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

This article examines the key practical issues concerning who qualifies as an owner of land or buildings — the members of a rearrangement project association — and how the number of consenting owners is calculated for association formation.

[Question] Who are the members of a rearrangement project association, and how is the number of consenting owners calculated?

[Answer]

a. The statutory basis of membership

Article 39(1) of the Act on the Improvement of Urban Areas and Residential Environments (the "Urban Improvement Act") provides that members of a rearrangement project association are the owners of land and buildings, save that in a reconstruction project only those who have consented to the project are members. Article 2(9) defines those owners as "(a) for residential environment improvement and redevelopment projects, the owner of land or a building located in the rearrangement zone, or the holder of superficies over it; (b) for reconstruction projects, the owner of a building in the zone and its appurtenant land".

Where a trust business operator is designated as project implementer, the truster is treated as the owner in respect of land or buildings entrusted to the operator for the purposes of the project.

b. Where membership is not recognised

Two situations recur in practice: (1) those who own only land or only a building in a reconstruction project, and (2) owners of unauthorised buildings.

In a redevelopment project, the owner of land or a building in the zone, or the holder of superficies, qualifies as an owner and therefore as a member.

For reconstruction projects, by contrast, Supreme Court Decision 2011Du5759 of 14 November 2013 held, reading the provisions of the former Act together, that "a person who owns only land or only a building cannot be a member under the former Act, even though such a person is among those whose consent must be obtained for the formation of a housing reconstruction association under Article 16(3)". Only a person owning both land and building can be a member; those owning one alone must be counted for consent purposes but cannot be members.

On unauthorised buildings, Supreme Court Decision 2009Ma168, 169 of 24 September 2009 held that "a building whose owner is granted membership under Article 2(9)(a) and Article 19(1) of the former Act means in principle a lawful building, and does not include an unauthorised building". The Court added, however, that "this does not prohibit a redevelopment association established with the lawful consent of the owners from providing in its articles, within a certain scope, that owners of unauthorised buildings be granted membership". Because that exception is recognised, the articles of the particular association must always be checked.

c. How the number of consenting owners is calculated

The method is set out in detail in Article 33(1) of the Enforcement Decree, made under the delegation in Article 36(4), and differs by project type.

For residential environment improvement and redevelopment projects: (i) where several persons jointly own one parcel of land or one building, one representative is counted as the owner; (ii) where superficies has been created over land, one representative of the landowner and the holder of superficies is counted; and (iii) where one person owns several parcels or several buildings, that person is counted as a single owner regardless of the number.

For reconstruction projects: (i) where ownership or sectional ownership is jointly held, one representative of those holders is counted; (ii) where one person holds two or more ownerships or sectional ownerships, that person is counted as a single owner regardless of the number; and (iii) where the co-owners of two or more ownerships are the same, one representative of those co-owners is counted.

d. State and public land — counting and the manner of consent

Where several parcels of State or local government land lie within the zone, how those owners are counted, and how the State's or local government's consent must be expressed, are important practical questions.

In Decision 2012Du1419 of 14 April 2014, the Supreme Court, sitting en banc, held that even where several parcels of State or public land lie within the zone, the owner of land or buildings is to be counted as one person per owner regardless of the number of ownerships, and that "where the State or a local government owns land or buildings within the zone, its consent to the formation of the association and the promotion of the project need not necessarily be expressed explicitly in writing" — so that, absent an express objection during the authorisation of the association or the designation of the master plan and rearrangement zone, consent may be inferred.

This is now codified in Article 33(1)5 of the Enforcement Decree: "For State and public land, each property management authority shall be counted as an owner. In such a case, if the property management authority does not indicate whether it consents within 30 days of receiving the request for consent, it shall be deemed to have consented." In practice, therefore, each property management authority is treated as a separate owner, and consent is deemed given if no express objection is made within 30 days of the request.

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