「Retail building's subdivision contract related law」 to protect consumers has took effect after it was enacted and proclaimed in October 22, 2004. This law's enactment seems to play an important role in securing the systematic stability of the subdivision market by largely eliminating consumers' investment risk from builder's bankruptcy and preventing previously rampant ill-motivated subdivision business practice. However, there are drawbacks that by mainly focusing on the aim of the law to protect consumers, builders and other related parties have been severely regulated, and, as a result, the law decreased the supply in the subdivision market, and, furthermore, reversely increased consumer's investment risk.
So, this paper will suggest some improvements of problems witnessed in the process of implementing the law by comparing key contents of the law with housing law's subdivision system. First, as part of protecting consumers, the law is amended to increase the subdivision business size, which can be applicable to the law, from over 3,000㎡ to over 5,000㎡, but, builders can
freely choose in terms of a trust agreement or substitute arrangement. In addition, even though, preferred public offering for partial ownership of over 1000㎡ floor size is allowed with regard to attracting key tenants, builders are allowed to have a free choice including a private contract, considering a building's purpose and size.
Second, unlike the current rule in which establishing a subdivision business agency is only after a certificate for a subdivision business is issued, a builder can establish it if reported to a government office as the same way of establishing a model house under the housing law. In addition, in terms of the subdivision report of business successors, successors are obliged to report their business under these improvements.
Third, as part of improving a builder's business progress, when dealing with a new building on an uncompleted building land, while there is no specific rule about it under the current law, once there is a trust agreement or substitute arrangement with a trust company, the company's trust assets must include the property when the land register is completed in order to protect consumers from another creditors safely. In addition, in terms of unsold subdivision buildings, the number of public offering decreases to over 1 from the current over 2 to put them at the same level of the sale of unsold properties under the current law.
It is desirable that the government should not intervene with retail building subdivision business because this subdivision business has a character of free contracts among individuals with strong pursuit of profits and investment returns unlike housing subdivision requiring fairness. In addition, it is inevitable that the law enacted in the name of protecting consumers could become a drag on the market and make a dent in builders' motivation, ultimately damaging builders and investors(consumers). So, providing stability and transparency to the market by seeking improvements of the law in line with the aim of the law of protecting consumers and helping the business is necessary.