Suncheon-si Songbo Apartment, Changing Neighborly Fates Between Priority Buyers and Disqualified Applicants

Over 200 Households with Unreleased Mortgages May Suffer the Most
Songbo Pineville Files Special Damage Claims Against Certain Ineligible Litigant Households

[Suncheon=Asia Economy Honam Reporting Headquarters, Reporter Lee Hyung-kwon] “We used to say that if we unite, we live, and if we scatter, we die. Everyone was of one mind, but I don’t know how it ended up like this,” said Resident A of Songbo Apartment in Suncheon, expressing regret that “all of us living in the same apartment used to be like neighbors, but now everyone has different positions.”

Songpo Pineville Co., Ltd., which received sales approval from Suncheon City last December, classified the total 757 households of Songbo Apartment into 529 priority sale households and 228 disqualified households.

The sales price for the 529 priority sale households is 226 million KRW, while the 228 disqualified households, if they wish to purchase, face a price of 349 million KRW, making the price difference between priority sale and disqualified households 123 million KRW.

This is why the disqualified households inevitably have strong objections, but for the priority sale households, it is an opportunity to secure a home at an affordable price.

In the public rental housing of Songbo Apartment, tenants who were united in spirit to purchase as neighbors are now divided by fate into priority sale households and disqualified households with differing positions.

The rental company must classify priority sale and disqualified households according to laws and regulations such as the Public Rental Housing Special Act.

If they disagree with the disqualification decision, they can file a lawsuit to confirm priority sale status in court and seek judgment.

Among the 228 disqualified households, about 180 have filed lawsuits, which are currently under review by the Suncheon court.

The positions of the approximately 180 households who filed lawsuits are also divided by fate.

Testimonies from residents and rental company officials support this, stating that “the positions of many households with a chance of winning and those clearly disqualified are expressed differently.”

Resident B said, “Households with a chance of winning quietly hope to secure priority sale status through court rulings, while those without a chance seem to want to shake the company and hope for failure.”

A company official said, “Initially, about 80 households filed lawsuits claiming unfairness, but recently, perhaps due to crowd psychology, many more households have joined the lawsuit,” adding, “Many clearly disqualified households, such as homeowners, illegal transfers, late move-ins, and move-out histories, have also joined the lawsuit.”

Meanwhile, the 529 priority sale households are also divided in their positions.

Among the approximately 400 households that have paid the balance and completed ownership transfer, about 200 households have fully acquired ownership after the rental company repaid the Housing and Urban Fund.

However, for about 200 households, the mortgage set when the rental company took out a loan from the Housing and Urban Fund has not been canceled for several months, putting them at risk of having to bear 72 million KRW if the rental company goes bankrupt.

Resident C said, “I have paid the apartment balance and completed ownership transfer, but I cannot sleep worrying about when the mortgage will be released.”

Low-income people who have faithfully complied with the Public Rental Housing Special Act for the past five years and fulfilled their dream of owning a home are suffering mental distress due to the uncanceled mortgage.

Also, about 100 households among the priority sale households have not paid the balance or have not transferred ownership due to concerns or issues with repaying jeonse loans simultaneously.

These households say, “We are facing an unstable situation, unable to move forward despite being close to realizing our dream of homeownership with over 100 million KRW in market price gains.”

A representative of the residents’ association said, “All our residents should unite, but instead, various rumors and lawsuits are occurring, making things more difficult and regrettable,” adding, “I hope everyone considers the reality that we need to make small compromises to prevent damage.”

He continued, “If the company smoothly helps sell even the 40 vacant units it holds, it would greatly help the 200 households whose mortgages have not been canceled.”

Songpo Pineville Co., Ltd., which planned to repay fund loans with the surplus from selling disqualified households excluding priority sale households among the total 757 households, faces bankruptcy if it loses the lawsuit.

If Songpo Pineville goes bankrupt, the households most affected will be the approximately 200 who have paid the balance and transferred ownership but are waiting for mortgage cancellation, potentially having to bear an additional 72 million KRW in fund loans.

A Songpo official said, “Except for a few households who initially filed lawsuits, we believe we will win the lawsuit against many tenants who are clearly disqualified,” adding, “If we lose, it would be a disaster. We would go bankrupt, and what would happen to the households whose mortgages are not canceled?”

He added, “If we win, we will have no choice but to claim damages from the lawsuit households,” explaining, “If we do not claim damages, it would constitute breach of trust regarding interest and other matters.”

Claiming significant damages, he said, “Due to injunctions from the lawsuit households, we could not sell 132 units that had general sale applications, and we suffered damages such as refunding deposits or paying penalties due to canceled sales contracts.”

Songpo Pineville Co., Ltd. said it filed special damages claims lawsuits against 79 households last month.

It also reported 67 households suspected of illegal transfer of lease rights to the police and Real Estate Home.

Depending on the court’s decision, some tenants participating in the lawsuit may face even greater losses, so caution is required.

The Asia Economy Honam Reporting Headquarters plans to follow up with reports on the advantages and disadvantages of households due to Songpo Pineville’s bankruptcy and subsequent legal situations, and will also interview the lawyer handling the lawsuit for detailed coverage of the trial.