Law Articles
2026-04-30
Urban Renewal & HRR | Real Estate
Discussion on the comprehensive management of landowners’ initiatives in urban renewal—— The risks associated with landlords acting as “actual developers”
【Partner Lawyer Charlotte Wu, Zhong Yin Law Firm】
charlotte.wu@zhongyinlawyer.com.tw
charlotte.wu@zhongyinlawyer.com.tw
In order to accelerate urban renewal, in April 2026, the Ministry of the Interior proposed draft amendments to certain provisions of the Urban Renewal Regulations. The draft proposes the establishment of a “comprehensive management mechanism” to assist landowners in appointing organizations to oversee urban renewal projects. Under this mechanism, projects that meet the requirements of building planning and design can receive a volume bonus of up to 1.5 times the normal limit. Additionally, tax incentives are provided for both landowners and the organizations responsible for managing the projects. These measures are intended to encourage landowners to appoint such organizations to carry out urban renewal projects. However, when landowners appoint these organizations to handle urban renewal projects, they may face financial and legal challenges, especially when there are fluctuations in construction costs or significant changes in the external environment. This article aims to explore the structural risks faced by landowners in practice, with a focus on the nature of the legal relationship between landowners and the organizations responsible for managing urban renewal projects.
The relationship of delegation between the landowner and the organization responsible for managing the entire project
According to the current urban renewal regulations, private-sector urban renewal can be carried out in two ways: “commissioned implementation” and “self-implementation”. In the case of commissioned implementation, as stipulated in Articles 22 and 26 of the regulations, the owners of the land and legal buildings entrust urban renewal agencies to carry out the work. In the case of self-implementation, as stated in Articles 22 and 27 of the regulations, the owners of the land and legal buildings organize their own urban renewal committees to carry out the work. These committees then appoint agencies with expertise in urban renewal to oversee the entire process, as required by Article 28 of the regulations. In the scenario discussed here, the landowners form their own urban renewal committee to carry out the work themselves. They also appoint an agency to manage all aspects related to the project, including funding, architectural design, construction, and sales. In this case, the agency acts merely as an agent for the landowners, and the legal responsibilities remain with the landowners themselves.
Since the “Comprehensive Management Contract” established between the comprehensive management company and the landowner is a type of commission contract, according to the provisions of the Civil Code regarding commission contracts, the comprehensive management company, as the agent, must act in good faith, in accordance with Article 535 of the Civil Code. The landowner, on the other hand, is responsible for covering any necessary expenses, debts, and damages that arise from the comprehensive management company’s actions, in accordance with Article 546 of the Civil Code. In other words, although the landowner entrusts the comprehensive management company to handle the matters related to the property management, it is still the landowner who is the party to the contracts involved in these matters. Therefore, the landowner bears the risks associated with these transactions. For example, during the financing process, the landowner, as the actual borrower, must bear the risks related to raising funds and repaying loans. Banks may require the landowner to provide land as collateral and to act as a co-signer. If some landowners have personal credit or debt problems; it’s possible that they may face difficulties in obtaining financing. During the construction and sales phases, the landowner, as the person who builds and sells the houses, must also bear the risks associated with fluctuations in construction costs and selling prices. The following example illustrates the structural legal risks that landowners may face when entrusting a management company to handle the entire process of building and selling pre-sale houses during urban renewal projects.
I. The risks associated with construction, borne by the landowner
In order to build houses on their land, landowners often enter into contracts with builders. However, these contracts hide many legal risks that ultimately fall on the landowner’s shoulders. For example, there are issues related to the handling of soil during the construction process. Here, we’ll discuss just a few of these issues.
