The 'Magok Lotte Castle Le West', which was distributed as a lifestyle accommodation facility in 2021, is undergoing re-distribution as an officetel. A total of 767 units from canceled contracts have become part of the re-distribution stock. Lotte Castle Le West was converted to officetel status in November of last year, and before and after that, 88% of the contracts were canceled.
According to the construction and maintenance industry on the 25th, the 'Lotte Castle Le West' in Magok-dong, Gangseo-gu, Seoul, began its re-distribution on the 21st. From a total of 876 units across 5 buildings, ranging from 6 underground floors to 15 above ground, 767 units from canceled contracts have been re-distributed. When distributed as a lifestyle accommodation facility in August 2021, the subscription competition ratio was recorded at 657 to 1. The implementing company is Magok MICE PFV, with Lotte Construction as the major shareholder.
Lotte Castle Le West has faced ongoing turmoil due to false advertising controversies, poor construction, and delays in occupancy. The subscribers claim that the implementing company made false advertisements stating that residence was possible at the time it was originally distributed as a lifestyle accommodation facility, and they have been engaged in legal disputes seeking contract cancellation since April of last year. The government stated that lifestyle accommodation facilities are not for residential use as of 2023, and if the change of use is not implemented, a coercive penalty of 10% of the property's assessed value will be imposed.
The Seoul Metropolitan Government seemed to conclude the conflict when it allowed a change of use to officetels for the first time in the country last November. Magok MICE PFV donated 20 billion won to secure parking lot space. However, thereafter, defect issues were raised by the subscribers, leading to refusals to move in and to pay interim payments and remaining balances. In January, Lotte Construction notified 650 subscribers of contract cancellations, and the subscribers filed for provisional seizure of the right to apply for the transfer of ownership. The court accepted this.
Lotte Construction announced that the refund from the contract cancellation amounts (159.3 billion won) belongs to Magok MICE PFV, according to the real estate distribution contract. The interim payments were made by Lotte Construction as substitutionary payment. Lotte Construction did not disclose the specific amount of the substitutionary payment. The re-distribution price remains the same. The original price of 1.59 billion won for a 74㎡ unit will be applied to the re-distribution.
A Lotte Construction official noted, "Magok MICE PFV completed the change of use to officetel by investing over 20 billion won at the request of the contractors, and also provided support measures such as covering the interest on interim payments and granting some extensions for the remaining balance." He added, "We have canceled the contract based on the contractual action and intend to proceed with the main litigation."
An industry official stated, "It seems that the subscribers will take legal action regarding Lotte Construction's decision," and noted, "The possibility of legal battles prolonging may impact the re-distribution."