Supreme Court: No Priority Sale Rights for Public Housing Occupancy Without Open Recruitment Process

Court: "Cannot Accept Exception Allowing Omission of Public Recruitment Process"

The Supreme Court has ruled that the preferential purchase rights of public rental housing tenants who have not gone through the public recruitment procedures stipulated by the Housing Supply Regulations cannot be recognized.

The Supreme Court's 3rd Division (Presiding Justice No Jeong-hee) announced on the 13th that it overturned the lower court ruling in favor of plaintiff A, a resident of public rental housing, in a lawsuit to confirm the status of a pre-sale right holder against apartment rental business operator B, and remanded the case to the Seoul High Court.

A and others rented public rental apartments on a first-come, first-served basis without going through the public recruitment process. Later, in 2017, B secured the status of rental business operator by purchasing the entire apartment complex from the apartment construction company, and the following year received approval for sale conversion from the local government.

Accordingly, A applied for sale, claiming to have a preferential purchase conversion right regarding the rental housing, but when B did not accept it, A filed a lawsuit.

The first trial ruled that first-come, first-served tenants like A were not eligible for preferential sale. The Rental Housing Act stipulates that when recruiting tenants for sale conversion, public recruitment must be conducted targeting household heads without housing.

On the other hand, the second trial judged, "Exceptionally, even if tenants are publicly recruited, if it is clear that those with priority qualifications will not apply, the public recruitment procedure may be omitted and tenants may be selected by a first-come, first-served method, and in that case, tenants selected by first-come, first-served are subject to preferential sale conversion."

However, the Supreme Court held that exceptions allowing omission of the public recruitment procedures stipulated by the Housing Supply Regulations cannot be recognized.

The court pointed out, "The lower court's interpretation lacks legal basis, and if such an exception is recognized, rental business operators could arbitrarily supply public rental housing preferentially to persons who are not members of housing-deficient households, resulting in depriving housing-deficient households of the opportunity to receive public rental housing and preferential sale conversion. It would also rely on unclear conditions to determine eligibility for preferential sale conversion, undermining the stability of related legal relationships."

Furthermore, the Supreme Court's 3rd Division (Presiding Justice Lee Heung-gu) ruled that even in cases where a person selected as a tenant by a first-come, first-served method for a public rental housing unit whose contract was terminated by a previous tenant, such a person is not eligible for preferential sale.