[Park Jong-il's Local Communication] How to Ensure Transparency in Apartment Management Fees

Nowon-gu Proposes Government Measures to Completely Block Apartment Management Fee Embezzlement...Urgent Need for Enhancing Management Transparency Through Live Broadcasts of Residents' Representative Meetings

Apartment Complex in Nowon-gu by Jungnangcheon Stream

[Asia Economy Reporter Jong-il Park] As of the end of 2018, half of Seoul citizens live in apartments. In particular, it is known that nearly 80% of residents in Nowon-gu live in apartments.

It can be said that most urban residents live in apartments. Because of this, it is also true that many problems arise in apartments. Recently, a shocking incident occurred in Gangbuk-gu, Seoul, where an apartment security guard who was assaulted by residents took an extreme step. Earlier this year, a manager of an apartment management office in Nowon-gu also took an extreme step while under investigation over management fees.

These days, apartments are exposing various problems, making urgent countermeasures necessary. In this context, Nowon-gu (District Mayor Oh Seung-rok) drew attention by announcing on the 8th a “Plan to Completely Block Embezzlement of Apartment Management Fees.” First, the district carefully presented an analysis of the causes to prevent embezzlement of apartment management fees. These include the lack of expertise in the residents’ representative meetings, inadequate audits by external accounting firms, and the physical limitations of district office supervision.

Then, Nowon-gu pointed out that urgent measures are needed such as strengthening the audit system for overall management fees including long-term repair reserves and improving related laws. In large apartment complexes, despite the huge scale of long-term repair reserves, there is no control function by the residents’ representative meetings, and accounting audits are selected based on the lowest bid to reduce costs. Moreover, if the residents’ representative meeting leads and obtains consent from more than two-thirds of residents, external accounting audits can be omitted.

Furthermore, if the management office does not provide appropriate materials, the accounting firm can only express “qualified opinions” or “disclaimers,” reducing the effectiveness of audits. Along with this, the district office, which has supervisory authority, conducts on-site investigations and guidance inspections for apartment complexes with more than 150 households, but can only impose fines or correction orders, limiting its role, the district office admitted.

Accordingly, Nowon-gu announced plans to expand on-site investigations and demand legal and institutional improvements for fundamental solutions. First, the number of apartment complexes subject to district office on-site investigations, which has remained at 12 complexes per year, will be expanded to 38 complexes, shortening the investigation cycle from an average of 9.6 years to 3 years. To this end, the district explained that it has hired two additional housing managers and has been implementing this since April.

Along with this, the district revealed that it requested the Ministry of Land, Infrastructure and Transport in February to amend the “Apartment Management Act” for fundamental solutions. The requests include ▲strengthening the in-depth on-site investigation criteria for autonomous districts from the current 300 households or more to 150 households or more, which is the legal mandatory management target ▲deleting the clause that allows omission of external accounting audits with written consent from two-thirds of residents ▲making it mandatory for residents’ representative meetings to request recommendations for external auditors from local governments or the Korean Institute of Certified Public Accountants ▲disclosing monthly management fee billing details along with account transaction details and monthly deposit balances ▲expanding education hours for building representatives and mandating education on overall accounting processing.

Additionally, the district proposed introducing a public system for apartment managers, suggesting that metropolitan or local governments establish and operate a joint housing management corporation to prevent disputes among residents’ representative meetings, housing management companies, and apartment managers in advance and enable effective management supervision. If the public system for apartment managers is introduced, it is expected that the tyranny of residents’ representative meetings will be significantly reduced. Oh Seung-rok, Mayor of Nowon-gu, emphasized, “Due to the moral negligence of some management office staff, many residents suffer damages, so more detailed preventive measures are urgently needed.”

It is true that residents have great interest and concern about whether the monthly management fees they pay are being properly used. Therefore, Nowon-gu’s proposal of institutional improvements to the central government is quite meaningful. The Ministry of Land, Infrastructure and Transport should also thoroughly review such policy proposals from local governments and prepare effective countermeasures.

More detailed measures for transparent apartment management also seem necessary. For example, if apartment complexes with more than 150 households are required to establish apartment websites, residents can frequently access the website to check problems within the complex. The progress of bidding processes can also be transparently disclosed. In particular, by allowing residents to view the progress of residents’ representative meetings in real time, it can function as a mechanism for suspicion-free apartment management.

This content was produced with the assistance of AI translation services.