[1] In a case where a project implementer bears the obligation to pay liquidation money to a landowner of land, etc. pursuant to Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, whether a landowner of land, etc. shall transfer ownership of land, etc. to a project implementer without any restriction on rights (affirmative), and whether a landowner’s duty to transfer ownership without any restriction on rights and duty

[2] Whether the existing limitation of rights established on a site or structure subject to settlement money by failing to apply for a parcelling-out in a housing reconstruction project or not to conclude a contract for parcelling-out in a housing reconstruction project ceases to exist due to the public notice of transfer under Article 54 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (affirmative in principle), and whether the project implementer may exercise the right of defense of simultaneous performance on the grounds of the duty to cancel

[3] Whether a buyer is exempted from the duty to pay interest under Article 587 of the Civil Code in case where the buyer was delivered in advance the object of the sale but the buyer's obligation to pay the buyer's price and the seller's duty to cancel the registration of the establishment of a mortgage or the registration of a provisional seizure are concurrently performed in relation to the simultaneous performance

[4] The case holding that in the case where Eul, the owner of the apartment house and its site in the rearrangement zone of the reconstruction project implemented by the reconstruction and rearrangement project association Gap, acquired the membership qualification and completed the registration of transfer of ownership and transfer based on trust on the apartment house and its site in Gap association, but the status of the member was lost due to the failure to conclude the sale contract, and the registration of establishment of a neighboring mortgage and provisional seizure was completed on the apartment site in Byung bank, and Byung bank's acquisition of the secured debt from Byung bank was issued a seizure and collection order by subrogation on the liquidation amount to be paid by Eul and the overdue interest claim to be paid by Eul association, and thereafter Gap association completed the transfer announcement, the case held that Gap association cannot set up a simultaneous performance defense against Eul association's obligation to pay the liquidation amount and the obligation to cancel the registration of establishment of a mortgage or provisional seizure before the transfer announcement, and even if the real estate was received in advance, it does not have the obligation to pay interest under Article 587 of the Civil Act

[1] In a case where a project implementer fails to apply for a parcelling-out under Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (wholly amended by Act No. 14567, Feb. 8, 2017) or is liable to pay liquidation money to the owner of land, etc. who has withdrawn the application for a parcelling-out, the owner of land, etc. under the principle of fairness bears the duty to transfer the ownership of the land, etc. to the project implementer in the state where there is no restriction

[2] Article 48(3) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (wholly amended by Act No. 14567, Feb. 8, 2017; hereinafter “Urban Improvement Act”) provides that “Where there is a remainder after receiving an application for parcelling-out, a project implementer may designate as a reserved land (including buildings) for the purposes specified in the articles of incorporation or the project implementation plan, such as articles of incorporation, or sell it to any person other than the association members,” and Article 55(2) of the same Act provides that “the reserved land and the site or buildings sold to the general public shall be deemed as the reserved land or the land or buildings sold to the general public under Article 34 of the Urban Development Act”. Accordingly, the legal doctrine on reserved land or the land or buildings sold to the general public without filing an application for parcelling-out, or without concluding a contract for parcelling-out, may be applied

Meanwhile, Article 34 of the Urban Development Act provides for the provisions on reserved land or land allotted by the authorities in recompense for development outlay, and Article 42(5) of the same Act provides, “The implementer of land allotted by the authorities in recompense for development outlay under the provisions of Article 34 shall acquire the ownership concerned on the day following the date when the land substitution disposition was publicly announced, respectively.” Furthermore, Article 42(1) of the same Act provides, “The land substitution stipulated in the replotting plan shall be deemed the previous land from the day following the date when the land substitution disposition was publicly announced, and the right in the previous land which was not determined in the replotting plan shall be terminated at the time when the land substitution disposition was publicly announced.” According to these provisions, the restriction on the right to the previous land among the previous land shall be deemed to be established as the land substitution, and the restriction on the right to the previous land which was not determined as the land substitution becomes extinct by the land substitution disposition. Accordingly, the reserved land or the land allotted by the authorities in recompense for development outlay for development outlay shall acquire the ownership thereof.

