[Taemin Ryu's Real Estate A to Z] What Are the Criteria for Choosing Building and Unit Numbers in Reconstruction Apartments?

Combination Decides Among 3 Methods of Unit Number Lottery
Project Delays Inevitable in Case of Disputes... "Individuality Must Be Considered"

Apartment complex in Seoul area (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] Expectations are growing for the new government to ease regulations on redevelopment projects. In particular, with Seoul Mayor Oh Se-hoon actively promoting the ‘Rapid Integrated Planning’ initiative, redevelopment projects in Seoul are expected to accelerate. However, many complexes are anticipated to face disputes over the allocation of building and unit numbers after redevelopment, leaving concerns about project delays.

The allocation of building and unit numbers is one of the most important aspects for existing association members. This is because the value difference can amount to hundreds of millions of won depending on the building and unit within the same complex. Especially for complexes located along the Han River with views, the interests are even more sharply divided.

The problem is that the method for allocating building and unit numbers must be decided directly by the association. This is because neither the Urban and Residential Environment Improvement Act nor local ordinances specify concrete methods. In fact, Seoul’s ordinance states only that “in cases where there is competition for housing of the same size, allocation shall be made in order of higher right value, and if the right values are the same, a public lottery shall be conducted; the determination of building and unit numbers shall follow a public lottery by housing size,” without providing clear standards. Due to the complexity and sensitivity of the issue, it is entrusted to the redevelopment associations.

Typically, the allocation of building and unit numbers in redevelopment complexes is classified into three methods: drawing lots within grades divided by floor levels into 10 to 12 ranks; drawing lots by building and floor grades; or random lottery.

However, as complexes grow larger, various interests such as views and accessibility become entangled, and disputes that cannot be resolved by conventional methods are increasing. The standards set by the association may not be perfect, and even with the same standards, some members may feel it is unfair. For example, in the case of the Cheongdam Samik redevelopment (Cheongdam Le El) apartment in Cheongdam-dong, Gangnam-gu, an unusual complaint was raised requesting a higher asset appraisal than before. As the complex design changed and the number of units enjoying Han River views increased, members without Han River views requested additional cost burdens from those with Han River views.

When disputes arise among association members like this, they often escalate into lawsuits, inevitably delaying the project. Ultimately, the burden falls on all association members. Yoon Soo-min, a real estate specialist at NH Nonghyup Bank, advised, “It is necessary to sufficiently reflect the opinions of association members in advance to minimize related disputes so that the project can proceed smoothly,” adding, “As real estate individuality has recently become stronger, it is necessary to reflect these characteristics more in redevelopment as well.”