In construction projects, civil engineering works, and demolition activities, the remaining soil, sand, stones, bricks, tiles, and concrete blocks are collectively referred to as “earthwork”. In recent years, due to the increase in construction projects in our country, the capacity to handle these waste materials has become insufficient. As a result, the cost of removing these waste materials has skyrocketed. This has led to illegal dumping of waste materials by unscrupulous individuals. For example, in 2026, the Taipei District Prosecutors’ Office prosecuted a case involving illegal dumping of construction waste. The waste was dumped in various fish ponds and agricultural lands over a long period of time. In 2025, state-owned land in Houlong Town, Miaoli County was repeatedly used for illegal dumping of waste materials. In 2024, illegal backfilling of waste materials occurred in Damu 坑, Xihu Township, Miaoli County.In order to strengthen the control over the flow of construction waste, the Ministry of the Interior’s National Land Administration has adopted the revised “Procedures for Handling Construction Waste” as the basis for its regulations. Starting from January 1, 2026, a new policy will be implemented to ensure full tracking of construction waste. All vehicles used for transporting construction waste must be equipped with GPS systems for real-time monitoring. The use of paper-based reports will be abolished, and electronic reports will be required at all entry and exit points. This measure aims to prevent unscrupulous companies from manipulating data, such as falsifying reports or exaggerating the amount of waste. By doing so, it will be possible to keep track of where the waste goes and prevent illegal dumping.
In addition to the central government’s efforts to establish systems for tracking the flow of construction waste, local governments have also revised their regulations. These regulations hold construction contractors jointly responsible for any illegal dumping of construction waste. For example, Article 30, Paragraphs 2 and 3 of the Taoyuan City Regulations on the Management of Construction Waste stipulate that “Construction contractors shall be jointly responsible for removing and remedying any construction waste that is discarded in violation of these regulations. If a contractor fails to comply with these regulations, they shall be fined between NT$60,000 and NT$100,000.” Therefore, even if a landowner hires a company to handle the waste management, as the person responsible for the construction project, the landowner is still jointly liable with the contractor for proper disposal of waste. Since landowners often have little knowledge about construction processes, it’s difficult for them to oversee how the contractor handles the waste and whether any illegal dumping occurs. However, when the contractor violates the law…They must jointly bear the risk of being fined for such violations. In addition, Article 46 of the Waste Management Act also stipulates criminal penalties for illegal dumping of waste. If a landowner, in order to save costs, explicitly or implicitly instructs contractors to find illegal ways of dumping construction waste, the landowner may face imprisonment of not less than one year but not more than five years, along with a fine of not more than NT$15 million.
In addition, if the illegal dumping of soil affects the surrounding drainage systems, road safety, or environmental hygiene, the relevant authorities may, in accordance with Article 58 of the Construction Law, order that the work be stopped or modified. In necessary cases, forced demolition may also be carried out. This will lead to delays in the completion of the pre-sale housing projects. Since these delays are caused by the seller’s illegal actions, the landowner cannot be exempted from liability for the delays.
