"Living Accommodation Facilities Not Allowed for Residential Use"…Mandatory Guidance When Selling

[Asia Economy Reporter Moon Jiwon] From now on, developers of residential lodging facilities must inform buyers from the sales stage that these facilities cannot be used for residential purposes without a change of use, and that they are subject to lodging business registration.

The Ministry of Land, Infrastructure and Transport announced that it will publicly notify the amendment of the Enforcement Decree and Enforcement Rules of the "Act on the Sale of Buildings," which includes these provisions, from the 13th of this month until the 21st of next month.

According to the Ministry, there have been many cases where residential lodging facilities were used illegally for residential purposes, causing problems such as overcrowding of nearby schools, traffic congestion, and increased parking difficulties.

Some buyers complained that they were not adequately informed of these facts at the time of purchasing residential lodging facilities and expressed dissatisfaction with sanctions against illegal change of use or failure to register lodging businesses.

To address these issues, the government has strengthened the guidance on building use for residential lodging facilities from the sales stage and established procedures for buyers to confirm this information.

The amendment also expands the developer's liability grounds under which buyers can cancel an already concluded sales contract.

Until now, buyers could only cancel the sales contract if ▲ the developer failed to comply with correction orders from the mayor or county governor regarding sales advertisements, ▲ was fined for violating sales procedures, or ▲ was penalized with a fine for receiving payment at an improper time.

Going forward, buyers will also be able to cancel the contract if ▲ the developer receives a disposition under the Act on Fair Labeling and Advertising for false or exaggerated advertising, or ▲ other items listed as grounds for cancellation in the sales contract due to the developer's fault that prevent achieving the contract's purpose.

In sales management trust projects where construction has been suspended or delayed for a long time, the trustee can succeed the developer's position and resume construction.

Until now, unlike land trusts or sales guarantee projects, sales management trust projects could not practically liquidate or continue construction of buildings under construction due to construction suspension or delay, unless the developer went bankrupt or became insolvent.

However, from now on, in projects where construction has been suspended or delayed for more than six months, if more than 80% of buyers request it and the trustee agrees, construction can be resumed.

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