Forced Disposal and Profit Recovery of Farmland Speculation... Possibility Remains Uncertain

Difficult to Prove Speculative Intent and Forced Disposal May Raise Constitutional Issues

Saplings such as Salix koreensis have been planted on a piece of land in Mujinae-dong, Siheung-si, Gyeonggi-do, where allegations of land speculation by some employees of Korea Land and Housing Corporation (LH) in the Gwangmyeong-Siheung new town have been raised.
Siheung - Photo by Kim Hyun-min kimhyun81@

Although the government announced that it would begin forced disposition and profit recovery related to farmland speculation by employees of Korea Land and Housing Corporation (LH), doubts remain about the feasibility of this plan. The government intends to apply the Farmland Act to forcibly dispose of the farmland, but experts say legal controversy is inevitable because the constitution also allows lawful farmland ownership by non-farmers.

According to the government on the 18th, under the current system, farmland must be used as stated by the acquirer in the farmland plan, and the government or local governments regularly inspect farmland usage. If violations are found, forced disposition can be carried out. The government’s policy is to apply charges of violating the Farmland Act and forcibly dispose of farmland if it is revealed that LH employees did not use the land they purchased for farming as intended.

Article 10 of the Farmland Act, revised in 1996, titled “Disposition of farmland not used for agricultural management,” states that "if a farmland owner does not directly cultivate the farmland for more than one year without justifiable reasons, they must dispose of the farmland within one year, and if they fail to do so, a penalty amounting to 20% of the farmland’s official assessed value (publicly announced land price) will be imposed."

The problem is that both the Farmland Act and the constitution recognize exceptions allowing non-farmers to own farmland. The Farmland Act alone lists 16 cases where non-farmers can own farmland, including inheritance, weekend farms, and leasing.

To enforce forced disposition, the government must prove that LH employees speculated for profit, which is widely considered practically impossible. Professor Sadongcheon of Hongik University’s Department of Law said, "In some agricultural products, it is impossible to distinguish between non-farmers and speculators based on whether they cultivate the land themselves." A representative example is the seedling planting revealed in the recent LH speculation scandal. Professor Sa explained, "If an actual farmer intends to plant seedlings, they end up using the same methods as speculators," adding, "It is practically impossible to determine speculation just because seedlings were planted."

Even if cases of misuse are detected, there are concerns that forced disposition could be unconstitutional. While the constitution declares the principle of land cultivation by the farmer, it also stipulates exceptions. Article 121, Paragraph 2 of the constitution states, "Furthermore, leasing and entrusted management of farmland arising from unavoidable circumstances for the purpose of improving agricultural productivity and rational use of farmland shall be recognized as prescribed by law." Professor Sa said, "Legal farmland ownership by non-farmers is permitted under the constitution," and explained, "Distinguishing and punishing speculation through the Farmland Act has the potential to be unconstitutional." He added, "Unless there is illegality, it is difficult for the government to forcibly dispose of private property directly, and government forced disposition would likely be limited to issuing a 'disposition order due to lack of intention to cultivate.'"

The government’s current plan is to thoroughly block land-for-land compensation while proceeding with cash compensation. Cash compensation is based on the appraisal value of the land. Two to three appraisers comprehensively consider factors such as the shape of the land and whether it is a blind spot, using the publicly announced price of standard land near the subject land as a reference to determine the appraisal value. The appraisal value tends to be set higher than the publicly announced price, considering market prices during the evaluation process. Moreover, with policies to enhance the realism of real estate publicly announced prices, these prices are rising, and the publicly announced prices of new town sites have already increased significantly. For example, the price of farmland (526㎡) in Okgil-dong, Gwangmyeong City, which an LH employee purchased, rose from 241,000 KRW in 2017 to 274,400 KRW last year, an increase of 13.9%.

Ultimately, to fully recover their profits, the government must bear the burden of proving through investigation that the employees speculated by obtaining insider information about the 3rd New Town in advance.

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