|The fulfilment process of guarantee obligations differs by the type of guarantee. As for the guarantee for housing completion, the process is divided into performance of project completion and refund of housing payments.|
|The fulfilment of guarantee for defect repairs is initiated upon receipt of a claim for fulfilment, and guarantee obligations are determined through defect investigation and agreement with residents.|
What Constitutes Housing Completion Guarantee Incident?
It refers to a situation where it is considered realistically impossible to expect that a principal debtor will perform his or her obligations under the pre-sale contract due to one of the following reasons
- A. In case of principal debtor’s bankruptcy, insolvency, or abandonment of project
- B. In case where guarantee creditors (homebuyers) file a claim for fulfilment of guaranteed obligations following the confirmation of supervisor that actual progress is 25% or more behind the scheduled progress (one specified in the Scheduled Progress Table submitted to a supervisor by a principle debtor). Provided, however, that if there is no prospective residents in the project, the claim filing process is not required.
- C. In case where, the actual progress rate confirmed by supervisor is over 75%, and guarantee creditors file a claim for fulfilment of guaranteed obligations because there has been a 6-month or longer delay compared to schedule progress rate without justifiable reasons
- D. In case where guarantee creditors file a claim for fulfilment of guaranteed obligations as the project construction has been suspended for 3 months or longer due to constructor’s bankruptcy and insolvency.
Fulfilment Process of Housing Completion Guarantee
- Occurrence of Guarantee Incident
- Notify individual customers to suspend the housing payments Place a public notice of incident in newspapers or on the homepage
- Notification to Choose a Fulfilment Method or Delay Thereof
- Notify individual customers to choose a fulfilment method (Provided that if a project owner, etc. who applied for recovery process (court receivership) intends to continue the construction, such notification may be postponed.)
- Field Investigation and Feasibility Review
- If the project owner has failed to submit sufficient information on sales contract status, it must be checked with individual homebuyers during field investigation
- Determination on Fulfilment Method
- If 2/3 or more of homebuyers choose to get a refund, the guarantor will provide a refund of using payments. Otherwise, the guarantor will decide whether to complete the project or provide the refund. Provided that if a project cannot proceed due to discovery of cultural resources, etc., the refund shall be made while if the guarantor recognizes the ability of principal debtor, etc. to continue the project, the project continuation shall be granted. (Principal debtor, etc. refer to the joint project owner (constructor), the constructor, the project owner who filed for recovery process, etc.)
- Project Continuation by Principal Debtor, etc.
- Refund Fulfilment & Completion Fulfilment
- Refund Fulfilment: Provide guidance on refund process
- Completion Fulfilment: Notify a new payment account and schedule, move-in inspection date
- Fulfilment method shall be determined within three months from the date of incident; provided that if the project owner filed for a recovery process, it shall be determined within six months.
- If refund fulfilment is determined, an individual customer cannot file for completion fulfilment, and vice versa.
- A project successor shall be selected through competitive bidding except for special occasions.
Project Continuation by Principal Debtor, etc
If the builder, joint project owner, or principal debtor, etc. ( the “Constructor, etc.”) who applied for recovery process wants to complete the project, notification to home buyers can be postponed until HUG determines if the constructor, etc. are capable of completing the project.
When it is considered that the constructor, etc. are able to fulfil the obligations under the sales contract, project continuation will be permitted without notifying it to home buyers. In this case, housing payments shall be made to the account designated by the guarantor.
When Principal Debtor Filed for a Recovery Process in Court
- STEP1 : Guarantee Incident
- STEP2 : Application for Recovery Process
- STEP3 : Order of Property Preservation / Commencement of Recovery Process
- STEP4 : Application for Project Continuation / Approval
- STEP5 : Resumption of Project
- STEP1 ~ STEP5 : Normally six months
- STEP2 ~ STEP3 : Within one month
Process of Refund Fulfilment
Process of Refund Fulfilment : Refund Fulfilment is Determined Refund Fulfilment is Determined
Process of Refund Fulfilment : Send out a Notice of Refund to Homebuyers Send out a Notice of Refund to Homebuyers
- Required documents for refund application and place for submission, etc.
- Send it via mail or post it on the HUG homepage
Process of Refund Fulfilment : Receive and Review the Required Documents for Refund Application Receive and Review the Required Documents for Refund Application
- Required documents
- 1. Refund application form
- 2. Original copy of sales contract
- 3. Subrogation certificate (also used as a receipt)
- 4. Housing payment receipts (slips of deposits without bankbook)
- 5. Written confirmations of sales contract and housing payments
- 6. Registered seal and its authentication certificate
- 7. Request for direct deposit and a copy of bankbook
- 8. Other necessary documents
- Required documents
Process of Refund Fulfilment : Determine the Amount of Refund Determine the Amount of Refund
Process of Refund Fulfilment : Pay the Refund Pay the Refund
- Pay the refund in the account without a bankbook submitted by a homebuyer.
- Refund shall be made within one month from the date when all required documents are submitted by the homebuyer.
Process of Completion Fulfilment
In case where HUG decides to perform completion of project to fulfil its guaranteed obligations, HUG either selects a project successor or becomes the successor itself to complete the project before finalizing the move-in inspection. Upon approval of the move-in inspection, HUG completes the registration of ownership preservation. Individual homebuyers then make the final payment, and HUG transfers the ownership to individual homebuyers with the transfer fee charged to homebuyers.
