[Edaily Reporter KIM HYUNG-HWAN ] A dispute continues as tenants of commercial spaces in the Eunma Apartment complex in Daechi-dong, Gangnam-gu, Seoul, are demanding relocation compensation of approximately 100 million won—equivalent to the key money levels from 10 years ago. Although current law does not mandate compensation for business losses or relocation expenses for tenants of commercial spaces in redevelopment projects, it is common practice to pay relocation compensation due to concerns over project delays. In this regard, some are calling for the government to step in as a mediator to resolve the conflict.

According to the redevelopment industry on the 16th, merchants at the Eunma Commercial Complex have formed an emergency response committee to demand relocation expenses and other compensation. The amount they are demanding is expected to reach approximately 100 million won per store—equivalent to the business transfer fee paid 10 years ago. They stated, “We have lived here for 30 years, making this our home,” adding, “We will stand united and prevail until we receive appropriate compensation.”

Conflicts over relocation compensation for commercial tenants are occurring across the country. A prime example is the Namseoul Apartment complex in Singil-dong, Yeongdeungpo-gu, Seoul. At that apartment complex, conflicts persisted over compensation for commercial tenants’ relocation, leading some merchants to file a lawsuit seeking to invalidate the management and disposition plan. As a result, while voluntary relocation concluded in July 2023, demolition work could not proceed until September 2024. The reconstruction project in the Namsan 4-5 District in Daegu also faced conflict as some tenants demanded compensation; they eventually relocated after receiving a consolation payment from the construction company.

The lack of a legal basis is cited as the reason for these ongoing conflicts over relocation expenses. Redevelopment projects are governed by the Urban Renewal Act. Under this act, land or buildings may be compulsorily acquired for the project, and the Land Compensation Act is applied by analogy in this process. Since this process forces tenants to lose their living and business foundations, the system requires that tenants be provided with statutory compensation for losses such as housing relocation expenses, moving costs, and business losses.

On the other hand, reconstruction projects—which involve demolishing and rebuilding existing apartment complexes—are largely private-sector ventures and therefore do not fall under the Land Compensation Act. In 2014, the Supreme Court ruled that the loss compensation provisions applicable to redevelopment projects could not be applied to reconstruction projects.

Consequently, the issue must be resolved through relocation payments in the form of settlement agreements. If the project is delayed, financial costs naturally increase, placing a burden on the members’ contributions. It is better to reach an agreement with commercial tenants and provide them with a certain level of compensation to facilitate their relocation. An official in the urban renewal industry explained, “From the association’s perspective, it would be best to pay compensation and expedite the construction schedule as much as possible.”

The Eunma Apartment Reconstruction Association maintains that compensation is difficult to provide. The association is pushing forward with the project with the goal of relocation in the first half of next year, and the commercial tenants must also complete their relocation during the same period. The association argues that it is difficult to pay relocation expenses because, under current law, there are no provisions for financial compensation—such as business compensation or moving expenses—related to relocation in reconstruction projects.

Experts emphasized that the government should step in to act as a mediator between the association and the emergency committee. Seo Jin-hyung, a professor in the Department of Real Estate and Legal Affairs at Kwangwoon University, stated, “While it is difficult to impose mandatory guidelines regarding private property in the absence of a legal basis, the district office or similar authorities should step in to act as mediators,” adding, “This would allow conflicts to be resolved as quickly as possible should problems arise.”