Within the Goduk Biz Valley in Gangdong District, Seoul, buyers of the mixed-use complex "Gangdong IPARK The River" have filed a class-action lawsuit against the developer and the builder. They said they signed contracts believing it was a livable "live office" at the time of sale, but later learned it is a business facility where move-in registration is not allowed. The developer and builder countered that they fully disclosed the relevant details during the contracting process.
◇ Sold out even at triple the surrounding prices… "If it were a business facility, we wouldn't have bought it"
On Feb. 5, according to the real estate industry, about 130 buyers of Gangdong IPARK The River are pursuing a lawsuit seeking to cancel their sales contracts and recover payments against the developer JKMiraeGangdong PFV (PFV) and the builder IPARK Hyundai Development, among others.
Gangdong IPARK The River is a large mixed-use facility in Goduk Biz Valley built by IPARK Hyundai Development. It spans six underground floors to 21 above ground, with a total floor area of about 300,000㎡, and business facilities with 591 units were placed on the fourth floor and above. At the time of sale, it was marketed under the concept of a "live office" to tap demand for proximity between work and home.
The crux of the buyers' complaint is that the facility was promoted during sales as effectively a space suitable for residential use. They argue the model home was staged similarly to a regular apartment and that marketing materials emphasized living convenience and residential functions, leading them to naturally perceive it as a residential-type product.
They also say that even if the contract and confirmation documents included language calling it a business facility, that information was displayed in small print and was not adequately explained during contracting.
According to the buyers, at the time of sale they mainly heard explanations that the product could be used for residential purposes, and they recognized that move-in registration was not possible during the process of changing the name and paying the balance after signing the contract. Some said they were told by certain parties that "you can live there as long as you don't file move-in registration" or "you can use it however you want." The buyers say pre-occupancy inspection videos and audio recordings show such explanations were given repeatedly.
The sale price is also in dispute. According to the buyers, when Gangdong IPARK The River was sold in 2021, it was offered at about 50 million won per 3.3㎡. They say that was more than triple the sale price of Knowledge Industry Complex units within the same Goduk Biz Valley. Despite the unusually high price for a business facility, it sold out with an average competition rate of 31.5 to 1 and a peak of 410 to 1.
The buyers argue that market conditions also deteriorated after it became known that residential use would be difficult. Listings with negative premiums appeared, shaking prices, and conditions for group loans worsened. Some contract holders are reportedly facing burdens from interest in arrears and the pressure of provisional seizures.
◇ Developer, builder: "Restrictions specified in the contract and confirmation documents"
The developer and builder, in contrast, say they sufficiently disclosed that it is a business facility during the contracting process. According to the company, the confirmation documents signed by the buyers include the statement "a business facility under the Building Act (not an officetel)." They also specify that move-in registration, cooking, and installation of floor heating are not allowed.
The company says it explained at the time of sale that it is not an officetel and promoted advantages such as not counting toward the number of dwellings and not being subject to resale restrictions. The position is that buyers entered into contracts fully aware of these details before signing.
The key issue in this case is expected to be whether the content stated in the contract and confirmation documents can be recognized as sufficient disclosure, or whether, during sales advertising and consultations, there were circumstances that led buyers to perceive it as a product suitable for residential use.
Seo Jin-hyung, a professor in the Department of Real Estate Law and Administration at Kwangwoon University, said, "In the real estate sales market, disputes are repeatedly arising as gaps emerge among advertising, consumer perception, and the actual contract terms," adding, "In this case as well, it is necessary to look comprehensively not only at the wording of the contract but also at the advertising at the time of sale, the consultation process, and the perceptions formed by the buyers."
Seo added, "The court will make the final judgment, but to reduce similar disputes, businesses should more clearly disclose the legal nature of the product and its restrictions," noting, "buyers also need to carefully check the intended use and restrictions before signing."