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B-192282 1 (1979-04-18)

handle is hein.gao/gaobadhdn0001 and id is 1 raw text is: THE COMPTROLLER GENERAL DECISION OF THE UNITED STATES WASHINGTON, D.C. 20548 FILE: B-192282 DATE: APR 18 17 MATTER OF: Obligation of Funds for Chonsegwon Leases in Korea The United States Peace Corps leases property in Korea on terms which require initial payments to the lessors of approximately 50 percent of the assessed valuation of the property, returnable at the close of lease term. No rent is requested. Peace Corps may not account for initial payment as resulting in a receivable, without recording an obligation. Lease is an obligation of the United States. Initial payment corresponds to liquida- tion of obligation, chargeable to appropriation available for period in which obligagation was incurred. Return of initial payment is to be covered into Treasury as miscellaneous receipts. This is in response to a request from the Assistant Director, Office of Administration and on the proper eod o accounting for transactions pertaining to certain unusual leases executed in Korea by officers of the United States Peace Corps, Korea (PC/K) for PC/K offices and staff living quarters. The leases in question (hereafter referred to as Leases) are called Chonsegwon, or Chonsei Kwon (Right of Registered Lease). They are recognized by Korean law, specifically articles 186 and 303 through 319 of Book II of the Korean Civil Code, Laws of the Republic of Korea (Korean Legal Center, Seoul, 3d unofficial ed., 1975). Instead of requiring installment rental payments, as is customary for leases within the United States, the Korean lessors require an initial payment, usually of the order of fifty percent of the assessed valuation of the property. Ordinarily there are no periodic payments to the lessor in addition to the initial payment. Under the terms of the typical lease, as well as under article 317 of Book II of the Korean Civil Code, supra, the lessor is required to return the initial payment to the lessee t Te expiration of the lease term. Thus, the lessor has the use of the initial payment for the duration of the lease term, and presumably derives his profit from investment at the local interest DIGEST: 25L P7V

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