- Selection of a project successor
- Application for recovery process
- Completion of construction and move-in inspection
- Move-in and ownership preservation registration
Process of Competitive Bidding
Process of Competitive Bidding : Development and Public Notice of Bidding Plant Development and Public Notice of Bidding Plant
- A public notice of bid is placed on bulletin boards of head office and branches, corporate homepage, and in daily newspapers.
Process of Competitive Bidding : Field Briefing Field Briefing
- A field briefing is held at least 6 days after the date of public notice for bid. Those attending the field briefing should fill in a participation report.
Process of Competitive Bidding : Application for Bid Participation Application for Bid Participation
- The application for bid participation is available for three days or longer only during a certain period scheduled between the date of field briefing and bidding date. If field briefing was held, only those submitted a participation report is eligible for a bid.
Process of Competitive Bidding : Bidding and Successful Bidder Bidding and Successful Bidder
- The bidding date is stated in the public notice of a bid. If there is no selected bidder, it can be put to a bid many time until a successful bidder is chosen.
Process of Competitive Bidding : Bidding and Successful Bidder Bidding and Successful Bidder
- A selected bidder should sign a contract with the Director of applicable sales branch within 7 days from the selection. When signing the contract, the selected bidder must pay 10% down for a contract, and submit a construction start report, progress schedule, field representative report, and project abonnement/ transfer memorandum to the sales branch. The successful bidder must submit the Statements of construction expenses and quantity calculation to HUG within one month.
Qualifications of a Bidder
Participants of a competitive bid shall meet the following qualifications :
- 1. A company registered as housing developer pursuant to Housing Act and registered as a builder pursuant to Framework Act on the Construction Industry
- 2. A company whose housing development performance for the last two years exceeds the total number of units in the troubled project
- 3. A company who has construction capacity that is greater or equal to that of principal debtor and original constructor (Except for a case where a constructor that is ranked in the top 30 construction capacity list is selected as a project successor.)
- 4. A company who has BBB+ or higher credit rating
- 5. A company that has no record of nonperformance of obligations to HUG over the last three years
As to the item 3 or 4 above, Review Committee may decide otherwise if it is difficult to select a project successor without relaxing the qualifications due to the size of remaining construction expenses, regional circumstances, etc.
As to the housing development performance under item 2, it excludes the units where developer and constructor were different entities and includes all constructed units which have move-in approval before the due date of bidding.
- 1. The debt incurred by the principal debtor’s failure in fulfilling a contract of housing sale due to natural disasters, wars, rebellions, or other similar circumstances
- 2. The debt that principal debtor owes to a party who has committed non-contractual acts, such as payment in substitutes, false contract, double contract, etc.
- 3. The amount paid by a home buyer who signed a housing sales contract before the public notice for pre-sale was given out.
- 4. The amount remitted to a bank account other than the designated one for housing payment (if not designated in the public notice for pre-sale, it refers to the bank account specified in the sales contract. If the designated account is changed and informed by the guarantor, it refers to the changed bank account.) in the public notice for pre-sale.
- 5. The amount remitted to a suspended account after the guarantor notified the creditor to suspend further housing payment.
- 6. Of the amount that guarantee creditor paid in advance of the due date prescribed in the public notice for pre-sale, the amount paid after the date of guarantee incident. However, the payment made to an account managed by the guarantor (including co-management account with a guarantor) is not affected.
- 7. The amount that guarantee creditor paid in excess of the down payment and middle payment prescribed by the sales contract.
- 8. The interest, expenses, and other incidental liabilities associated with the housing payments made by the guarantee creditor
- 9. The interest on the home purchase loan taken out by a guarantee creditor
- 10. The penalty paid by a guarantee creditor for delays in housing payment
- 11. Housing payments that principal debtor is obliged to refund to guarantee creditors due to rescission or cancellation of sales contract before the occurrence of guarantee incident. Except for the case in which the guarantee creditors rescind or cancel the sales contract before the occurrence of guarantee incident for reasons that are closely linked to guarantee incident
- 12. The compensation of deferment that principal debtor is obliged to pay when he or she fails to deliver the housing within the scheduled move-in date
- 13. The amount paid for options (i.e., home automation, veranda sash, minus option area, and other finish works) not included in the selling price for housing or welfare facilities sold to individual buyers prescribed in public notice for pre-sale in accordance with Rules on Housing Supply
- 14. The amount of debt incurred or increased due to creditor’s failure to perform his or her obligations including the failure to submit required documents for making a claim for indemnity under Article 6 or the failure to cooperate under Article 7
- 15. The housing payments made by any interested parties with the principal debtor, joint venture partner, constructor, etc. including the subcontractors, CEO, executives, or employees of the subcontractors in an attempt to provide a convenience of financing by signing a false sales contract
- 16. The housing payments made by the principal debtor, joint venture partner, constructor, or the CEO of construction company, etc. in an attempt to repay the debt owed to guarantee creditor
- 17. The housing payments made by home buyers who entered a sales contract with down payment, etc. borrowed from the principal debtor, joint venture partner, constructor, or the CEO of construction company