Where a real estate purchaser has agreed to take over a debt related to the subject matter of sale and deduct the amount of such debt from the purchase price, the legal nature of the takeover (=performance acceptance) and the requirements for the right to cancel a contract in the event that the purchaser fails to discharge the obligation he/she has

Where the buyer of a real estate agrees to take over the obligation regarding the subject matter of sale and purchase and to deduct the amount of such obligation from the purchase price, such acquisition shall be deemed performance acquisition, not to exempt the seller, barring any special circumstances, and the buyer is not obligated to actually pay the obligation he/she takes over at the time of the purchase and sale contract, and the buyer is obligated to pay the remainder after deducting the amount of the obligation from the purchase price, barring special circumstances. Thus, even if the purchaser did not actually pay the above obligation, such circumstance alone is that the seller cannot rescind the purchase and sale contract, but if there is a special reason to evaluate that the purchaser is the same as not paying part of the purchase price by failing to pay the purchase price, the right to cancel the contract occurs. Whether there is such special circumstance should be determined whether the parties to the purchase and sale contract can be seen as identical to the seller’s failure to pay part of the purchase price.

Articles 454 and 543 of the Civil Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant)

Plaintiff (Law Firm Barun, Attorneys Park Jae-hwan)

Defendant (Attorney Kim Sang-sung, Counsel for defendant-appellant)

Seoul East District Court Decision 2005Na4286, 4293 Decided September 20, 2006

The judgment of the court below is reversed, and the case is remanded to the Seoul Eastern District Court Panel Division.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

In selling and buying real estate on which a mortgage was established, the question of whether the purchaser took over the obligation secured by the mortgage at the same time is the matter of interpreting the intention of the parties concerned (see Supreme Court Decision 74Da1419, Dec. 10, 1974). The court below, by taking account of the evidence adopted in its judgment, transferred the land of this case to the defendant (Counterclaim plaintiff; hereinafter "the plaintiff") without establishing the right to collateral security as to the land, and recognized that the defendant agreed to deduct the amount equivalent to the money from the purchase price in lieu of taking over the obligation secured by the right to collateral security, and there is no violation of the law of misunderstanding the legal principles on the acceptance of the obligation and the payment of the balance arising from the sales contract, or violating the rules of evidence. The grounds for appeal cannot be accepted.

2. Regarding ground of appeal No. 2

Where the purchaser of a real estate agrees to take over the obligation regarding the subject matter of sale and purchase and to deduct the amount of such obligation from the purchase price, such acquisition shall be deemed performance acquisition, not the seller's obligation to discharge the obligation, barring any special circumstances, and the purchaser is not obligated to pay the obligation actually at the time of the sale and purchase contract, and the purchaser is obligated to pay the remainder after deducting the amount of obligation from the purchase price, barring special circumstances. Thus, even if the purchaser did not actually pay the above obligation, the seller cannot rescind the sale and purchase contract merely because the purchaser did not pay the above obligation, but if there are special circumstances that can be deemed the same as the purchaser's failure to pay part of the purchase price, the right to cancel the contract occurs (see, e.g., Supreme Court Decisions 92Da23193, Feb. 12, 1993; 94Da58599, Aug. 11, 195).

In addition, whether there exists such special circumstances should be determined as to whether the parties to a sales contract constitutes “a case where it is deemed identical to the payment of part of the purchase price,” comprehensively taking into account all the circumstances such as the circumstances leading up to the sales contract, the details and degree of disadvantages suffered by the seller due to the buyer’s failure to perform the buyer’s obligation to accept the purchase and sale, etc.

The lower court determined that the cancellation of the instant sales contract, which was made on the ground of the Defendant’s nonperformance of obligation, was unlawful, since it is difficult to view that the Plaintiff provided the obligation to transfer ownership until the Plaintiff notified the rescission of the instant sales contract.

However, such determination by the court below is difficult to accept for the following reasons.

According to the evidence duly admitted by the court below, "the plaintiff's debt to the non-party," which is the defendant's debt under the contract of this case, was overdue due to the due date prior to November 20, 2003, which is the date of the conclusion of the contract of this case. Meanwhile, the registration of the establishment of a neighboring mortgage on the land of this case as security for the above loan loan does not guarantee the payment of the maximum debt amount of the loan amount as the principal of the loan and the equivalent amount of 50 million won and the overdue interest accrued continuously. Thus, the plaintiff's transfer of the land of this case, which is a security for the above loan loan loan obligation, to the defendant, should bear the interest accrued from the date of delivery of the name transfer document of this case (30 million won per month). Further, the purport of the contract of this case is that the defendant agreed to pay the loan amount to the defendant for the above repayment of the loan amount to the non-party by 200,204.

On the other hand, on December 9, 2003, prior to the payment date of the remainder, the Plaintiff offered performance of his obligation by leaving all documents necessary for the registration of transfer of ownership of the instant land to a certified judicial scrivener, such as power of attorney, certificate of personal seal impression for sale, certificate of registration right, and certificate of resident registration. Furthermore, from the time when the payment date of the balance expired to the Defendant several times, the Plaintiff notified the Defendant of the repayment of the obligation to the Defendant, and had maintained the status of the payment of the obligation to the Defendant by June 7, 2004 even until the time when the payment period expired. However, upon considering the circumstances where the Nonparty, the obligee of the obligation to the Plaintiff, who did not comply with the Plaintiff’s demand for the repayment of the obligation to the Plaintiff, applied for a voluntary auction based on the right to collateral security, the Plaintiff made an application for an auction with the obligation to the acquisition and auction in lieu of the above obligation and the withdrawal of the auction. In this case, at the latest, the Plaintiff did not pay the obligation to the Defendant, and thus, the Plaintiff acquired the right of termination.

In addition, if a creditor has the right to cancel a contract due to the delay of the debtor's performance, the creditor can exercise the right to cancel even without providing the debtor's performance, unless there are special circumstances. Thus, the sales contract of this case is legally rescinded due to the delivery of the copy of the complaint of this case containing the plaintiff's declaration of termination.

Nevertheless, the court below erred in the misapprehension of legal principles as to the cancellation of a sales contract on the ground of non-performance of obligation, which affected the conclusion of the judgment.

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Nung-hwan (Presiding Justice)