'Chaotic Moa Town'... Jungnang-gu Cooperative Files 700 Million Won Lawsuit Against Joint Operator

Myeonmok Station 3-1 Cooperative Files for Return of Unjust Enrichment Against Handah General Construction
122 Moa Town Sites Designated in Seoul... Systemic Flaws Fuel Ongoing Disputes

A legal dispute has arisen at a Moa Town project site, which is being promoted by the Seoul Metropolitan Government to renovate aging low-rise residential neighborhoods. Within the Moa Town district, the street housing redevelopment association has filed both civil and criminal lawsuits against a company selected as a co-executor, seeking the return of service fees totaling over 700 million won.

This lawsuit marks the first case where conflicts over the co-executor model, which many Moa Town projects in Seoul have adopted, have surfaced publicly. It is also drawing attention as a small association with only about 100 members has filed suit against the number one company in Seoul in terms of Moa Town co-executor project wins.

Seoul Mayor Oh Se-hoon is examining the status of the site at a Moa Town project location in Seoul. Provided by Seoul City.

According to the Myeonmok Station 3-1 District Street Housing Redevelopment Association (Myeonmok Station 3-1 Association) in Myeonmok-dong, Jungnang-gu, on March 21, the association has filed a lawsuit with the 12th Civil Division of the Seoul Northern District Court against Handa General Construction Co., Ltd. and former CEO Kim, seeking the return of 734.03 million won as unjust enrichment.

The Myeonmok Station 3-1 District (7,434.70㎡) is one of the Moa Town project sites (88,040㎡ in the area of 152-1 Myeonmok-dong) designated by the Seoul Metropolitan Government and Jungnang-gu. Under the “Special Act on the Maintenance of Vacant Houses and Small-Scale Housing,” multiple street housing redevelopment associations are consolidated into a single Moa Town project site.

Association: “Not qualified, procedural violations” VS Co-executor: “No legal flaws”

The association claims that Handa General Construction does not meet the “construction business operator” requirement stipulated by the Small-Scale Housing Maintenance Act. In other words, they argue that since the co-executor does not meet the legal qualifications, the contract itself should be considered void.

They also said that the company failed to satisfy the registration requirements for a professional management business in urban maintenance. According to the Enforcement Decree of the Urban Maintenance Act, to register as a professional management business, a corporation must have a capital of at least 500 million won and employ at least five full-time professionals. However, at the time of the contract (June 22, 2023), Handa General Construction’s capital was only 350 million won and it did not employ full-time professionals, according to the association.

The association also argues that paying a service fee as high as 734.03 million won is excessive and unjust, given that the project in this district is still in its early stages and has not yet generated sales. Furthermore, the association claims that Handa General Construction and former CEO Kim demanded the dissolution of both the Myeonmok Station 3-1 and 3-2 associations and their re-establishment as a single entity, pressured the association president and executives to resign, and personally collected resignations—actions that they argue constitute illegal conduct.

In response, Handa General Construction contends that it is a properly registered construction contractor and meets all registration requirements.

Handa General Construction also insists, based on the contract with the association, that the clause stipulating payment as a certain percentage of the total sales revenue means the company shares the risk of project failure. Therefore, they argue, it is unjustified to claim that the co-executor bore no risk and received excessive service fees.

The verdict in the first trial of this case is scheduled for April 23.

Concerns over “Need to address Moa Town management loopholes”

This lawsuit is significant because it has brought to the surface ongoing management issues within the Moa Town initiative. The Seoul Metropolitan Government has set a goal of carrying out extensive renovation of aging low-rise residential areas through the Moa Town project by 2030.

However, due to the nature of small-scale projects, disputes involving external business operators have reportedly recurred from the early stages of association formation. Despite a surge in complaints at project sites, both the Seoul Metropolitan Government and district offices have been criticized for focusing on promoting achievements while labeling the issues as “private matters” and taking a passive stance on resolving complaints.

Experts in urban maintenance point out that smaller project sites tend to have relatively weak oversight by association members, and that there are significant structural limitations that make it difficult to verify contract details during the selection of co-executors, contractors, and partner companies. These systemic risk factors and loopholes are said to be driving conflicts.

Moa Town is one of Seoul Mayor Oh Se-hoon’s core redevelopment policies, aiming to bundle areas of 100,000㎡ or less of aging low-rise residential neighborhoods for redevelopment through small-scale methods such as street housing maintenance and voluntary housing maintenance. As of the end of January this year, 122 sites had been designated in Seoul, with 16 Moa Town projects underway in Jungnang-gu alone—the highest number in the city.

While the Moa Town project has advantages such as simplified procedures and shorter project periods compared to large-scale reconstruction or redevelopment, concerns persist that oversight and supervision during association operations and business operator selection remain weak.

[Right of Reply] Regarding the article "'Moa Town in Chaos'...Jungnang-gu Association Files 700 Million Won Lawsuit Against Co-executor"

This outlet previously reported, in the March 21 article titled "'Moa Town in Chaos'...Jungnang-gu Association Files 700 Million Won Lawsuit Against Co-executor," on the lawsuit filed by the Myeonmok Station 3-1 Association against co-executor Handa General Construction Co., Ltd. and its former CEO, seeking the return of unjust enrichment.

In response, Handa General Construction Co., Ltd. has stated, “This lawsuit was filed by the association president individually, without a resolution from the general assembly or board of directors. Our company registered as a lawful co-executor prior to the enforcement of the relevant maintenance business law, and the resignations of association executives were submitted voluntarily for the purpose of establishing the integrated association, not through coercion or pressure.”

This statement is published in accordance with the mediation decision by the Press Arbitration Commission.

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