Hello, this is attorney Park Jong-han of Cheongchul Law Firm.

This article reviews the key practical issues surrounding the formation and approval of a redevelopment promotion committee and the authorisation of an association under the Act on the Improvement of Urban Areas and Residential Environments (the "Urban Improvement Act").

[Question] After a rearrangement zone is designated, what procedure governs the formation of a promotion committee and the authorisation of an association, and what are the key practical issues?

[Answer]

a. Basic structure of association formation

Article 25 of the Urban Improvement Act provides that where a party other than the head of a local government, a land and housing corporation or a designated developer intends to implement a rearrangement project, it must establish an association composed of owners of land and buildings, and Article 35 separately prescribes the consent requirements for authorising that association. In other words, redevelopment and reconstruction projects are in principle implemented by an association formed after the owners organise a promotion committee and obtain authorisation, and the association model is by far the most widely used in practice.

b. Formation and approval of the promotion committee

Under Article 31(1), a party seeking to establish an association must obtain the consent of a majority of the owners of land and buildings to at least five promotion committee members including the chair, and to the operating rules, then form the committee and obtain approval from the head of the local government. Article 31(2), as amended on 3 December 2024, further widens the areas in which a committee may be formed: not only (i) areas designated and publicly notified as rearrangement zones, but also (ii) areas for which no master plan has been established, areas set as prospective rearrangement zones, areas for which the drafting of a rearrangement plan has been decided upon request or proposal, and areas where a draft plan has been made available for public inspection. In practice, this widens the routes for forming a committee before a zone is formally designated.

Earlier case law, Supreme Court Decision 2009Du12297 of 29 October 2009, held that "for a promotion committee to be formed in relation to rearrangement projects under the Act, the scope of the owners of land and buildings must first be fixed, and to fix that scope the designation and public notice of the rearrangement zone by the competent Mayor or Governor must come first", concluding that approval of a committee granted without such designation and notice was void. Under the current Act, committee approval is possible only where the zone has been designated and notified or the requirements of Article 31(2) are met.

c. Functions of the promotion committee

Article 32 lists the committee's functions, including selecting and replacing the specialist project management company and the designer, preparing an outline implementation plan, and preparatory work for obtaining association authorisation. Under Article 34(3), once an association is established, the committee's work is reported to the general meeting and the related rights and obligations are transferred to the association as a whole, so contracts entered into and expenditure incurred at committee stage directly affect the finances of the resulting association.

d. How an owner who did not consent can challenge the committee

Supreme Court Decision 2006Du12289 of 25 January 2007 reasoned that only one promotion committee may be approved within a single rearrangement zone, and that the committee's rights and obligations pass to the association upon its establishment, and held that "an owner of land or buildings within the zone who did not consent to the formation of the committee nonetheless enjoys a direct and specific interest protected by the Act in relation to the approval, and therefore has standing to bring an action to revoke it". Owners within the zone may therefore challenge the approval even if they did not consent to the committee.

e. Where an association is established during proceedings to revoke committee approval

Approval of a promotion committee and authorisation of an association are separate dispositions with different purposes and characteristics, which raises the question of what happens where an association is authorised while a challenge to the committee approval is pending, or where a defect in the committee approval is invoked after authorisation to attack the authorisation itself.

Supreme Court Decision 2010Du10488, 10495 of 13 June 2013 held that where an association is authorised while a challenge to the committee approval is pending, there is no longer any legal interest in seeking revocation or confirmation of nullity of the committee approval, and the authorisation itself must be challenged directly.

Supreme Court Decision 2011Du8291 of 26 December 2013 further held that "because the committee's powers extend only to work promoting the establishment of an association, once authorisation is granted and the related rights and obligations pass to the association, the committee has achieved its purpose and ceases to exist", and that "where a housing redevelopment association has been established after satisfying the statutory consent requirements and holding an inaugural general meeting, a defect in the already extinguished committee approval cannot render the authorisation unlawful". Exceptionally, only where the defect is "so serious as to hollow out the legislative purpose of the committee system, under which a single committee performs the work of promoting association formation within one rearrangement zone" will the application for authorisation be unlawful and void, allowing the authorisation to be challenged.

Supreme Court Decision 2013Du17473 of 15 December 2016 held that where an association has been incorporated following authorisation and that authorisation is later revoked by judgment, "the promotion committee regains its status and may continue its work, including making a fresh application for authorisation", confirming that the committee automatically revives where revocation of the authorisation retroactively extinguishes the association.

f. Legal nature of the authorisation — a status-conferring disposition

Supreme Court Decision 2008Da60568 of 24 September 2009 held that authorisation of an association "is not merely a supplementary act completing a private establishment agreement; where the statutory requirements are met it also has the character of a status-conferring disposition granting the association the position of an administrative entity (a public juristic person) empowered to implement a housing reconstruction project under the Act".

As a result, even where the resolution establishing the association is defective, the remedy is not a separate action to confirm the nullity of that resolution; the authorisation itself must be challenged by seeking its revocation or confirmation of nullity.

g. Where several housing complexes lie within one rearrangement zone

Article 35(3) (as amended on 3 December 2024 and 31 January 2025) requires, for authorisation of a reconstruction association, "consent from a majority of the sectional owners in each building of the housing complex, together with consent from at least 70% of all sectional owners in the complex and owners of at least 70% of the land area" (relaxed from the former three-quarters requirement). Where several housing complexes lie within one zone, the question arises whether that requirement is assessed complex by complex or across the zone as a whole.

Seoul High Court Decision 2018Nu69525 of 9 July 2019 (finalised by the Supreme Court's dismissal without further review, 2019Du48943, on 15 November 2019) held, interpreting the then Article 16(2) of the former Act (corresponding to the current Article 35(2) and (3)), that in light of the statutory scheme and the purpose of the amendments, the sectional owners and landowners of "the housing complex" are to be assessed not complex by complex but across all housing complexes within the rearrangement zone taken together.

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