[Home Tech] Securing a Home Through Reconstruction... Carefully Review the "Restriction on Transfer of Association Membership"

After Association Establishment Approval in Speculative Overheating Zones

Purchasing a Home Does Not Guarantee Inheritance of Association Membership

May Face Cash Liquidation Instead of Receiving Pre-Sale Rights

Strict Legal Interpretations and Precedents Require Thorough Verification

Editor's NoteOver 70% of household assets in Korea are tied up in real estate. For many, a home is not only the most important asset but also the closest and most comforting place. While people find themselves bound to their homes, we provide the necessary information for buying and selling property. The Asia Business Daily, together with Hyosun Kim, Senior Real Estate Specialist at KB Kookmin Bank, publishes [Home Tech] every three weeks to deliver essential knowledge.

Photo unrelated to the article, Yonhap News Agency

In the 2023 film "Concrete Utopia," the apartment complex is portrayed as the last stronghold and symbol of survival in the midst of a catastrophic disaster. As of 2026, newly built apartments in prime areas of Seoul are regarded as the most powerful safe-haven assets, serving not merely as residences but as means to preserve asset value, much like the scenario depicted in the movie.

While the stock market is led by strong gains in technology stocks, the real estate market is experiencing severe polarization, with capital pouring into prime locations such as the Han River area in Seoul.

In a society where apartment brands and locations have become synonymous with social status, demand is now concentrated on securing homes along the riverside through early-stage reconstruction and redevelopment projects, rather than purchasing newly built apartments whose prices have already soared to the level of office buildings. This is due to the same social context. However, there are legal risks that must be overcome behind such rosy expectations.

The most critical issue is the restriction on transferring the status of association members. Reconstruction is not simply a project to rebuild old homes; it is a process that grants intangible value in the form of future occupancy rights to association members. Recently, most areas in the Seoul metropolitan region have been designated as land transaction permit zones, requiring actual residence, making the purchase of occupancy rights an appealing niche for certain investors seeking to bypass residency requirements.

Due to high levels of interest among buyers, there are robust regulatory measures in place to curb excessive speculative demand in advance, such as Article 39, Paragraph 2 of the "Urban and Residential Environment Improvement Act" (Dojung Act).

Under the rules governing reconstruction projects in speculative overheating zones, even if a property is purchased after the association's establishment has been approved, in principle, the buyer cannot inherit association membership. Unaware buyers who proceed with such purchases may face the painful consequence of cash liquidation instead of acquiring pre-sale rights for new apartments. This applies not only to sales transactions but also to transfers of title through gifts or exchanges, whether for value or without consideration.

Recently, there have been several consultations involving people who, unaware of these rules, nearly faced cash liquidation after attempting to gift reconstruction project apartments in areas newly designated as regulated zones in October to their children.

Of course, there are exceptions. Transfers are exceptionally permitted in cases such as inheritance, when all family members relocate to a distant area, or when the original association member has owned a single home for more than 10 years and has lived in it for more than 5 years. These are minimal safeguards to prevent unfair harm to well-intentioned individuals.

There are also escape clauses if the project fails to progress as planned (for example, when project implementation approval is not applied for within three years after the association is established). However, it remains essential to carefully review the specific stage of the project first.

It is important to note that recent interpretations of the law and court precedents have become much stricter. In the past, it was commonly interpreted that, for jointly owned properties, it was sufficient for one representative to meet the requirements for succession. However, due to recent Supreme Court rulings and changes in interpretation by the Ministry of Land, Infrastructure and Transport, now all co-owners must individually meet the exception requirements. This is why it is necessary to conduct even more thorough checks when considering properties held under joint ownership by spouses or gifted within families.

When trading properties in redevelopment or reconstruction projects this year, it is essential to consider not only the acquisition of assets but also to conduct advanced legal reviews, establish thorough financial plans, and ensure residency requirements are met. To successfully achieve your goals and avoid unexpected risks, you should visit the association office to verify the seller's association membership status.

It is also crucial to stay updated on the latest legal interpretations by the Ministry of Land, Infrastructure and Transport. Knowledge is directly linked to profit, while ignorance leads to the loss of assets. In a changing market, the strongest weapon for self-protection is, in the end, a thorough return to the basics—meticulous verification.

Hyosun Kim, Senior Real Estate Specialist, Star Advisory Group, KB Kookmin Bank

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