Prohibition of Beneficial Interest Return Claims in Nominee Trusts
Key Features of Preventing Hidden Profits in Farmland Nominee Ownership
[Asia Economy Reporter Koo Chae-eun] In response to the Korea Land and Housing Corporation (LH) scandal, a strengthened "Act on Strengthening Farmland Preservation and Preventing Farmland Speculation by Outsiders," including provisions such as the prohibition of claims for the return of benefits from nominal trust, has been proposed to prevent farmland speculation under false names.
On the 18th, a revision to the Farmland Act proposed by Shin Jeong-hoon, a member of the Democratic Party of Korea, includes △ limiting the farmland that non-farmers can inherit or abandon to 10,000 square meters and entrusting all of it to organizations such as the Korea Rural Community Corporation for leasing or free use, and △ mandating the disposal of farmland exceeding ownership limits within three years.
Notably, the revision introduces a special provision in the Farmland Act prohibiting claims for the return of benefits from nominal trust, aiming to block factors of speculation under false names. This is in response to frequent cases where farmland speculation profits were obtained through nominal transactions on registration.
Rep. Shin stated, “Although the farmland speculation controversy in the planned sites of the 3rd phase new towns has exploded like a powder keg, limiting this issue to a few deviations will not eradicate the problem. It is time for fundamental reconsideration of the Farmland Act, which has become a patchwork causing widespread speculation.”
Additionally, △ even for self-cultivated farmland, if one intends to own farmland above a certain scale that could significantly infringe on the agricultural management and livelihood rights of other farmers, permission must be obtained, and △ weekend and experiential farming farmlands are restricted from acquisition in agricultural promotion areas, significantly strengthening overall management of farmland ownership by non-farmers.
Furthermore, △ a farmland committee is to be established, △ issuance of farmland acquisition qualification certificates in areas with speculation concerns must undergo review by the farmland committee, △ submission of supporting documents is mandatory when issuing farmland acquisition qualification certificates, and △ false preparation of agricultural management plans will incur fines, with mandatory reporting upon plan changes.
The current Farmland Act has faced criticism for excessive exceptions allowing non-farmers to own farmland, undermining the constitutional principle of "Gyeongja Yujeon" (耕者有田), meaning "those who cultivate the land shall have the land."
Weekend and experiential farming have been exploited as loopholes, allowing inheritance of farmland without actual farming, and farmland ownership remains possible even after quitting farming. The farmland acquisition qualification certificate system, which should serve as a shield to preemptively regulate non-farmer farmland ownership, has deteriorated into a mere formality.
Rep. Shin emphasized, “Farmland is an essential resource performing various public functions such as food security and national land environmental conservation. We must not allow farmland, the lifeblood and lifeline of farmers, to be turned into a speculation ground for outsiders. We must preserve rural areas and uphold the value of agriculture.”
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