LH collected overdue interest during delayed new town land development period... Fair Trade Commission issues corrective order and fines

[Sejong=Asia Economy Reporter Joo Sang-don] Korea Land and Housing Corporation (LH) was sanctioned by the Fair Trade Commission for abusing its power by charging buyers late payment interest for the delayed period despite the completion of land development in the Gimpo Hangang New Town land development project being later than originally contracted.

On the 16th, the Fair Trade Commission announced that it decided to issue a corrective order and impose a fine of 565 million KRW on LH for delaying the agreed land availability date stipulated in the contract and charging a total of 34 buyers for "delayed damages after the land availability date," which they were not obligated to pay during the delay period, as well as "property tax."

This case arose during the process of supplying relocation land and living measure land to evacuees and others due to the implementation of the Gimpo Hangang New Town land development project.

The development project was promoted with LH as the project implementer to foster regional development in Gimpo City and create a self-sufficient new town. The original project period was scheduled from December 13, 2006, to December 31, 2012.

However, due to delays such as cultural heritage excavations during the land development construction, the project plan was changed, resulting in a 1 year and 4 months delay in the contractually agreed land availability date.

Nevertheless, LH forced payment of the purchase price and property tax strictly according to the contract wording without considering the actual availability of the land.

In fact, LH collected a total of 948 million KRW from 34 buyers who were in arrears on the purchase price during the delayed land availability period under the name of delayed damages or reimbursed property tax. Additionally, LH charged about 58 million KRW in property tax to 30 buyers between September 1, 2013, and December 7, 2017, which LH itself was supposed to pay.

The Fair Trade Commission judged that LH’s actions constituted an abuse of its trading position by imposing disadvantages on its trading partners (the related land buyers).

A Fair Trade Commission official stated, "This sanction against LH is expected to serve as an opportunity to improve the business practices of local government urban corporations or development corporations conducting similar projects," and added, "It is also expected to contribute to establishing a fair trade order in the process of fulfilling land sale contracts in the future."

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