'Uncontracted Apartment' Supplied to Family and Acquaintances by Developer CEO… Fine Confirmed

[Financial News] The CEO of a development company and others have been confirmed to receive fines for supplying leftover apartment subscription units from canceled contracts or forfeited agreements to family or acquaintances without going through public recruitment procedures.
According to the legal community on the 3rd, the Supreme Court's 2nd Division (Presiding Judge Kwon Young-jun) confirmed the original judgment that sentenced CEO A and Deputy CEO B, who were indicted for violating the Housing Act, to a fine of 7 million won each.
The company, which was jointly indicted under the dual punishment regulation, was fined 5 million won, and acquaintances who received apartments from A and B were fined 3 million won.
A and B, after the completion of the joint housing subscription process in Suncheon-si, Jeollanam-do in November 2020, supplied 95 unsold units left due to canceled contracts or forfeited agreements to 75 preliminary occupants in order. When no more preliminary occupants were available, 20 units remained, which they were accused of supplying arbitrarily to family or acquaintances.
A and others claimed that they transparently completed the preliminary occupant supply process and entered into supply contracts on a first-come, first-served basis for the remaining houses, arguing that the housing supply was conducted legally. They cited the housing supply regulations that allow selecting occupants for unsold units on a first-come, first-served basis and allow the project owner to determine the supply method at their discretion if there are no preliminary occupants.
However, the first trial did not accept this claim. The first trial court explained, "The regulation allowing the selection of occupants on a first-come, first-served basis applies to 'unsold' units where no occupants have been selected," and "it is difficult to see that it applies to this case where occupants were selected but supply was not made due to other reasons."
It also pointed out, "It is questionable whether the method of selecting occupants by the project owner in this case can be evaluated as the 'first-come, first-served' method stipulated in the regulations."
Furthermore, it added, "Since the 20 units remained unsupplied due to the absence of further preliminary occupants, there is no need to select preliminary occupants again for the 20 units, and a separate supply method can be determined," but "even in that case, the supply method must still be based on the 'one house per adult' standard and the 'public recruitment method.'"
A and others appealed, but the second trial dismissed the appeal, finding no error in the original judgment.
The Supreme Court also confirmed the original judgment, stating, "When uncontracted housing occurs and there are no preliminary occupants, the project owner must establish a supply method that complies with the 'one house per adult' standard and the 'public recruitment' procedure to supply the uncontracted units."

jisseo@fnnews.com Minji Seo Reporter