The court has ruled that after registering ownership, it is possible to register as a construction rental business operator even if the building was actually rented out after it was built for lease purposes.
The Seoul Administrative Court Administrative 13th Division (Chief Judge Park Jeong-dae) recently announced that it ruled in favor of the plaintiff in a lawsuit in which Mr. A filed a lawsuit against the Seoul Mapo District Office, requesting the cancellation of the rejection of the change in registration information for a rental business operator.
In October 2002, Mr. A received a construction permit and built an officetel. The following year in December, he completed the registration of ownership rights for a total of 364 units. Ownership registration is the process of creating the first registration record for a specific real estate property and indicating ownership.
Until March 2019, Mr. A registered all units as privately purchased rental housing. Private rental housing is classified as private construction rental housing or privately purchased rental housing depending on whether the building was built or purchased.
However, in September 2022, Mr. A applied to change the ‘housing classification’ in his business registration information from privately purchased rental housing to private construction rental housing in order to become a construction rental business operator. However, the district office rejected his application based on guidelines from the Ministry of Land, Infrastructure and Transport.
Mr. A argued that he had not registered as a rental business operator until after completing the registration of ownership rights, and there was no way to know if the officetel was actually built for rental purposes. The district office stated that “registration as a construction rental business operator is only possible until the registration of ownership rights is completed.”
However, the court’s judgment was different. The court stated that “the guidelines of the Ministry of Land, Infrastructure and Transport are just internal standards of the administrative agency and do not have binding force externally.” It also deemed that “Mr. A can be sufficiently recognized as having built the officetel for rental purposes, as he had not sold any units and had used all of them for rental purposes until the time of the trial.”
The court concluded that “it is not necessary to register as a rental business operator until the registration of ownership rights in order to classify it as private construction rental housing.” It also stated that “the relevant laws define private construction rental housing as a ‘unit built by a rental business operator for the purpose of renting,’ without providing specific criteria.”