Table of Contents
- Significance of Local Housing Cooperative Inspections
- Results of Special Joint Inspection: Illegal Increases in Construction Costs and Unfair Contracts
- Results of Comprehensive Local Government Inspections: Examination of 396 Cooperatives Nationwide
- Dispute Mediation and Direction for System Improvement
- Conclusion: The Need for Strengthening Member Protection and Transparency
- Frequently Asked Questions (FAQ)
Significance of Local Housing Cooperative Inspections
The Ministry of Land, Infrastructure and Transport recently released the results of comprehensive inspections and special joint inspections of local housing cooperatives.
This inspection was an opportunity to closely investigate unfair contracts, excessive demands for construction cost increases, and cases of member damage occurring during the operation of the cooperatives, highlighting the need for system improvements.
Current Status of Local Housing Cooperatives in Busan as of 2024
Results of Special Joint Inspection: Illegal Increases in Construction Costs and Unfair Contracts
During the special joint inspection, inappropriate actions by construction companies were uncovered in 4 out of 8 cooperatives. It was revealed that these companies excessively raised construction costs without contracts. Some companies presented low initial prices during the contract process and later demanded additional costs citing design changes, leading to a burden on the members.
Cases of unfair contracts found in several cooperatives are being pointed out as serious issues.
These include clauses that do not refund administrative fees upon withdrawal from the cooperative, exempting the construction company from liability, and restricting the jurisdiction of lawsuits to certain courts.
Such clauses have a high potential to violate the terms and conditions law, and the Fair Trade Commission is currently in the process of corrective measures regarding these issues.
Results of Comprehensive Local Government Inspections: Examination of 396 Cooperatives Nationwide
Results from inspecting 618 cooperatives across the country showed that 641 violations were found in 396 of them. The most common violation type was insufficient information disclosure, which accounted for 197 cases. This refers to situations where the progress of cooperative projects is not adequately disclosed or where the timing of disclosure is delayed.
Additionally, there were 52 cases of neglecting the obligation to explain during the contract signing process and 33 cases of misleading advertising while recruiting members. There were also 50 cases of violating the resolutions of general meetings and 16 cases of failing to conduct accounting audits.
Of these, 70 cases may lead to criminal complaints, while various administrative actions have been taken, including 280 orders for correction and 22 fines imposed for the remaining violations.
Dispute Mediation and Direction for System Improvement
Some projects have been delayed due to increased construction costs, suspension due to construction companies entering legal management, and insufficient conditions for PF loans. However, solutions have been established through the operation of the Construction Dispute Mediation Committee and amendments to HUG regulations.
The Ministry of Land, Infrastructure and Transport plans to apply strict management standards from the initial stages of member recruitment. Additionally, a comprehensive plan to eradicate unfair contracts, enhance information disclosure, and increase the transparency of cooperative operations is expected to be established by the end of this year.
Conclusion: The Need for Strengthening Member Protection and Transparency
The recent inspections revealed the unfair and illegal practices of local housing cooperatives. Members face significant risks of serious harm due to issues such as refunding contract money, unjustified increases in construction costs, and lack of information disclosure. Therefore, continuous management and supervision by the government and local governments are required.
In the future, institutional improvements to protect honest members and promote normal cooperative operations should be strengthened. These efforts are expected to enhance the credibility of local housing cooperative projects and positively impact residents' housing stability.
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Frequently Asked Questions (FAQ)
Q. What is the main purpose of the local housing cooperative inspections?
To investigate unfair contracts and excessive construction cost increases in local housing cooperatives and promote system improvements.
The inspections conducted by the Ministry of Land, Infrastructure and Transport aim to closely investigate unfair contracts, excessive demands for construction cost increases, and cases of member damage occurring during the operation of the cooperatives. This has highlighted the need for system improvements to protect members' rights by accurately assessing the current situation.
Q. What inappropriate actions by construction companies were discovered during the special joint inspection?
They unjustly increased construction costs without contracts and demanded additional costs after initially presenting a low price.
As a result of the special joint inspection, inappropriate actions by construction companies were found in 4 out of 8 cooperatives. These companies excessively raised construction costs without following normal contract procedures and after presenting a low initial price during the contract process, demanded additional costs later, leading to increased financial burdens for members.
Q. What unfair clauses were found in the cooperative contracts?
Clauses exempting administrative fees from refund, removing liability from the construction company, and limiting court jurisdiction for lawsuits.
Unfair clauses found in the cooperative contracts include provisions that do not refund administrative fees upon withdrawal from the cooperative, exempting the construction company from liability, and restricting the jurisdiction of lawsuits to certain courts. These clauses have a high potential to violate the terms and conditions law, and the Fair Trade Commission is currently in the process of corrective measures regarding these issues.
Q. What main violations were found in the nationwide local government inspections?
Insufficient information disclosure and neglecting contract explanation obligations, false and exaggerated advertising were mainly detected.
In the nationwide inspection of 618 cooperatives, 641 violations were found in 396 cooperatives, with the most common being insufficient information disclosure (197 cases). Additionally, there were 52 cases of neglecting the obligation to explain during the contract signing process, 33 cases of false or exaggerated advertising, and 50 cases of not complying with general meeting resolutions, as well as 16 cases of failing to conduct accounting audits. Administrative penalties and possible criminal complaints are being pursued for these violations.
Q. What measures are being taken to resolve disputes in local housing cooperatives and improve the system?
Operating a dispute mediation committee and amending HUG regulations, applying strict management standards and enhancing transparency.
To resolve disputes arising from increased construction costs and construction companies' legal management, the Construction Dispute Mediation Committee has been established and HUG guarantee regulations have been amended. The Ministry of Land, Infrastructure and Transport plans to apply strict management standards from the initial stages of member recruitment and aims for comprehensive improvements to increase the transparency of cooperative operations and eradicate unfair contracts.
Q. What changes can be expected in the operation of local housing cooperatives based on the results of this inspection?
Strengthening member protection and enhancing transparency in cooperative operations are anticipated.
The necessity for continuous management and oversight by the government and local governments regarding illegal and unfair practices revealed by the latest inspections has become clear. In the future, improvements to protect honest members and facilitate normal cooperative operations should be strengthened, which is expected to boost the credibility of housing cooperative projects and positively impact residential stability for residents.
