Refusing Access to Apartment Management Fee Ledgers to Be Punished by Prison or Fines... Penalties to Be Increased

Ministry of Land, Infrastructure and Transport to Pursue Reforms in Multi-Unit Housing Fee Management

Preventing Misconduct by Residents’ Representative Council...Stricter Criminal Penalties for Violations

Overhauling Bidding System for Housing Complex Construction and Services

The government has decided to move forward with measures to strengthen criminal penalties for corrupt practices related to the management fees of apartment complexes and other multi-unit housing. Additionally, the bidding system will be revised to prevent the abuse of private contracts in construction or service processes.

On May 21, the Ministry of Land, Infrastructure and Transport reported these plans for improving the system for managing housing complex fees at a special task force meeting of relevant ministers on public livelihood and prices. To prevent misconduct by management entities such as the Residents’ Representative Council, the government will seek to amend the Multi-Unit Housing Management Act to increase the level of criminal penalties related to management fees. Currently, failing to maintain proper records or making false entries is punishable by up to one year in prison or a fine of up to 10 million won; this will be raised to up to two years in prison or a fine of up to 20 million won.

If the viewing or issuance of management ledgers is refused, the current penalty is a fine of up to 5 million won, but this will be strengthened to up to one year in prison or a fine of up to 10 million won. Failure to fulfill the obligation to provide management fee breakdowns will result in a stiffer penalty, increasing the fine from 5 million won to 10 million won. In addition, the obligation for each household to pay and the collection of management fees will be explicitly defined as a comprehensive duty of the management entity, and the fine for violating this obligation will be set higher than the penalty for other general duty violations. As these measures require legislative changes, they may be revised during discussions in the National Assembly.

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The provision allowing exemption from accounting audits with residents’ consent will also be removed. Generally, multi-unit housing is required to undergo an annual accounting audit, but there is a rule that exempts this requirement if a majority or two-thirds of residents give written consent. The level of sanctions will be strengthened so that a housing manager’s license can be revoked if they intentionally or grossly negligently cause financial losses or obtain unjust enrichment.

Considering that exceptions for private contracts have been frequently abused, such contracts will now be strictly limited to emergency situations such as natural disasters or safety accidents, or when specific technical expertise is needed. Insurance and industrial goods will be excluded from the scope of private contracts. In response to concerns that excessive restrictions in limited competitive bidding have led to failed tenders or increased management fees, requirements for bidding based on technical capabilities will be reinforced, such as requiring prior consent from residents for patents or new technologies necessary for construction or services.

Meanwhile, the government’s recent investigation into the management fee practices of some multi-unit housing complexes revealed 38 cases of on-site guidance or corrective actions, and 19 advance notices of fines. The Ministry of Land, Infrastructure and Transport assessed that, while there is little risk of management fee imposition or collusion due to a lack of institutional framework, there remains a possibility of fee increases stemming from corruption in the Residents’ Representative Council or management entity at the field level.

Kim Young-Ah, Director of Housing Construction Operations at the Ministry of Land, Infrastructure and Transport, explained, “Management is an area of strong private autonomy, making intervention difficult, but specific rules such as conflict-of-interest provisions are stipulated in enforcement decrees and regulations, and violations are frequently uncovered. If new types of corruption are identified, we will continue to improve the system accordingly.”

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