project executor | After establishment of the association |
| Key Features | · The trustee secures the initial project cost and promotes the project swiftly · By covering project costs, the trustee can directly select contractors and reduce construction cost · Enables early contractor involvement, allowing for optimized design and cost efficiency | · Project promoted efficiently by utilizing trustee’s own funds and external financing · The trustee may lead cost-saving by direct contractor appointment through early funding · Aims to minimize design changes and ensure transparent business execution |
| Classification | Trust Method (Project Implementer Method) | Association Method |
|---|---|---|
| Implementer | Trust company | Association |
| Decision-making body | Meeting of all landowners | General Assembly |
| Governing Body | Maintenance Business Committee | Board of directors, council of delegates |
| Internal Rules | Implementation Regulations | Articles of Association |
| Initial project financing | Trust company financing | Landowner financing or service provider leasing |
| Timing of selecting a construction company | After designation of the project implementer (approval of the establishment of the association) | |
| Construction Conditions | Condition of progress payments, the trustee company provides funding for construction costs | Pre-payment terms, if construction costs are insufficient, the contractor secures funding on its own. |
※ The structure may change depending on the contract terms of the project.
※ In the case of the project agency method, the business procedure is the same as the association method.
| Classification | Problems with Existing Redevelopment Projects | Benefits of the Trust-Based Redevelopment Project |
|---|---|---|
| Quickness | · Complex business processes (Promotion committee approval, association establishment authorization) · Difficulty raising initial business capital | · Pursuit of shortened project duration by omitting the procedures for forming the promotion committee and establishing the association (developer-initiated method). · Allows trusts to fund initial costs and move forward quickly |
| Transparency | · Occurrence of various association-related corrupt practices · Project delays and increased conflict | As a financial institution transparent business management is expected |
| Expertise | Lack of expertise in the association leads to weak negotiation power with contractors and increased dependency on service providers | Pursuit of professional project management through the participation of a trust company, a specialized real estate trust service institution. |
| Profitability | Embrace high construction costs | The trust company seeks to reduce project costs by financing the project and awarding a simple subcontract for construction. |