Gwangju City Issues Fraud Alert for Cooperative Private Rental Housing

"Be Sure to Verify Project Eligibility and Site Conditions"

Gwangju City Hall exterior view.

Gwangju City has urged citizens to exercise special caution, noting that a series of fraud cases related to the 'Cooperative-Type Private Rental Housing Project' have been occurring nationwide.

According to Gwangju City on the 30th, a 'Cooperative-Type Private Rental Housing' requires the establishment of a cooperative with at least five promoters. Under the 'Special Act on Private Rental Housing,' the cooperative must report the recruitment of members to the relevant district office and subsequently conduct a public recruitment for members.

However, recently, there have been frequent cases nationwide where, without even establishing a cooperative, promotional centers are opened under the pretext of recruiting promoters (investors) for the establishment of a housing cooperative, encouraging people to join. Therefore, special caution is necessary.

The city stated that the business plans promoted during the promoter and member recruitment stages are not finalized, so financial damages may occur due to project delays or cancellations. In particular, it emphasized the importance of checking whether the planned project site is eligible for apartment construction under the 'National Land Planning Act' and other relevant laws, and whether the business plan contains any false or exaggerated information.

Additionally, since there are no legal regulations regarding the return or withdrawal of investment funds at the promoter stage, it is difficult to seek remedies in case of damages. The city advised that individuals should carefully review the contract for clauses regarding membership cancellation, refund provisions, and any terms unfavorable to the contractor before making a decision.

The city plans to distribute a 'Guideline for Cooperative-Type Private Rental Housing Projects,' monitor the status of such projects in the Gwangju area, and take proactive administrative measures in cooperation with the relevant autonomous districts if any violations are detected.

Kim Junyoung, Director of Urban Space, stated, "Currently, there are no cases in the Gwangju area where a cooperative-type private rental housing cooperative has reported member recruitment or received approval for a housing construction business plan," and added, "Contracts with organizations recruited without legal grounds are not legally protected, so decisions should be made carefully after thorough verification."

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