[Supreme Court Ruling]
The CEO and the corporation of a real estate development company have received a finalized sentence of a fine for supplying unsold apartment units, which became available after the contract was not concluded with the successful applicants, to family members or acquaintances without going through a public recruitment process.
The Supreme Court's Criminal Division 2 (Presiding Justice Kwon Youngjun) on June 26 upheld the lower court's ruling that sentenced CEO B and Vice President C of real estate developer A, who were indicted for violating the Housing Act, to a fine of 7 million won each (Case No. 2024Do16888). Corporation A was fined 5 million won, and two family members or acquaintances of B who received the apartment units were each fined 3 million won.
[Facts of the Case]
Company A entered into a land trust agreement for the construction and supply of an apartment in Suncheon, Jeollanam-do, and received approval for the recruitment announcement from Suncheon City Hall in October 2020, after which it issued a recruitment announcement for residents. The eligibility criteria for general supply applicants for this apartment were individuals aged 19 or older residing in Suncheon, Jeollanam-do, or Gwangju Metropolitan City. In November 2020, the application and preliminary resident selection procedures were completed, and sales contracts were signed. The competition rate for general supply applications for this apartment was 46 to 1, and the competition rate for unsold units was 70 to 1. A total of 95 unsold units, which resulted from cancellation of winning applications or contract abandonment, were supplied in order to 75 preliminary residents. The remaining 20 units were left unsupplied as there were no more preliminary residents.
The prosecution indicted B, who was in charge of the overall apartment project, and C, who was in charge of sales, on the grounds that they should have supplied the remaining 20 unsold units through a public recruitment process, but instead arbitrarily supplied them to family members or acquaintances. The prosecution argued that this constituted supplying housing constructed and supplied under the Housing Act by false or dishonest means.
[Lower Court Rulings]
The first trial found B and others guilty. The first-instance court stated, "It is reasonable to view that B and C, by supplying the 20 units of this apartment, which had no prospective residents, not through public recruitment but arbitrarily to themselves or to the family members or acquaintances of directors and service providers, supplied the housing by false or other dishonest means."
The appellate court also found the first-instance ruling reasonable and dismissed the appeals of B and others.
[Supreme Court Ruling]
The Supreme Court also accepted the lower court's judgment and dismissed the appeal. The bench stated, "The 'Regulations on Housing Supply' distinguish between the supply procedures for unsold units and for uncontracted units." The court explained, "Article 28, Paragraph 10, Subparagraph 1 of the regulations stipulates, 'If there are unsold units after selecting residents, residents may be selected on a first-come, first-served basis,' thus providing an exception for selecting residents for unsold units, that is, for units remaining after the number of applicants did not reach the supply volume."
The court continued, "In contrast, Article 26, Paragraph 5 of the regulations states, 'If among those selected as residents, there are those whose selection is canceled, who do not conclude a supply contract, or who terminate the contract, after a certain period, the units shall be supplied in order to preliminary residents, and if there are no preliminary residents, the business entity may establish a supply method to supply the units by public recruitment on a one-person-one-household basis for adults.' This sets out the supply procedure for uncontracted units, that is, for remaining units that arise due to subsequent reasons such as failure to conclude a contract, cancellation, or termination, even though the number of applicants met the supply volume."
The court added, "Therefore, if uncontracted units arise and there are no preliminary residents, the business entity must establish a supply method that complies with the procedure of 'public recruitment on a one-person-one-household basis for adults' and supply the uncontracted units accordingly."
The bench stated, "The fact that defendants B and C supplied the units arbitrarily to themselves or to family members or acquaintances of directors and service providers without the public recruitment procedure constitutes 'supplying housing by false or other dishonest means' as stipulated in Article 65, Paragraph 1 of the Housing Act. Therefore, the lower court's finding of guilt on the charges against the defendants does not involve any misunderstanding of the law."
Hong Yoonji, Legal Times Reporter
※This article is based on content supplied by Law Times.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
