The respected Comrade
"A favorable climate and good conditions for investment should be created in our economic development zones in order to revitalize their operation, and wide-scale tourism should be encouraged."
The transfer and mortgage of the right to the use of land constitutes an important part of the transactions in real estate in an economic development zone.
Only when the problems arising in this type of transactions are resolved properly can the transactions in real estate including land be resolved as required by law and the development of the economic development zones be stepped up.
Today the Democratic People's Republic of Korea allows by law the transfer and mortgage of the right to the use of land according to the Law of the Democratic People's Republic of Korea on Economic Development Zone and the Regulations on Real Estate in Economic Development Zone, so as to create an environment and conditions favorable to transactions in real estate in the economic development zones.
A land leaseholder in an economic development zone may transfer or mortgage the right to the use of the whole or part of the land he has leased to a third party subject to the approval of a land management organ.
First, he can transfer the right to the use of the whole or part of the land he has leased to a third party subject to the approval of a land management organ.
Transfer of the right to the use of land means selling, re-leasing, granting or inheriting land by the leaseholder to a third party.
Selling of the right to the use of land means giving the right to a third party by the leaseholder for its counter value.
In this case the seller and the buyer must conclude a sales contract and obtain authentication by a notary's office.
The seller must submit a written application for the selling of his right, by attaching to it copies of the sales contract and land lease contract, a document certifying the buyer's capability for investment or a document of credit guarantee, to the land management organ to get its approval.
The land management organ can reject the application if it does not conform to the selling conditions, if the selling contract has been compiled against the lease contract, if the buyer's capability for investment and operation cannot be confirmed or if the selling conditions including the price are not fair.
If the right is sold and bought, the buyer and the seller must register with the economic development zone management organ the cancellation and transfer of the name for the right.
The selling and buying of land whose lease has not been cancelled and transferred to another in the economic development zone is not valid by law.
In case a land leaseholder is going to sell the right to the use of land in the economic development zone, the land management organ or the economic development zone management organ has the right to buy the relevant land before anybody else.
Re-lease of the right to the use of land means leasing to a third party for a certain period the right obtained from a land management organ.
Re-lease of this right in the economic development zone can be conducted only with regard to the land leased for real estate development.
Foreign investors specializing in real estate development can lease a certain area of land, construct various forms of industrial areas and facilities or buildings on it and sell or re-lease them to a third party within the range allowed by the relevant laws and regulations.
In this case they can sell or re-lease the right to the use of land after developing the land according to the land lease contract.
It is as a matter of course that this deed must be approved by the land management organ. But if the relevant items are not stipulated in the land lease contract, the right cannot be re-leased.
The investor, who is going to re-lease the right to the use of land where the infrastructure construction has been completed, must conclude a contract of the transfer of the relevant land, submit to the land management organ a written application for land re-lease by attaching to it a copy of the land lease contract, get its approval and go through a procedure for re-leasing.
The re-lease contract is, in principle, valid by law from the moment it has gone through the registration procedure.
Granting the right to the use of land means transferring free of charge the right by the land leaseholder to a third party.
The land leaseholder can grant the right to the use of land in the economic development zone to a relevant organ, enterprise or association of the DPRK or to a foreign investor.
The land leaseholder who is going to donate the right must compile a donation document, submit the document to the land management organ and get its approval. Then he can donate the right to a third party.
In this case those who donated and who were donated must register with the economic development zone management organ the cancellation and transfer of the name for the right.
The donated right goes over to the donated from the moment when the transfer of the name has been registered.
The donation for which the transfer of the name has not been registered is invalid by law.
Inheriting the right to the use of land means the transfer of land free of charge to the heir designated by the laws and regulations, by the will or by the judgment of the court after the land leaseholder has died.
The person who has inherited the right to the use of land in the DPRK must get authentication of the inheritance confirmation document, issued by an identity registration organ or court in the area of the inheritor in the territory of the DPRK or outside of it, by the notary's office in the relevant area, and submit it to the relevant land management organ.
The land management organ that has received the inheritance confirmation document must issue a written approval to the applicant.
The person, who has inherited land, must register with the economic development zone management organ the transfer of the name for the right.
If he is going to alter the contents of the land lease contract, he must conclude an auxiliary contract with the land management organ.
And a land leaseholder can, upon approval of the land management organ, mortgage to a third party the right to the use of the whole or part of the leased land.
Mortgage of the right to the use of land is a deed of mortgaging the right as a security for the fulfillment of an obligation in order to get a loan from a bank or other financial organs.
If the right is going to be mortgaged, those who are going to mortgage it and hold the mortgage must conclude a land mortgage contract in conformity to the land lease contract and get authentication by a notary's office.
After concluding the contract, they must register with the economic zone development management organ the mortgage of the right.
The person who mortgaged the right cannot mortgage it again or transfer the mortgaged right without the approval of the person who holds the mortgage within the mortgaging period.
The person who holds the mortgage in the economic development zone can dispose of the mortgaged right and the buildings and their auxiliaries on the land according to the mortgage contract if the person who has mortgaged the right fails to fulfill his obligation after the expiry date of the mortgage or his business has gone dissolved or bankrupt within this period.
The person, who has obtained the right and the buildings and their auxiliaries on the land disposed of by the person who holds the mortgage, must get authentication by a notary's office, register the transfer of the name with the economic development zone management organ, and use the land in conformity to the land lease contract.
The right to the use of land in the economic development zones can be mortgaged only when the following conditions are satisfied.
The right to be mortgaged in the economic development zone must be the right leased by the land management organ or transferred in the form of selling and buying or exchanging with the person who has leased the land and the right whose rent fixed by the land lease contract has been fully paid or its one-year instalment has been paid in case of an instalment payment.
That the person who has leased the right, a foreign investor, has failed to fully pay the rent means, in the final analysis, that he has failed to fully pay the rent in the period of the land lease contract, so the person, who has no right to completely transfer the right, cannot transfer his right at his own will.
The right that can be mortgaged in the economic development zone must be the right to the use of land for which investment and development have been done in conformity to the period and conditions set in the land lease contract.
Transfer of the right after obtaining it in the economic development zone and without developing the land in order to engage in speculation by making use of the investment environment or fluctuation of the price can never be tolerated.
Investors must conduct transactions in land and other types of real estate in the economic development zones with a correct understanding of the transfer and mortgage of the right to their use.
