Lawsuits Over Registration Delays... Double Hardships at Helio City

[Asia Economy Reporter Kim Yuri] The issue of Helio City apartments in Garak-dong, Songpa-gu, Seoul, where ownership registration has been delayed for over a year after move-in due to internal conflicts within the association, is showing signs of escalating into a lawsuit. However, due to internal disputes within the association, the holding of a general meeting to change the management disposition plan for the transfer notification remains uncertain, and the problems surrounding this apartment show little sign of resolution.

According to industry sources on the 21st, recently, about 150 general buyers of Helio City are preparing a class-action lawsuit against the Garak Siyoung Reconstruction Association, claiming damages for the delay in registration. Park Gun-ho, a lawyer from the law firm Jeonghyang handling the class action, stated, "We plan to submit the related complaint to the court on the 30th," adding, "The number of plaintiffs is expected to increase after the power of attorney submissions end on the 25th."

Helio City, reconstructed from the former Garak Siyoung Apartments, is the largest reconstruction apartment complex in Korea with a total of 9,510 households. Completion approval was granted on December 28, 2018, and move-in was completed by early April last year. However, the ownership preservation and transfer registration to transfer apartment ownership from the association, the project operator, to the members is being delayed. Typically, immediately after project completion, the association holds a general meeting to change the management disposition plan and applies for transfer notification, but due to internal conflicts over additional contributions, the general meeting itself has not been held.

According to the legal community, a Supreme Court ruling has recognized the association's liability for damages from one year after completion. The claim amount per household was set at around 5 million KRW. The Jeonghyang side explained, "We based this on the 2016 Dongbu District Court precedent, which calculated damages as 5% per annum of 10% of the total sales price."

Currently, Helio City residents are facing difficulties exercising property rights such as sales because they have not secured ownership. Songpa-gu, where the complex is located, is a speculative overheating district, and resale is prohibited until ownership transfer registration is completed. Therefore, currently, only properties held by one-house owners who have owned for over 10 years and lived for over 5 years, which are exceptions to the resale restriction, can be traded. For multi-homeowners, disposal of the property is impossible, making it difficult to avoid tax burdens due to this year's official price increases. In this situation, combined with the general buyers' claims for damages, resident conflicts are expected to intensify further.

Earlier, the association attempted to hold a general meeting to change the management disposition plan for the transfer notification earlier this year but failed due to internal conflicts. Some members demanded verification of the additional contribution of 68.5 billion KRW included in the plan. The association has tried to coordinate opinions with members over about ten sessions but has yet to find a consensus.

The association has postponed the general meeting to the 20th of next month, but industry insiders expect this may also be delayed given the current situation. The association stated, "There is no way to prevent lawsuits from general buyers," but added, "Once the case is filed, we plan to meet and persuade the opposing side." They further explained, "The best we can do is to hold the general meeting as soon as possible and promptly complete the procedures for ownership transfer."