CONTENTS
- 1. Act on the Improvement of Urban Areas and Residential Environments | Definition
- - Purpose and Types of Improvement Projects
- - Key Parties and the Subjects of Regulation
- 2. Act on the Improvement of Urban Areas and Residential Environments | Major Types of Violations and Penalties
- - Acceptance of Money or Valuables by Association Officers and Others
- - Provision of Money or Valuables in Relation to Contractor Selection
- - Unregistered Improvement Project Management Business
- - Violations Related to the Management and Disposal Plan and Association Operation
- 3. Act on the Improvement of Urban Areas and Residential Environments | For Associations
- - Key Points for Associations to Review
- 4. Act on the Improvement of Urban Areas and Residential Environments | For Association Members
- - Key Points for Association Members to Review
- 5. Act on the Improvement of Urban Areas and Residential Environments | The Need for Legal Advisory
- - Daeryun's Legal Response System
1. Act on the Improvement of Urban Areas and Residential Environments | Definition
The Act on the Improvement of Urban Areas and Residential Environments is a statute that governs the procedures and the relationships of rights in improvement projects, with the aim of upgrading residential conditions in areas crowded with aging and substandard buildings and restoring urban functions.
It provides the legal basis for managing a range of improvement projects in an orderly way, including redevelopment projects, reconstruction projects, and residential environment improvement projects.
The Act also governs the rights and duties of the parties involved in an improvement project, such as associations, association members, contractors, and improvement project management agents.
Because an improvement project ties together a wide range of interests, including ownership of land and buildings, contribution charges, and development gains, any procedural breach or unlawful act may lead to an administrative disposition or criminal punishment.
Purpose and Types of Improvement Projects
Under Article 2 of the Act on the Improvement of Urban Areas and Residential Environments, improvement projects fall into three broad types: redevelopment projects, reconstruction projects, and residential environment improvement projects. The legal standards that apply differ according to the purpose of each project and the characteristics of the target zone.
An improvement project is a project carried out in areas crowded with aging and substandard buildings, in order to upgrade the urban environment and improve residential conditions.
▶ Residential environment improvement project
▶ Redevelopment project
▶ Reconstruction project
Association-based improvement projects, such as redevelopment and reconstruction, generally proceed through designation of the improvement zone, establishment of the association, approval of the project implementation plan, and approval of the management and disposal plan.
Throughout this process, a variety of legal standards apply, including the requirements for establishing the association, the procedure for selecting the contractor, the preparation of the management and disposal plan, and the calculation of contribution charges.
Key Parties and the Subjects of Regulation
The Act on the Improvement of Urban Areas and Residential Environments aims not only to demolish aging buildings and construct new ones, but also to restore the functions of the city and improve residents' living conditions.
Because an improvement project can generate substantial development gains, the Act contains a range of provisions intended to secure transparency in the operation of the association and to protect the interests of its members.
For a project to move forward, the consent of the owners of land or buildings within the zone, or of holders of superficies rights (landowners and others), is a required step.
Through this process, a relationship of rights and duties forms between the project implementer leading the project (the association, the mayor or county governor, the Korea Land and Housing Corporation, and others) and the landowners and others.
Here, a breach of the consent rate or the procedures set by law may give rise to disputes over the validity of project implementation, such as nullity or revocation, as well as questions of damages and criminal liability.
2. Act on the Improvement of Urban Areas and Residential Environments | Major Types of Violations and Penalties
Violations of the Act on the Improvement of Urban Areas and Residential Environments tend to arise in the following areas.
∙ Provision of money or valuables in the course of selecting the contractor
∙ Unlawful business activity by improvement project management agents and others
∙ Unlawful acts related to the management and disposal plan and the operation of the association
The provision of money or valuables during the operation of an association and corruption in selecting the contractor are treated, in particular, as serious crimes subject to criminal punishment.
Acceptance of Money or Valuables by Association Officers and Others
Officers of an improvement project association, members of a promotion committee, improvement project management agents, and others must not accept or demand money or valuables in connection with their duties.
Urban Improvement Act, Articles 132 and 135 | Penalty |
Where an association officer or similar person accepts, demands, or promises money or valuables in connection with their duties | Imprisonment for up to 5 years or a fine of up to 50 million won |
Because the operation of an association directly affects the property rights of its members, misconduct by association officers is punished strictly.
Provision of Money or Valuables in Relation to Contractor Selection
The law prohibits construction companies and others from providing money, valuables, or entertainment to association officers or members during the contractor selection process.
Urban Improvement Act, Articles 132 and 135 | Penalty |
Where money, valuables, entertainment, or the like is provided in relation to contractor selection | Imprisonment for up to 5 years or a fine of up to 50 million won |
Conduct of this kind is regarded as a leading example of an unlawful act that undermines the fairness of an improvement project.
