1. Article 4 of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) provides that a title trust agreement (Article 1(1)) and any change in the real right to real estate made by registration under a title trust agreement (main sentence of paragraph (2) are null and void. However, in the proviso of paragraph (2), the same shall not apply where the title trustee becomes a party to a contract for the acquisition of real right to real estate and the other party did not know that a title trust agreement exists

The proviso to Article 4(2) of the Real Estate Real Name Act stipulates that a contract for the acquisition of a real right is valid when the other party enters into a contract to protect the other party to the transaction of real estate without knowing the fact that a title trust agreement was made (see, e.g., Supreme Court Decision 2012Da202932, Dec. 23, 2015). In cases where a title truster and a title trustee entered into a contract for title trust and entered into a contract with a seller as a party to the contract, the contract and registration shall be determined based on the seller’s awareness at the time of entering into the contract, and even if the seller becomes aware of the fact of a title trust agreement after entering into the contract, the contract and registration do not affect the validity of the contract and registration even if the seller becomes aware of the fact of the title trust agreement after entering into the contract. There is no ground to deem that the contract effective as mentioned above is retroactively null and void due to the unexpected circumstances that the seller becomes aware of the fact that the contract was concluded after the contract.

2. According to the lower judgment, the following facts are revealed.

A. On September 23, 2015, the Plaintiff agreed to purchase real estate listed in the attached list of the judgment of the first instance (hereinafter “instant real estate”) owned by the Defendant from the Defendant for KRW 150 million (hereinafter “instant sales contract”); on the same day, the Plaintiff paid the Defendant the down payment of KRW 15 million to the Defendant, and on October 13, 2015, agreed that KRW 80 million will succeed to the Defendant’s obligation to return the deposit.

B. When concluding the instant sales contract under the Plaintiff’s name, the Nonparty, his father, lost benefits from the initial purchase of housing in his life. At the time of the instant sales contract, the Plaintiff did not express the aforementioned circumstances to the Defendant at the time of the instant sales contract. The Nonparty appeared together with the Plaintiff at the time of concluding the instant sales contract, and the Plaintiff paid KRW 15 million out of the Nonparty’s bank account as down payment.

C. On October 7, 2015, the Defendant refused to implement the instant sales contract by notifying the Plaintiff of the cancellation of the instant sales contract on the grounds of the change of circumstances in which the instant real estate was subject to reconstruction. While explaining the developments leading up to the conclusion of the sales contract, the Plaintiff told the Defendant that the instant sales contract was concluded in the name of the Nonparty on behalf of the Nonparty.

D. On October 13, 2015, the remainder of KRW 50 million, which the Plaintiff agreed to succeed from the remainder of KRW 135 million on October 13, 2015, the payment date, was deposited to the Defendant for the remainder of KRW 50 million.

3. Examining the foregoing facts in light of the legal principles as seen earlier, the Defendant concluded the instant sales contract with the Plaintiff without knowing the fact of the title trust agreement between the Plaintiff and the Nonparty upon entering into the instant sales contract, and thus, the instant sales contract concluded between the Plaintiff and the Defendant is valid pursuant to the proviso to Article 4(2) of the Real Estate Real Name Act. Whether the Defendant was aware of the fact of the said title trust agreement after the said conclusion does not affect such conclusion. Accordingly, the Defendant is obliged to implement the ownership transfer registration procedure for the instant real estate

The judgment of the court below to the same purport is just in accordance with the above legal principles, and it did not err by misapprehending the legal principles on the interpretation of Article 4(2) of the Real Estate Real Name Act.

4. The Defendant’s appeal is without merit, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)