Hello, this is Cheongchul Law Firm.

When owners in a redevelopment zone do not apply for a new unit and become subject to cash settlement, they are often surprised at how low the compensation offered by the association is. That does not mean they must simply accept the amount the association sets. With compensation, however, when and through which procedure you exercise your rights matters as much as how much you receive.

The project operator of a redevelopment project may expropriate land and buildings for the project (Article 63 of the Act on the Improvement of Urban Areas and Residential Environments (도시정비법)), and except as provided in that Act, the Act on the Acquisition of and Compensation for Land for Public Works Projects (토지보상법, the 'Land Compensation Act') applies mutatis mutandis to the expropriation and compensation (Article 65(1) of the Urban Improvement Act). For reconstruction projects, expropriation is limited to certain cases (Article 63 of the same Act), so they usually proceed through a claim for a demand of sale. This post explains, with statutory provisions and a Supreme Court decision, four rights that cash-settlement owners in redevelopment should check. For the overall procedure of improvement projects, see Overview of Urban Improvement Projects: Redevelopment and Reconstruction Procedures and Disputes (Korean).

[Contents]

1. If the Award Is Too Low – 30 or 90 Days From Receiving the Ruling

2. If Cash Settlement Talks Are Delayed – Late-Payment Interest

3. You May Keep Using the Property Until Compensation Is Complete, Then Must Hand It Over

4. If Only Part of Your Land Is Taken – Remaining Land Purchase Claims and Loss Compensation

5. Deadlines at a Glance – Check Right After Receiving the Ruling

If the Award Is Too Low – 30 or 90 Days From Receiving the Ruling

If no agreement is reached, the Land Tribunal sets the compensation through an expropriation ruling. If you disagree with that amount, there are two routes. One is to file an objection within 30 days from the date you receive the authentic copy of the ruling (Article 83(3) of the Land Compensation Act). If the ruling was made by a regional Land Tribunal, the objection is filed with the Central Land Tribunal through that regional tribunal (Article 83(2)). The Central Land Tribunal may change the amount of compensation if the ruling is unlawful or unjust, and if compensation is increased, the project operator must pay the increase within 30 days from receiving the authentic copy of that ruling (Article 84).

The other is to file an administrative lawsuit directly without an objection. A lawsuit challenging an expropriation ruling must be filed within 90 days from receiving the ruling, or, if an objection was filed, within 60 days from receiving the ruling on the objection (Article 85(1)). A suit seeking increased compensation names the project operator as the defendant (Article 85(2)). In the lawsuit, the court reassesses fair compensation through a court-appointed appraisal and the like, and the difference is claimed from the project operator.

Note that filing an objection or an administrative lawsuit does not stop the project or the expropriation (Article 88). Disputing the amount of compensation and the duty to hand over the property discussed below proceed separately. And once the deadline passes you can no longer dispute the amount, so the ruling should be reviewed as soon as it is received.

If Cash Settlement Talks Are Delayed – Late-Payment Interest

The Urban Improvement Act sets deadlines for the cash settlement process. Within 90 days from the day after the management and disposal plan is approved and announced, the project operator must consult on compensation with persons who did not apply for a unit, persons who withdrew their application before the application period ended, persons excluded from allocation under the management and disposal plan, and others (Article 73(1)). If no agreement is reached, it must apply for an expropriation ruling or file a claim for a demand of sale within 60 days from the day after that period expires (Article 73(2)).

If the project operator applies for an expropriation ruling or files a claim for a demand of sale after this period, it must pay the owner interest according to the number of days of delay (Article 73(3)). The rate is 5 percent for up to 6 months of delay, 10 percent for more than 6 and up to 12 months, and 15 percent for more than 12 months (Article 60(2) of the Enforcement Decree of the Urban Improvement Act).

It is therefore wise to keep written records of the date you requested consultation and of the association's replies and the content of the discussions. Whether the association met its deadlines is ultimately judged by dates, and these records are what allow you to claim late-payment interest along with the compensation. The meaning and effect of the management and disposal plan are covered in Contents of the Management and Disposal Plan and Quorum for the General Meeting (Korean).