According to Article 40(4) and (5) of the Urban Development Act, when a project implementer undergoes an inspection of completion by a designating authority, it shall take a replotting disposition by notifying the landowner of the matters prescribed in the replotting plan and publicly announcing the same. Meanwhile, according to Article 54(1) and (2) of the Urban Improvement Act, a project implementer shall notify the purchaser of the matters prescribed in the management and disposal plan at the time the approval of completion of construction and the completion of construction are publicly announced, and the details thereof shall be publicly announced in the official bulletin of the relevant local government. In light of the method and effect of a replotting disposition and a public announcement of transfer, the alteration of rights according to the management and disposal plan takes place. In light of such method and effect of a public announcement of transfer, the effects and effects of a replotting disposition under the Urban Development Act as applied mutatis mutandis by the relevant provisions of the Urban Improvement Act should be changed.

Examining these provisions and legal principles on reserved land, etc., in the case of a site or building subject to settlement money by a partner of a housing reconstruction project without filing an application for parcelling-out or not concluding a contract for parcelling-out, the existing limitation on rights established for the housing reconstruction project is extinguished by the public announcement of transfer unless there are special circumstances. As long as the restriction on rights such as mortgage or provisional seizure becomes extinct due to the public announcement of transfer, the project implementer may not exercise the right of defense for simultaneous performance on the grounds of the duty to cancel the registration of cancellation

[3] Article 587 of the Civil Act provides, “The fruits derived from an object not delivered even after a sales contract has been concluded shall belong to the seller. The buyer shall pay the interest of the purchase price from the date of delivery.” However, in a case where the buyer’s duty to pay the purchase price and the seller’s duty to cancel the registration of the establishment of a mortgage or the registration of a provisional seizure is in a simultaneous performance relationship, and there is a justifiable reason for the buyer to refuse the payment, it shall be deemed that the buyer has no obligation

[4] The case holding that in the case where Gap association acquired the right of subrogation for the liquidation money acquired by Eul association before the provisional attachment or provisional attachment or the right of subrogation for the liquidation money acquired by Eul association's owner of the apartment house and its site after Eul acquired the qualification of association member and completed the registration of transfer of ownership based on trust for the apartment house and its site in Gap association, but the status of association member was lost because it did not conclude the sale contract, and Eul association acquired the right of subrogation for the liquidation money to be paid by Byung bank after the registration of establishment of mortgage and provisional attachment was completed on the site of the above apartment, Byung limited company which acquired the right of collateral security from Byung bank was issued the seizure and collection order by subrogation for the liquidation money to be paid by Eul association, and thereafter Eul association completed the transfer order, the right of subrogation for the liquidation money to be paid by Eul association can not be exercised within the limit of 5th company's right of subrogation for the liquidation money to be paid by Eul association before the provisional attachment or provisional attachment.

[1] Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (wholly amended by Act No. 14567, Feb. 8, 2017; see Article 73 of the current Act); Article 536 of the Civil Act / [2] Articles 47 (see current Article 73), 48 (3) (see current Article 79 (4)), 54 (see current Article 86), 55 (2) (see current Article 87 (3)), 34, 40 (4), (5), and 42 (1) and (5) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents; Article 536 of the Civil Act / [3] Articles 536, 587 and 48 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (wholly amended by Act No. 14567, Feb. 8, 2017; Article 47 (3) of the current Act)

[1] Supreme Court Decision 2008Da37780 Decided October 9, 2008 (Gong2008Ha, 1544) / [2] Supreme Court en banc Decision 201Du6400 Decided March 22, 2012 (Gong2012Sang, 682) / [3] Supreme Court Decision 201Da98129 Decided June 27, 2013

Ep 1411 Asset-backed Company (Law Firm Cheongn, Attorneys Park Chang-ho et al., Counsel for the defendant-appellant)

Seocho-gu 1 Apartment Housing Reconstruction and Improvement Project Association (Attorney regular number and one other, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2016Na2004974 decided August 18, 2016

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiff’s appeal is dismissed.

The grounds of appeal are examined.

1. Plaintiff’s ground of appeal

A. In a case where a project implementer fails to apply for parcelling-out or withdraws an application for parcelling-out under Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (wholly amended by Act No. 14567, Feb. 8, 2017; hereinafter “Urban Improvement Act”), the owner of land, etc. under the principle of equity bears the duty to transfer the ownership of the land, etc. to the project implementer in a state where no restriction on rights is placed, and the obligation of the project implementer to transfer the ownership without such restriction on rights and to pay the liquidation amount concurrently (see, e.g., Supreme Court Decision 2008Da37780, Oct. 9, 2008).

