The East Village apartments, which were used as accommodations for athletes during the London Olympics in 2012, revealed potential fire safety issues during a comprehensive safety inspection by the government in 2017 due to insufficient non-combustible materials in the internal walls. In response, the Newham Council ordered the construction company and owners to reinforce the walls, replace non-combustible materials, replace fire doors, and improve fire alarms and evacuation routes. The central government (DLUHC) also mandated that the owners and construction company share repair expenses totaling £18 million (about 30 billion won) through legal agreements.
In overseas advanced countries like the United Kingdom and Australia, the government imposes strict sanctions on defect issues arising in residential facilities. However, in Korea, the reality is that most residents must resolve defects occurring after obtaining construction approval through civil lawsuits.
Experts point out that to reduce defects in newly constructed multi-family dwellings, it is necessary to strengthen punitive measures against construction companies and develop plans that enhance the effectiveness of warranty liability for defects.
◇Australia and the UK directly address apartment defect issues
Overseas, strict responses are underway regarding apartment defect issues. In Queensland, Australia, the government imposes sanctions if appropriate repairs are not conducted after defects occur in newly constructed buildings. In the UK, construction companies that are required to provide housing quality guarantees face fines amounting to tens of millions if they do not repair defects immediately after they arise, according to consumer protection laws. In the United States, some states restrict the use of buildings where serious defects occur.
On the other hand, even if defects in apartments are acknowledged in Korea, there are few ways to intervene if the construction company procrastinates. If a construction company fails to perform repairs for defects, the Minister of Land, Infrastructure and Transport or local government heads can impose fines of up to 10 million won under the Multi-Family Housing Management Act. However, this too depends on the discretion of the fine-imposing authority, meaning that fines are not necessarily imposed even if satisfactory repairs are not completed within the deadline.
In Korea, the Housing Act allows for the issuance of use stop or entry prohibition orders if there is a significant risk to the safety of a building, and the Building Act can limit approval for use (residential entry) if there are serious safety or structural defects. However, in reality, this is rarely applied unless a construction inspection is passed without the approval of the construction company or supervising contractor or if collapse, foundation subsidence, or structural damage is discovered.
◇We need to enhance the effectiveness of warranty liability insurance for defects
The warranty liability insurance that construction companies must subscribe to is less effective compared to overseas. Warranty liability insurance is a system that mandates construction companies to be insured for defects for a certain period when constructing new dwellings or apartments.
In the case of Canada, if a defect occurs, housing buyers can report the defect to the provincial insurance agency, which then demands repairs from the construction company. If the construction company does not proceed with repairs, the insurance company can directly mediate and force repairs.
An official from a foreign architecture firm noted, "In Canada, there is a legal warranty system called Home Warranty that mandates warranty for structural defects, waterproofing, electrical and plumbing issues, heating, exterior walls, roofs, and other defects in newly constructed dwellings," and explained, "This protects buyers of new homes from defects that may occur in buildings constructed by the construction company."
He added, "While it may vary by state, construction companies are obligated to repair defects or provide compensation during the warranty period of 3 to 10 years, regardless of whether the defect occurs before or after entry," stating that "In Korea, the Housing Act only stipulates responsibility for repairs of defects, while leaving insurance subscription to the discretion of the construction companies."
Professor Kwon Dae-jung from the Graduate School of Hanyang University stated, "Korea has the most apartments compared to any other country in the world, making it difficult to compare the apartment system to that of overseas countries," yet added, "While Korea has implemented a warranty system for defects, construction companies do subscribe to private warranty liability insurance such as the Korea Housing & Urban Guarantee Corporation (HUG), the scope and amounts of coverage are small, resulting in low effectiveness."
Ultimately, civil lawsuits have become the central method for resolving apartment defect issues in the country. However, there are disadvantages such as relatively low compensation amounts compared to overseas and the lengthy time required.
An official from the overseas construction industry stated, "In countries like the United States and the United Kingdom, collective lawsuits filed by numerous residents are allowed, making collective lawsuits amounting to hundreds of millions to billions possible, and the scope of compensation includes not only repair costs but also damages for living inconveniences and value depreciation," adding, "While defect lawsuits are rampant in Korea, the scope of compensation is limited to repair costs and some damages from delays, making them relatively low."
◇We must strengthen 'proactive responses' to defect issues
In Korea, after significant defect issues such as collapse accidents or loss of life occur, government intervention typically follows. There are opinions that regulations need to be strengthened to prevent defect issues proactively.
Currently, apartment residents in the country must apply for an investigation with the Defect Review and Dispute Mediation Committee to resolve defect issues. However, the mediation committee is a quasi-judicial administrative body that decides on mediation rather than rendering a judgment, reviewing defect scope, repairs, or compensation responsibilities and presenting suggestions for mediation. The problem is that it takes several months to over a year from the submission to the determination of whether there is a defect, during which residents must endure inconveniences caused by the defects.
Ahn Hyung-joon, the president of the Korean Society of High-rise Urban Architecture, stated, "Establishing a separate quality inspection agency designated by local governments or the Ministry of Land, Infrastructure and Transport that has expertise in defect-related matters is one way to reduce occurrences of defects," and emphasized the need for institutional contemplation towards prevention, rather than reactive measures after the damage is done.
It has also been pointed out that construction companies must prepare measures against issues related to overbidding and communication with foreigners to prevent apartment defects.
An industry official stated, "If defects occur in apartments, the construction company's credibility declines, impacting sales competitiveness and financial soundness," adding, "Instead of concealing or downplaying defects, construction companies should introduce a building recall system that transparently discloses the causes and measures for defects, similar to automotive recalls, to enhance trust from customers."