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Real estate project financing is the process by which real estate developers secure funding. This study categorizes the types of real estate finance and analyzes investment types based on the degree of financial companies’ participation. Financial companies invest in real estate development projects either through direct financing, using PF loans, or through indirect financing via mechanisms such as collective investment schemes. However, if a financial company is not merely a financial investor but also acts directly as a developing entity, appropriate regulation is required. From an investor protection perspective, the Financial Act aims to alleviate information asymmetry and enhance the financial soundness of financial companies. An important issue is the regulation of financial companies directly implementing real estate development projects. In particular, if a real estate development project fails, the implementer bears primary responsibility. Therefore, granting enforcement authority to a financial company that controls the funding mechanism may pose a risk to financial companies. Real estate financing suggests that administrative regulations should be organized in a way that facilitates collaboration among multiple administrative agencies. The regulatory frameworks of both the Construction Act and the Financial Act should govern financial companies’ participation in real estate development projects, necessitating close cooperation among different administrative agencies. In the complex and specialized administrative legislative process, overlapping responsibilities among multiple administrative agencies, such as those under the Real Estate Investment Company Act, may occur; conversely, gaps in responsibilities may also arise. With this in mind, it is necessary to acknowledge the role of financial companies beyond their fundraising function in real estate finance and to investigate the complex and diverse legal relationships that may arise as a result. In particular, given the current situation—marked by the downturn in the real estate PF market that began last year, the subsequent workout of Taeyoung Construction, and concerns about the deterioration of savings banks’ soundness—, it is crucial to explore an effective regulatory system for real estate development finance by integrating the Construction Act and the Financial Act.
S. Duke Han (Wed,) studied this question.