B. (1) Article 48(3) of the Urban Improvement Act provides that “Where there is a remainder after receiving the application for parcelling-out, the project executor may sell a parcel of land or a building site or a building site to be sold to the same person as the reserved land and the general public shall be regarded as a reserved land or a land or a building to be sold to the general public under Article 34 of the Urban Development Act.” Accordingly, the legal principle on reserved land or a land or a building to be sold to the general public under the Urban Development Act may be applied to the reserved land or a building site or a building to be sold to the general public without filing the application for parcelling-out or without concluding the contract for parcelling-out.

(2) Meanwhile, Article 34 of the Urban Development Act provides that “The implementer of a land allotted by the authorities in recompense for development outlay under Article 34 shall acquire the ownership of the land in question on the day following the date when a replotting disposition has been publicly announced, respectively.” Furthermore, Article 42(1) of the same Act provides that “The land substitution stipulated in a replotting plan shall be deemed the previous land from the day following the date when a replotting disposition has been publicly announced, and the right to the previous land which was not determined in a replotting plan shall be extinguished when the date when a replotting disposition has been publicly announced is completed.” According to these provisions, the determination of a replotting in the previous replotting plan is consistent with the previous land and the restriction on the right to the previous land shall be deemed to be established in a replotting, and the restriction on the right to the land in the previous land which was not determined shall be extinguished by a replotting disposition. Accordingly, the reserved land or the land allotted by the authorities in recompense for development outlay shall acquire the ownership of the land in a state where there is no restriction on the right to the previous land corresponding thereto.

(3) According to Article 40(4) and (5) of the Urban Development Act, when an implementer undergoes an inspection of completion by a designating authority, the implementer shall take a replotting disposition by notifying the landowner of the matters prescribed in the replotting plan and publicly announcing the same, and the alteration of rights according to the contents of the replotting plan through such replotting disposition occurs. Meanwhile, according to Article 54(1) and (2) of the Urban Improvement Act, a project implementer shall notify the purchaser of the matters prescribed in the management and disposal plan at the time the approval of completion and the completion of construction are publicly announced in the official bulletin of the relevant local government. In light of the method and effect of the replotting disposition and the public announcement of transfer, the alteration of rights according to the management and disposal plan takes place. In light of such method and effect of the replotting disposition and the public announcement of transfer, the validity of the public announcement of transfer should be changed as in the same way as the effect and effect of the replotting disposition under the Urban Development Act applicable mutatis mutandis under the relevant provisions of the Urban Improvement Act (see, e.g., Supreme Court en banc Decision

(4) Examining such provisions and legal principles on reserved land, etc., in the case of a site or building subject to payment of liquidation money by a housing reconstruction project’s partner who did not file an application for parcelling-out or did not conclude a contract for parcelling-out, the existing limitation on rights established thereon, barring special circumstances, shall be extinguished by the relocation announcement. As long as the limitation on rights, such as mortgage and provisional seizure, becomes extinct due to the relocation announcement, the project executor cannot exercise his/her right of defense for simultaneous performance on the grounds of the duty to cancel registration of restriction

C. Review of the reasoning of the lower judgment and the record reveals the following circumstances.

(1) The Defendant is a reconstruction association that implements a reconstruction project as prescribed by the Urban Improvement Act with respect to a housing complex located in Seocho-gu Seoul Metropolitan Government, Seocho-gu, 1310, 1311, and the Nonparty is the owner of the housing site of Samho Apartment-dong, ○○dong (hereinafter “instant apartment”) and the housing site.

(2) The Nonparty acquired the qualification of an association member by filing an application for parcelling-out within the period of application for parcelling-out, and completed the registration of ownership transfer and delivery for the instant apartment and its site based on trust, but became a person subject to cash settlement by losing his status as an association member on the day following the expiration date of the contract for parcelling-out because the contract for

(3) As of the date of the closing of argument in the lower judgment, the registration record was closed due to the removal or destruction of the instant apartment, but the registration record was completed on the instant apartment site with the National Bank as a mortgagee for the establishment of a mortgage and the registration of provisional seizure. However, it is clear that the sum of the secured debt amount and the secured claim amount of the instant provisional seizure, which are the maximum debt amount of KRW 83,381,190,000 and KRW 97,500,000, KRW 11,906,437, KRW 7,252,637, the sum of the secured claim amount and the secured claim amount of the instant provisional seizure, which are the liquidation amount to be paid by the Defendant to the Nonparty, exceeds KRW 901,350,00 (the average appraised value by two appraisal corporations during the auction procedure for the instant apartment), which is the liquidation amount to be paid to the Nonparty.

