A brake is expected to be put on the non-residential sales market, which had been awash in false information. Unlike dwellings, which are subject to limits on exaggerated sales information, the non-residential market had no penalties for exaggerated or false sales claims, allowing unfounded messages to spread unchecked, such as that lifestyle lodging facilities ("saengsuk") can be used for residential purposes or that officetels and Knowledge Industry Complexes guarantee high returns. As victims continued to emerge, the National Assembly decided to put in place mechanisms to strengthen training and oversight during sales for buildings other than dwellings.
According to the National Assembly's bill information system on the 2nd, 11 lawmakers including Son Myung-soo of the Democratic Party of Korea proposed on the 30th the partial amendment bill to the Act on the Sale of Buildings.
The amendment would require a sales business operator who seeks an agent to conduct building sales to hire someone qualified under law, and it centers on introducing obligations to educate, manage, and supervise sales agents. It also mainly prohibits sales business operators and sales agents from providing false or exaggerated information, as well as engaging in false advertising or coercive solicitation, when selling non-residential properties.
New provisions were also created for penalties and fines against those who induce or force others to purchase building units by conveying false or exaggerated facts, or those who engage in unfair labeling or advertising.
The reason for seeking to amend the law on the sale of non-residential properties is that victims have continued to emerge as false information floods sales of buildings other than dwellings. While apartments and the like are legally barred from providing exaggerated information at the time of sale, rules related to the sale of non-residential properties are lacking.
Explaining why he proposed the amendment, lawmaker Son said, "There have been calls to overhaul the system governing sales agency and labeling and advertising for the non-residential sector."
In fact, damage from false advertising for non-residential sales is growing into a social problem. In the case of lifestyle lodging facilities, there have been instances where victims arose after promotions claimed that "if you sign a contract by including a lodging consignment operator, there is no problem and residential use is possible." Commonly called "residences," these facilities provide hotel-style amenities and services while allowing cooking. Operating without filing a lodging business report, or using them for residential purposes, is not allowed. However, as the number of victims of "saengsuk" increased, the government ultimately eased regulations to allow residential "saengsuk" to be converted into officetels or to require filing a lodging business report.
Knowledge Industry Complexes likewise often leave buyers disappointed after they purchase based on false ads promising a guaranteed rental revenue rate of 20% or an actual occupancy rate of over 90%. According to the Korea Industrial Complex Corporation (KICOX), as of the first half of this year, about 40% of the 1,066 Knowledge Industry Complexes completed nationwide remain vacant.
If the newly proposed amendment passes the National Assembly, transparency in the non-residential sales market is expected to improve, reducing consumer harm. Son explained that the amendment "establishes requirements and obligations for sales agents, sets out prohibited acts, and stipulates matters to be observed in building labeling and advertising as well as management and oversight measures by permitting authorities for such labeling and advertising." He also said, "By having permitting authorities continuously manage and supervise the work of sales agents, while formulating policies related to sales agency and measures to protect consumers, we can prevent sales damage for buildings other than dwellings."