It has been confirmed through reporting that some of the land equity in the Apgujeong District 3 of Seoul, which is undergoing reconstruction, is registered as owned not by the members of the association but by the Seoul Metropolitan Government, Hyundai E&C, and HDC Hyundai Development Company.
Apgujeong District 3 is an area designated by the Seoul Metropolitan Government as a special planning zone, with a total area of 360,187.8 square meters and currently housing 3,946 units. It includes Hyundai’s 1st to 7th, 10th, 13th, and 14th projects and is located in the center of the six Apgujeong apartment districts.
The problematic parcels of land for Hyundai’s 3rd and 4th projects consist of 9 sites with a total area of 40,706.6 square meters, of which 4,655.2 square meters (11.4%) is owned by the Seoul Metropolitan Government. Additionally, approximately 29,367.9 square meters (72.1%) is held by Hyundai E&C and HDC Hyundai Development Company. Considering the equity ratio and market value of the land owned by the city and the construction companies, it is about 2.6 trillion won. What is even more puzzling is that if you combine the 83.5% land equity owned by the Seoul Metropolitan Government and the two construction companies with the equity of the association, the total equity rate exceeds 100%.
In order to sort out the equity structure of this site, legal battles between the association, the Seoul Metropolitan Government, Hyundai E&C, and HDC Hyundai Development Company are inevitable, raising the possibility of significant delays in the reconstruction schedule. To explain why parts of the land equity of the apartments where residents have lived for decades are owned by the Seoul Metropolitan Government and construction companies, one must go back to 1975, when these apartments were first sold. Some association members claim that Hyundai E&C did not properly organize the equity when developing the Apgujeong apartment complex and made donations of equity that they did not even possess to the Seoul Metropolitan Government.
According to the maintenance industry on the 15th, the members of the Apgujeong Hyundai 3rd and 4th projects and the Apgujeong 3 Reconstruction Maintenance Business Association are reviewing legal procedures such as lawsuits against the Seoul Metropolitan Government, Hyundai E&C, and HDC Hyundai Development Company.
An official from the maintenance industry noted, "During the 1970s, Hyundai E&C and Korea Urban Development (the predecessor of HDC Hyundai Development Company) did not properly handle the land equity issues and are currently in a state of ownership of the land under their company name instead of transferring it to the members of the association. Some of the land was transferred to the Seoul Metropolitan Government as contributed acceptance, and when combining those lands, the total equity exceeds 100%." Typically, if you look at the land registration of an apartment building, the 'Gapgu' section, which provides information regarding ownership, lists the owners of the apartments in this parcel as joint owners. However, there are third parties, such as Hyundai E&C, listed here.
Apartments and other multi-family housing have a structure where each co-owner shares a certain proportion of the land and buildings. All of these shares must total 100% for the entire building and land. When conducting reconstruction or maintenance projects, the land and building equity of each member must be confirmed in order to move forward with the project. If the equity exceeds 100%, it becomes difficult to proceed with reconstruction, methods like management disposal approval may not advance, and disputes over property rights among owners could arise, potentially resulting in a failure to conduct the preceding transfer.
The parcels of land related to the equity issues are 9 plots including Apgujeong 462, 462-1, 462-2, 466, 478, 464, 464-1, 465, and 467-2. The total area is 40,706.6 square meters (approximately 12,335.3 pyeong). Hyundai E&C holds approximately 7,941 pyeong (valued at 2 trillion won), Korea Urban Development holds about 942.8 pyeong (2.4 billion won), and the Seoul Metropolitan Government has 1,408.2 pyeong (about 3.5 billion won).
In light of these issues, the Seoul Metropolitan Government's Housing Division has instructed to resolve it through legal means such as lawsuits. In a response to inquiries related to this, the division stated, "There are limitations in confirming and reviewing the reasons for the situation where the land rights exceed 1, and even if reasons are found, given that the current land rights exceed 1, the issue must be addressed through methods such as rectification registration or lawsuits."
However, the land registered as property of the Seoul Metropolitan Government is not subject to prescription acquisition for more than 20 years under the State Property Act, which poses significant legal disputes. While civil law recognizes ownership after 20 years of possession of another's property, state property is an exception.
Kim Ye-rim, representative attorney at the law firm Simok, stated, "If the equity exceeds 100% clearly due to an error in over-registration, it can be resolved through rectification registration, but if the ownership is unclear, the issue can only be resolved through lawsuits."
A representative from Hyundai E&C said, "We were not aware of this situation at the headquarters and are currently assessing the situation centered around the site." According to the Financial Supervisory Service, Hyundai E&C's investment real estate scale is listed at 369.548 billion won. It is analyzed that land assets in Apgujeong District 3 have been omitted from the records. If assets are omitted, the basis for claiming rights to this land may diminish if a lawsuit is filed in the future.
Lee Jun-il, a professor in the Department of Accounting and Taxation at Kyunghee University, stated, "Not being aware of significant assets regarding their market value due to omissions in the accounting records indicates a major problem with the corporation's internal capabilities," and added, "This could also impact the corporation's asset value and the reliability of accounting and disclosures."