Hello, this is attorney Jonghan Park of Cheongchul Law Firm.

Reconstruction and redevelopment are urban improvement projects governed by the Act on the Improvement of Urban Areas and Residential Environments (도시 및 주거환경정비법, hereinafter the "Urban Improvement Act") and its subordinate regulations. In this article, I will briefly review the history and framework of the Urban Improvement Act, the types of improvement projects and how they proceed, and the forms of litigation that arise from disputes in such projects.

[Question] The framework of the Urban Improvement Act and the procedure for improvement projects

[Answer]

A. History and purpose of the Urban Improvement Act

The Urban Improvement Act was enacted on December 30, 2002 and took effect on July 1, 2003. It was enacted to consolidate under a single statute the improvement projects that had previously been carried out separately under the Urban Redevelopment Act (도시재개발법), the Temporary Act on the Improvement of Residential Environments for Low-Income Urban Residents (도시저소득주민의 주거환경 개선을 위한 임시조치법), and the Housing Construction Promotion Act (주택건설촉진법).

Article 1 of the Urban Improvement Act states that its purpose is "to contribute to improving the urban environment and enhancing the quality of residential life by prescribing matters necessary for systematically improving areas that require the restoration of urban functions or that have poor residential environments, and for efficiently upgrading aged and deteriorated buildings." The Act has been amended dozens of times since its enactment; in particular, it underwent a full amendment on February 8, 2017 that took effect on February 9, 2018, and numerous amendments have followed since. Accordingly, in any specific case it is necessary to check the supplementary transitional provisions to determine which version of the law applies.

B. Types of improvement projects

Article 2 of the Urban Improvement Act classifies improvement projects into three types. A "residential environment improvement project" upgrades infrastructure for improvement and housing in areas where low-income urban residents live in groups. A "redevelopment project" improves the residential environment in areas with poor improvement infrastructure and a concentration of aged and deteriorated buildings, or improves the urban environment in commercial or industrial districts in order to restore urban functions and revitalize commercial areas. A "reconstruction project" is defined as a project to improve the residential environment in areas where the improvement infrastructure is sound but apartment housing that qualifies as aged and deteriorated buildings is concentrated. Thus, whether the improvement infrastructure is deteriorated is the key practical indicator distinguishing redevelopment from reconstruction.

C. Overview of the improvement project procedure

An improvement project generally proceeds in the following order: "establishment of the master plan → establishment of the improvement plan and designation of the improvement zone → formation and approval of the promotion committee → authorization to establish the association → authorization of the project implementation plan → authorization of the management and disposal plan → commencement of construction and general sale → completion and transfer notice → cancellation of the improvement zone, dissolution of the association, and liquidation." For reconstruction projects, a separate safety inspection procedure takes place before or after the improvement plan stage.

Each stage is regulated in great detail as to requirements and procedure under the Urban Improvement Act and its subordinate statutes and municipal ordinances. In particular, the consent rate of landowners and other rightholders required at the association establishment, project implementation, and management and disposal stages is the key variable determining whether the project succeeds or fails.

D. Forms of related litigation

Disputes arising at each stage of an improvement project are handled, depending on their nature, as appeal litigation, party litigation, civil litigation, or non-contentious cases.

Dispositions subject to "appeal litigation" include the improvement plan and the disposition designating the improvement zone, approval of the establishment of the promotion committee, authorization to establish the association, authorization of the project implementation plan or the management and disposal plan, refusal of a sale allocation, the transfer notice, cost imposition dispositions, liquidation money imposition dispositions, and dispositions revoking each of the foregoing.

Representative examples of "party litigation" include actions contesting the validity of resolutions relating to changes in the establishment of the association, authorization of the project implementation plan, or authorization of the management and disposal plan, as well as claims for residential relocation expenses where no adjudication has been rendered.

"Civil litigation" includes actions to confirm the invalidity of resolutions establishing the association, selecting the contractor, amending the articles of association, or appointing officers; actions for registration of transfer of ownership based on the exercise of a sale demand right; and actions for delivery of buildings following public notice of authorization of the management and disposal plan. "Non-contentious cases" include the appointment of interim officers and the appointment of a liquidator by the court.

As reviewed above, reconstruction and redevelopment projects organically combine the requirements for the three types of improvement projects, the procedures at each stage, and the various forms of litigation that accompany them, all centered on the Urban Improvement Act. It is therefore necessary to understand the relevant legislation and procedures comprehensively from the earliest stage of a project.

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