One-sided Cancellation After Officetel Sale... Court Rules "Violation of Property Rights, Null and Void"

The general meeting resolution of the Urban Environment Improvement Project Promotion Committee (Promotion Committee), which canceled the sale of officetels planned to be built in a redevelopment area without reasonable grounds after two years, was ruled by the court to be illegal as it infringed on the property rights of the buyers.

According to the legal community on the 14th, the Seoul Administrative Court Administrative Division 11 (Chief Judge Kim Jun-young) ruled in favor of plaintiffs A and B, who owned land and building shares in a redevelopment area in Seoul, in a lawsuit seeking to nullify the general meeting resolution against the Promotion Committee of the area.

The Promotion Committee received approval for the redevelopment project implementation plan from the Seoul Metropolitan Government in September 2014. Accordingly, A and B applied for joint commercial unit sales with the Promotion Committee from December 2014 to March 2015. At that time, the right value (sale standard value) was calculated by multiplying the previous land and building appraisal value by a proportional rate (103.04%).

Subsequently, as the project's profitability increased, the proportional rate rose from 103.04% to 103.66%, and A and B hoped to purchase an additional officetel unit, stating that even after deducting the estimated amount of the commercial unit allocated during the first sale application, a balance remained. Accordingly, the Promotion Committee held an extraordinary general meeting in October 2018 and resolved to enter into an additional officetel contract with the two individuals.

However, two years later, in October 2020, the Promotion Committee suddenly resolved to cancel the officetel supply contract with the two. The reason was that instead of calculating the plaintiffs' right value by multiplying the real estate appraisal value by the proportional rate, the real estate appraisal value itself should be considered as the plaintiffs' right value. In response, A and B filed an administrative lawsuit against the Promotion Committee.

The court judged the Promotion Committee's decision to be illegal and ruled in favor of the plaintiffs.

The court stated, "When the management disposition plans were established in 2015 and 2017, it was specified that 'the right value of the sale applicants subject to sale is calculated by multiplying the previous asset appraisal value by the proportional rate,'" and pointed out, "The defendant had already evaluated and notified A and B of their right values according to this calculation method."

Furthermore, the court added, "Excluding the plaintiffs, who were granted the status of officetel sale applicants, from the sale applicants without reasonable grounds after more than two years is to deprive them of the status of officetel sale applicants they had already been granted," and "This excessively infringes on the plaintiffs' property rights and legitimate expectations."