II. The landowner bears the legal risks associated with the pre-sale contract for the sale of houses.
If landowners decide to build pre-sale houses on their existing land for distribution and sale, they must sign a pre-sale contract with the buyers in accordance with the “Matters That Must and Must Not Be Included in Pre-sale Contracts” issued by the Executive Yuan. Under these regulations, as the seller-landowner, they are responsible for providing accurate information about the property, paying any interest incurred due to delayed delivery, covering taxes and damages, and ensuring that there are no defects in the property. Regarding delayed delivery, due to international factors such as the pandemic, wars, tariffs, and the oil crisis, it’s common for there to be a shortage of workers and construction materials across the country. This, in turn, delays the completion of construction projects.As a result, it’s often difficult for landlords to complete the construction of the main building and its attachments within the prescribed time frame, and to obtain the necessary permits for use. This leads to delays in handing over the property. According to Article 12 of the regulations regarding what must and must not be recorded in contracts for the sale of pre-owned houses, unless there are force majeure circumstances such as natural disasters, changes in government regulations, or other reasons not attributable to the seller, if the seller fails to obtain the necessary permits within the deadline, they must pay the buyer interest at a rate of 0.05% per day on the amount paid for the property. If the permits are still not obtained after three months, it constitutes a breach of contract by the seller. Both parties agree to follow the penalties stipulated for such breaches. In practice, however, courts are strict in determining what constitutes force majeure circumstances that can exempt the seller from liability for delays. For example, in cases related to the pandemic, most courts have ruled that even if a national emergency level 3 is declared, the law does not require that all construction work be halted. Therefore, in cases where the pandemic affects construction progress and leads to delays in the project timeline, the seller must provide evidence to show how the pandemic has impacted the project. This could include records of construction activities, showing that workers had to be quarantined after being diagnosed with the virus, that foreign workers had to undergo quarantine procedures due to pandemic-related restrictions, that work was halted due to the severity of the pandemic, or that workers took time off to get vaccinated. The seller should also provide details about the specific dates and days affected, as well as the percentage of workers who were unable to work. However, in practice, it’s difficult for workers to keep detailed records of their daily work activities, making it hard to provide solid evidence in court.
It can be seen that, when there are many external factors that are difficult to control, leading to delays in the completion of pre-sale housing projects, the seller bears the main risk of having to pay interest for the delayed delivery of the property. Additionally, the seller must also bear any taxes and damages that arise from the delay in delivery. If the number of days of delay continues to increase and there are many buyers involved, the amount that the seller must pay could be quite substantial.
III. Communication costs and hidden negotiation risks associated with landowner integration
In addition to the aforementioned foreseeable legal risks, property owners also face challenges related to integration. Under the model of self-implemented urban renewal, the property owners form the decision-making body. While the management agency provides professional advice regarding various aspects of urban renewal, such as the need to adopt green building designs to qualify for incentives, thereby increasing construction costs, or determining the appropriate land use and planning directions, the final decisions still rest with the property owners. However, property owners often have different considerations, and there may be conflicts related to seniority or financial status. Each property owner’s ability to withstand financial pressures and time constraints also varies. This can lead to repeated revisions during the decision-making process due to disagreements among the property owners. As a result, it becomes difficult to reach a final consensus. In some cases, during the years of integration, some property owners may pass away. If the heirs are unwilling to take over the existing contracts or financial obligations, it will lead to delays in the entire process of integration. In practice, it’s not uncommon for integration processes to take several years or even more than a decade. The issue of “nagging tenants” also often becomes a major obstacle. Additionally, throughout the reconstruction process, it’s necessary to negotiate with various financial institutions, including banks, construction management companies, trust companies, manufacturers, architects, engineers, companies related to incentive programs for green buildings and earthquake-resistant structures, and other consulting firms. Most property owners aren’t experts in these negotiations. Therefore, finding good terms and coordinating the relationships between all the parties involved is another challenge. Even professional developers may face the complexities associated with integrating various systems and components. Throughout the process, they must constantly overcome challenges and solve problems. In short, when landowners take on the role of urban developers themselves, consulting companies can provide assistance with overall project management. However, in the end, it is still the landowners who bear all the responsibilities and risks involved.
IV. Conclusions
In summary, when landowners entrust a third-party management company to handle the entire renovation process, they assume various legal risks. Since there is a contractual relationship between the landowner and the management company, it is the landowner who enters into legal agreements with the government, contractors, and homebuyers. If there are any violations during construction, delays in delivery, or damages to neighboring properties, the landowner will be held legally responsible. Furthermore, according to Article 549, Paragraph 1 of the Civil Code, the management company can terminate the contract at any time. If the contract does not specify any guarantees or compensation in case of breach, and the management company decides to terminate the contract due to low profits or difficulties in implementing the project, the landowner will not only lose the fees paid to the management company but also face the consequences of having to cancel the entire renovation project. When deciding whether to entrust a management company or not, it is recommended that landowners make well-informed decisions based on all available information.
