Hello, I am Lawyer Bae Gi-hyung from Cheongchul Law Firm.

Local housing cooperatives are gaining attention as an alternative for housing provision alongside rising housing prices, but failing to clearly understand the legal risks when joining a cooperative can lead to significant financial losses. In particular, the qualifications for membership in local housing cooperatives are more stringent than expected, which sometimes results in individuals being notified that they do not meet the membership requirements and then only seeking legal remedies afterwards.

In cases where the membership qualifications are not met, the legal issues surrounding whether the contract can still be maintained, and the possibility of refunding already paid contributions, become important discussion points. Recently, the Supreme Court ruling (2023Da209403) addressed this matter directly.

In this article, we will analyze the validity of the cooperative membership contract and the obligation to pay contributions when the membership qualifications are not met, through the lens of the recent Supreme Court ruling (2023Da209403).

[Question] Is a local housing cooperative membership contract signed without meeting the membership qualifications automatically invalid, and can contributions be refunded?

[Answer]

The Supreme Court ruled that even if the membership qualifications are not met by the time of signing the contract or up to the application for establishment approval, a claim for the return of contributions that have an obligation to pay is not recognized (Supreme Court ruling on January 9, 2025, 2023Da209403).

The plaintiff signed a membership contract with the defendant local housing cooperative and paid the deposit but did not meet the membership qualifications. The plaintiff subsequently claimed the invalidity of the membership contract and sought the return of the paid deposit as unjust enrichment.

1. Main Issues

• Whether a membership contract signed without meeting the membership qualifications is automatically invalid.

• Whether the obligation to pay contributions ceases if the qualifications are not met even by the time of application for establishment approval.

  
  

2. Supreme Court Ruling

The Supreme Court (ruling 2023Da209403) stated that "the regulations concerning the membership qualifications of local housing cooperatives cannot be seen as provisions of validity, and thus even if the parties have made a contrary agreement, it does not automatically mean that the agreement is invalid."

Furthermore, the Supreme Court concluded that "if a membership contract has been signed but the membership qualifications are not met up to the application for establishment approval, the effect only applies to the future, so contributions that arose before the application for establishment approval and are due must still be paid."

3. Practical Implications of the Ruling

We will summarize the considerations to keep in mind when signing contracts for local housing cooperatives.

Lawyer Bae Gi-hyung has worked in the construction/real estate team at the Defense Facilities Administration and at a major law firm, specializing in real estate development projects, finance, trust, and litigation and advisory services related to construction works. There are various legal relations and principles intertwined in real estate development and trust and construction disputes. If problems arise, please feel free to contact us at any time.

Cheongchul Law Firm comprises lawyers from the five largest law firms in Korea—Kim & Chang, Kwangjang, Taepyungyang, Sejong, and Yulchon—as well as from corporate legal teams, and responds with a team of specialized lawyers in fields related to each case rather than just one lawyer. Cheongchul provides comprehensive solutions for overall business issues beyond simply resolving specific disputes, focusing on achieving what the client desires. If you need assistance in achieving your goals, do not hesitate to contact Cheongchul.