Residents Moved In, But No Ownership Granted... Hillstate Gwanak Blocked by Additional Shared Costs

Prolonged Partial Completion for Hillstate Gwanak
District Office Issues Corrective Order Over Violation of Proportional Rate Principle
Acquisition Tax Imposed on 22.5 Billion Won Despite Illegality Concerns

In Gwanak-gu, Seoul, the Hillstate Gwanak Cent Ciel apartment complex has not received the completion approval from the local government for the second year since residents moved in. The official notice of transfer, which would allow residents to obtain ownership, has also not yet taken place. This is because the district office has raised objections regarding the calculation of an additional 22.5 billion won in shared costs. The association responsible for resolving this issue has yet to present a solution. It is highly unusual for a completed apartment complex to go more than a year without receiving completion approval due to administrative shortcomings related to shared costs. Residents who are unable to obtain ownership are reporting difficulties, claiming they are being disadvantaged in leasing or selling their units.

HILLSTATE Gwanak Cent Ciel Perspective View.

According to the maintenance industry on March 4, Hillstate Gwanak completed move-in at the beginning of last year, but has still not received full project completion approval or completed the notice of transfer. Only some sections, such as the multi-family housing and ancillary welfare facilities, have received partial completion approval. While there are no issues regarding the use of the buildings, it means the overall project procedures have not been finalized.

Typically, a redevelopment project is completed after going through a series of steps: project implementation approval, management and disposal plan approval, commencement of construction, completion approval, notice of transfer, and finally liquidation. The notice of transfer, in particular, is the final stage of the project, officially cancelling previous property rights and confirming ownership of the new apartment units. If the full completion approval and transfer notice are not carried out, subsequent procedures such as cost settlements and confirmation of rights can be restricted.

The delay in the notice of transfer stems from the local government’s determination that the calculation method for the 22.5 billion won in additional shared costs was incorrect. At a general meeting in December 2024, the association’s executive body at the time approved a resolution on how to pay the additional shared costs, reflecting about 14 billion won in extra construction costs for Hyundai Engineering & Construction, 6 billion won in corporate tax, and 3 billion won in contingency funds, totaling 22.5 billion won. This would require each association member household to pay an additional 32.9 million won.

At the time, the association did not apply the internally set proportional rate of 88%, but instead calculated the shared costs using an internally determined adjustment coefficient based on the value of rights. The proportional rate refers to the share that a member is entitled to in the new apartment, and applying an adjustment coefficient can result in differences in the amount each household pays. In principle, when project costs change, the proportional rate should be recalculated through an amendment to the management and disposal plan and uniformly applied to all members. However, the association calculated the additional costs separately from the proportional rate system.

About 10 months later, in August 2025, Gwanak District Office, the relevant local government, issued a corrective order, stating that the calculation method could potentially violate the Urban and Residential Environment Improvement Act. The district argued that any increases in project costs should be reflected in the overall proportional rate through amendments to the management and disposal plan, and that imposing additional shared costs through a separate resolution could violate the principle of equity. The application of the adjustment coefficient was also criticized for potentially distorting the burden among association members.

After the corrective order, the association held a board of delegates meeting in November of last year and selected a business management services company to establish a new management and disposal plan. However, as of now, the application for approval to change the management and disposal plan has not been submitted. As the project remains partially completed, it is difficult to set up collateral, causing some residents to worry about possible increases in bridging loan interest rates.

Some association members filed complaints regarding the calculation of the additional shared costs starting in December 2024. In January of last year, the Housing Division of Gwanak District Office sought legal advice on whether the issue violated the Urban Redevelopment Act and conducted an internal review.

There is also considerable dissatisfaction regarding the acquisition tax imposed in February of last year. Residents argue that it is difficult to accept the district office’s decision to levy acquisition tax based on an additional shared cost that it itself judged to be potentially illegal. One resident said, "I have been filing complaints since the end of 2024, but at the time I was told there was nothing the authorities could do as supervisors. It is also hard to understand why the corrective order was issued much later, and why the disputed amount was included in the tax base."

Delays in the transfer of ownership are also causing problems for residents who wish to lease or sell their units. Even if they offer their units for lease, tenants are finding it difficult to obtain loans from top-tier financial institutions. A nearby real estate agent explained, "Financial institutions are hesitant to lend for properties that are not yet registered. There are inquiries about leasing, but when we explain the registration delay, some clients hesitate to proceed with contracts."

This content was produced with the assistance of AI translation services.