Frequent Project Delays... Enhancing Stability of Housing Cooperatives

[Asia Economy Reporter Yoo In-ho] The qualification criteria for promoters of regional housing cooperatives will be strengthened to 'home ownership and one year of residence.' To prevent delays in housing cooperative projects, capital requirements will also be mandated for business agents such as real estate development business registrants, with KRW 500 million for corporations and KRW 1 billion for individuals.

The Ministry of Land, Infrastructure and Transport announced that the amendment to the "Housing Act Enforcement Decree," which includes the qualification criteria for housing cooperative promoters, deposit and refund of membership fees for applicants, and dissolution procedures in case of project delays, passed the Cabinet meeting on the 21st to protect the property rights of housing cooperative members and enhance transparency in project promotion.

According to the amendment, to strengthen transparency in housing cooperative projects, mayors, county governors, and district heads must announce on the local government’s internet homepage the approval date, location of the housing construction site, and the status of land use rights or ownership when granting establishment or change approval for housing cooperatives.

Capital requirements have also been newly established for housing cooperative business agents such as registered housing construction businesses, licensed real estate agents, specialized maintenance project managers, registered real estate development businesses, and trust companies.

Currently, there are no capital requirements for housing cooperative business agents, raising concerns about project delays due to poor business performance.

The qualification criteria for cooperative promoters will also be made mandatory. Since multi-homeowners without member qualifications have been promoting projects as promoters and then not participating as members after approval, causing damage to members, promoters will be required to meet certain qualification standards similar to members.

Accordingly, promoters of regional housing cooperatives must meet the home ownership requirement from the date of member recruitment notification to the date of cooperative establishment approval, and the residence requirement from one year before the member recruitment notification date to the cooperative establishment approval date. In the case of workplace housing cooperatives, promoters must own a home from the member recruitment notification date to the cooperative establishment approval date and be currently employed as of the member recruitment notification date.

Compliance requirements related to member recruitment advertisements have also been strengthened. To prevent damages caused by false or exaggerated inducements during member recruitment, advertisements must include the cooperative’s name, office location, and the date of member recruitment notification acceptance.

Additionally, advertisements that may cause misunderstandings by implying that a constructor has been selected when one has not yet been chosen are prohibited.

Regulations on the deposit, payment, and refund of membership fees have also been established. To protect the property rights of housing cooperative applicants and prevent disputes over membership fees, the recruiting entity must enter into a contract with a financial institution regarding the deposit of membership fees, and if the applicant withdraws their subscription within 30 days from the date of deposit, the membership fee must be refunded.

Furthermore, to minimize member damages caused by prolonged housing cooperative projects, if the project is delayed for a certain period after member recruitment notification or cooperative establishment approval, early project termination or cooperative dissolution may be carried out.

This amendment will take effect from the 24th. However, the regulations regarding the deposit, payment, and refund of membership fees for housing cooperative applicants will be applied starting December 11.

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