Unregistered Improvement Project Management Business
The improvement project management business provides specialized support for improvement project procedures, and it may be carried on only after meeting certain registration requirements.
Carrying on this business without registration may result in the following penalties.
Urban Improvement Act, Article 137 | Penalty |
Where the improvement project management business is carried on without registration | Imprisonment for up to 2 years or a fine of up to 20 million won |
An improvement project management agent who allows another person to carry on business under this Act using the agent's own name or trade name, or who lends out a registration certificate, may also be subject to punishment.
Violations Related to the Management and Disposal Plan and Association Operation
The management and disposal plan is the core procedure in an improvement project that fixes the rights and contribution charges of each association member.
In the course of this process, the following unlawful acts can become an issue.
∙ Breach of the management and disposal plan procedure
∙ Breach of the association general meeting resolution procedure
∙ Misconduct in the association's accounting and operations
∙ Breach of the association's information disclosure duty
Carrying out a transfer without approval of the management and disposal plan, pursuing material statutory matters at one's discretion without a general meeting resolution, or falsely disclosing documents subject to disclosure may, in particular, be subject to criminal punishment.
Other procedural breaches may likewise lead to an administrative disposition or a dispute over the validity of project implementation.
3. Act on the Improvement of Urban Areas and Residential Environments | For Associations
Under the Act on the Improvement of Urban Areas and Residential Environments, an improvement project association is the central party carrying out the project, and it bears responsibility for protecting members' property rights and conducting the project lawfully.
After the association is established, key procedures such as the project implementation plan and the management and disposal plan must meet the requirements set by law and regulation.
Key Points for Associations to Review
An association should review the current operating structure of its improvement project with attention to the following points.
ㆍ Whether the contractor selection procedure was conducted lawfully
ㆍ Whether the project implementation plan and the management and disposal plan were prepared lawfully
ㆍ Whether the association general meeting and resolution procedures meet the standards set by law
ㆍ Whether the association's accounting and finances are managed transparently
ㆍ Whether procedures are in place to respond to members' requests for information disclosure
ㆍ Whether contracts with improvement project management agents and cooperating firms were concluded lawfully
An improvement project is a large-scale undertaking that runs over several years, and sometimes several decades, so securing procedural lawfulness from the early stages carries real weight.
4. Act on the Improvement of Urban Areas and Residential Environments | For Association Members
In an improvement project, an association member is, in principle, a landowner or similar person within the zone who meets the statutory qualifications for membership, and is a direct stakeholder in the project.
In practice, however, disputes of the following kinds often arise during the project.
∙ Disputes over association establishment consent forms
∙ Questions about the fairness of the contractor selection process
∙ Disputes over the management and disposal plan and the calculation of contribution charges
∙ Questions about transparency in the operation of the association
Key Points for Association Members to Review
An association member should monitor the progress of an improvement project with attention to the following points.
ㆍ Whether the association general meeting resolution procedure meets the standards set by law
ㆍ Whether the contribution charges under the management and disposal plan are calculated appropriately
ㆍ Whether the association's accounting and the spending of project costs are conducted transparently
ㆍ Whether the association responds lawfully to requests for information disclosure
Because improvement project disputes directly affect members' property rights, legal review is needed at each stage of the project.
5. Act on the Improvement of Urban Areas and Residential Environments | The Need for Legal Advisory
Disputes under the Act on the Improvement of Urban Areas and Residential Environments often involve administrative procedures, civil disputes, and criminal cases all at once.
The direction of the initial response should be set carefully, particularly in situations such as the following.
∙ Corruption by association officers and criminal investigations
∙ Lawsuits to revoke the management and disposal plan
∙ Disputes related to contractor selection
∙ Damages disputes related to the operation of the association
Because an improvement project involves a great many stakeholders and a large project scale, the legal response calls for specialized review.
Daeryun's Legal Response System
Drawing on its experience handling disputes in improvement projects such as redevelopment and reconstruction, Daeryun provides systematic legal services for cases under the Act on the Improvement of Urban Areas and Residential Environments.
ㆍ Response to criminal cases involving association operations and officer corruption
ㆍ Response to administrative litigation concerning the management and disposal plan and the project implementation plan
ㆍ Response to damages claims and civil disputes related to improvement projects
ㆍ Legal advisory on improvement project contracts and project structure
Improvement project disputes often combine administrative procedures with civil and criminal liability, so systematic legal review is needed from the earliest stage of a case.
If you are concerned about legal risk in an ongoing improvement project, you may have your case assessed through a 🔗legal consultation booking with a construction and real estate specialist attorney.
