'Innocent Buyers Unaware of Fraudulent Subscription Rights Will Be Protected'

Rep. Ha Tae-kyung's Proposed Housing Act Amendment Passes National Assembly Standing Committee
Legislation Accelerated Following Busan Haeundae 'Marine City' Incident

[Asia Economy Reporter Jo Gang-wook] It is expected that 'bona fide acquirers' who unknowingly purchased apartment pre-sale rights that were previously won through fraudulent subscription will be protected.

On the 20th, according to the National Assembly and the Ministry of Land, Infrastructure and Transport, a 'Housing Act Amendment Bill' with this content passed the full meeting of the National Assembly Land, Infrastructure and Transport Committee the day before. The amendment bill was primarily proposed by Ha Tae-kyung, a member of the People Power Party.

The amendment mandates that if fraud is discovered in housing subscription, the status must be revoked unconditionally. However, if a buyer who purchased a house or occupancy rights from the winner was unaware of the fraudulent subscription, they can maintain their status by providing an explanation to the local government.

Until now, if it was confirmed that a housing subscription was won through fraudulent means such as trading subscription savings accounts, false residence registration, or document forgery, the government or the project entity such as the developer had discretionary power to cancel the contract, raising issues of fairness.

There was also controversy that those who unknowingly purchased pre-sale rights or houses from fraudulent winners suffered unintended damages.

Therefore, while contracts will basically be canceled when fraud is detected, secondary or tertiary buyers who claim they were unaware of such facts after the subscription and purchased pre-sale rights will be protected.

Once the amendment is enforced, it is expected to prevent a recurrence of the 2016 Busan 'Marine City Incident.'

At that time, the Marine City Xi Apartments in Haeundae, Busan recorded a subscription competition rate of 450 to 1 during pre-sale, but recent investigations by the Busan Police Agency revealed that 41 winners were fraudulently selected and then resold their pre-sale rights.

Thirty-six households who purchased pre-sale rights from these individuals and moved in were unaware of the fraudulent subscription but faced the situation of not being able to live in their owned homes. They are currently engaged in legal battles as their contracts are at risk of cancellation.

The Ministry of Land, Infrastructure and Transport has sent official letters several times regarding the Marine City case, emphasizing that bona fide victims should not occur. It also plans to submit related opinions to the courts.

Since there is little disagreement between the ruling and opposition parties on the bill, it is expected to pass smoothly through the Legislation and Judiciary Committee and the plenary session.