(4) The Plaintiff acquired a claim for a loan from the National Bank of Korea against the non-party, which is the secured claim of the above right to collateral security (the claimed amount of KRW 1,202,535,950), and received a seizure and collection order by subrogation as to the liquidation amount to be paid by the non-party to the claim against the defendant and the claim for interest in arrears to be paid by the non-party as the claim amount.

(5) The Defendant completed the public announcement on November 3, 2017, which was after the date of the closing of argument in the lower court. Thereafter, the apartment house (Yegu △△△△dong), which was scheduled to be sold to the Nonparty by the Nonparty, was registered in the name of the Defendant.

D. Examining these facts in light of the aforementioned statutes and legal principles, the following determination is possible.

(1) As long as the Nonparty, the owner of the instant apartment, became a subject of cash settlement by losing its membership because it did not conclude a contract for sale in lots, the Nonparty, as the mortgagee of the instant apartment, may exercise the subrogation right on the settlement money acquired by the Nonparty even before the transfer notification of the effect of extinction of the right to collateral security

(2) However, as seen earlier, prior to the public announcement of transfer, the Defendant is obliged to pay the liquidation money to the Nonparty only by simultaneously performing the duty of cancelling the registration of the establishment registration of the collateral security or the provisional seizure. As such, the collateral security holder may exercise the subrogation right within the limit of the liquidation amount acquired by the Nonparty.

(3) Therefore, in the instant case where the Plaintiff, a collection creditor who acquired the secured debt of the right to collateral security, claims the collection of the debt, the Defendant, the garnishee, prior to the public notice of transfer, may set up against the Plaintiff with the aforementioned simultaneous performance defense that could have been asserted against the Nonparty, the enforcement

E. The judgment of the court below to the same purport is based on the legal principles as seen earlier, and there is no error of law by misapprehending the legal principles as to subrogation and simultaneous performance relationship, etc.

2. As to the Defendant’s ground of appeal

A. Article 587 of the Civil Act provides, “The fruits derived from an object not delivered even after a sales contract has been concluded shall belong to the seller, and the buyer shall pay interest on the price from the date of receipt of the object.” However, in a case where the buyer’s obligation to pay the purchase price and the seller’s duty to simultaneously implement the registration of establishment of a mortgage or the registration of provisional seizure is in a relationship of simultaneous performance, etc., and there are justifiable grounds for refusing the payment, the buyer shall be deemed to have no obligation to pay interest pursuant to the foregoing Civil Act even if he/she received the object in advance (see Supreme Court Decision 2011Da98129, Jun

B. Examining the aforementioned facts in light of the aforementioned legal principles, prior to the public announcement of transfer, the Defendant’s obligation to pay the liquidation money to the Nonparty is concurrently performed with the Nonparty’s obligation to register the establishment of a neighboring mortgage or the provisional attachment registration of the instant apartment, etc., and thus, the Defendant has justifiable grounds for refusing the payment of liquidation money until the obligation to cancel the registration of the establishment of a neighboring mortgage or the provisional attachment registration of the instant apartment. Therefore, even if the Defendant received the instant real estate in advance,

C. Nevertheless, the lower court determined otherwise, that the Defendant was liable to pay interest even before the Defendant performed the obligation to cancel the registration of the establishment of a mortgage or the provisional seizure on the ground that the instant apartment and its site was transferred after completing the registration of the ownership transfer. In so doing, the lower court erred by misapprehending the legal doctrine on Article 587 of the Civil Act, which affected the conclusion of the judgment.

3. Conclusion

The part of the judgment of the court below against the defendant is reversed, and that part of the case is remanded to the court below for a new trial and determination. The plaintiff's appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices

Justices Cho Jae-chul (Presiding Justice)