You May Keep Using the Property Until Compensation Is Complete, Then Must Hand It Over

Once approval of the management and disposal plan is announced, owners, lessees and other right holders of the existing land or buildings in principle may not use or profit from them until the transfer announcement. Exceptions apply where the project operator consents or where compensation under the Land Compensation Act has not been completed (Article 81(1) of the Urban Improvement Act).

The Supreme Court held that compensation is 'completed' only when not just the compensation set by agreement or expropriation ruling has been paid or deposited, but the payment procedure for relocation costs and the like has also been carried out. Until then, existing right holders may continue to use and profit from the property even after approval of the management and disposal plan is announced, and a project operator obliged to pay relocation costs cannot claim damages for unlawful occupation from a cash-settlement owner (Supreme Court Decision 2021Da249810, August 18, 2023).

Once compensation is complete, however, things change. The project operator must pay or deposit the compensation set by the ruling by the commencement date of expropriation (Article 40 of the Land Compensation Act); otherwise the ruling loses its effect (Article 42(1)). Once the compensation is paid or deposited, the project operator acquires ownership on the commencement date of expropriation (Article 45(1)), and owners and interested parties must hand over or remove the land or objects by that date (Article 43).

In the case above, the association deposited the compensation under the expropriation ruling and registered the transfer of ownership, but tenants who had leased the building from the owners stayed on for a while after the commencement date before moving out. The Supreme Court held that the owners had been indirectly possessing the building through the tenants and occupying the land without title, and that absent special circumstances, such as efforts to hand it over on time while returning the deposits, they were liable to compensate the association for damages such as the rent equivalent of the land, and it reversed the lower court's dismissal of the association's claim. In other words, holding out after the compensation has been deposited can lead to liability for damages.

If Only Part of Your Land Is Taken – Remaining Land Purchase Claims and Loss Compensation

If only part of a single tract of land owned by the same person is expropriated or purchased by agreement, and it becomes significantly difficult to use the remaining land for its original purpose, the owner may ask the project operator to purchase the remaining land as well. After project approval, if no purchase agreement is reached, the owner may ask the competent Land Tribunal to expropriate it, and this request must be made by the project completion date (Article 74(1) of the Land Compensation Act). For improvement projects, the announcement of approval of the project implementation plan is deemed to be project approval and its announcement (Article 65(2) of the Urban Improvement Act).

Even if you keep using the remaining land, if its value has dropped because of the partial expropriation, or if new works such as a passage, ditch or fence have become necessary, you can be compensated for the loss or the construction cost (Article 73(1)). This compensation can no longer be claimed once one year has passed from the project completion date (Article 73(2)). If the decrease in value plus the construction cost exceeds the value of the remaining land, the project operator may purchase the remaining land (proviso to Article 73(1)).

Deadlines at a Glance – Check Right After Receiving the Ruling

The deadlines discussed above are summarized below.

• Objection: within 30 days from receiving the authentic copy of the expropriation ruling (Article 83(3) of the Land Compensation Act)

• Lawsuit for increased compensation: within 90 days from receiving the expropriation ruling, or within 60 days from receiving the ruling on the objection if an objection was filed (Article 85(1))

• Association's cash settlement consultation: within 90 days from the day after approval and announcement of the management and disposal plan; if no agreement, an expropriation application or demand-of-sale claim within 60 days thereafter, with late-payment interest if exceeded (Article 73 of the Urban Improvement Act)

• Request to purchase or expropriate remaining land: by the project completion date (Article 74(1) of the Land Compensation Act)

• Claim for loss or construction costs on remaining land: within one year from the project completion date (Article 73(2))

In short, if you think your redevelopment compensation is too low, you can challenge it within 30 or 90 days of receiving the ruling, and if the association misses its deadlines for consultation or applying for a ruling, you can claim late-payment interest. You may use the existing building until compensation is completed, but once compensation is paid or deposited you must hand it over by the commencement date of expropriation, and if only part of your land is taken, your rights regarding the remaining land must also be exercised in time.

Cheongchul Law Firm directly handles disputes in urban improvement projects, including redevelopment and reconstruction cash settlements, objections to expropriation rulings, lawsuits for increased compensation, and litigation on the association's side. If you have received a ruling or are in compensation talks, please contact us through consultation booking.

This post is written for the purpose of providing legal information and does not constitute legal advice on any specific matter. Since conclusions may differ depending on the facts of each case, please be sure to consult a professional.