[1] Whether the opposing power of a subordinate right of lease is extinguished in a case where the senior mortgage becomes extinct prior to the payment date of the successful bid price (negative)

[2] In a case where a debtor in a compulsory auction fails to notify a successful bidder of the existence of a right of lease with no knowledge of the existence of a right of lease opposing the successful bidder, whether the debtor is liable to compensate for damages under Article 578(3) of the Civil Act (affirmative)

[1] In the auction procedure of real estate, where a prior mortgage exists more than the right of lease that has the requisite to set up against the provisions of Article 3 of the Housing Lease Protection Act, if the prior mortgage terminates due to the successful bid, the right of priority shall also lose its opposing power in order to guarantee the value of security secured by the prior mortgage. However, where the prior mortgage ceases to exist due to the successful bid and the prior mortgage terminates due to other reasons prior to the successful bid payment date, which is the time when the successful bidder acquires the ownership, the right of priority shall not extinguish because there is no prior collateral to be damaged by the existence of the right of lease with opposing power

[2] Although a successful bidder was awarded real estate with the knowledge that the subordinate right of lease ceases to exist due to the existence of senior mortgage, if the debtor pays the successful bidder on the payment date without knowing the circumstances that the successful bidder would continue to have a right of lease with opposing power because he/she did not notify the successful bidder of this point even though the debtor fully repaid the obligation of collateral with the aim of continuing to maintain the opposing power of the subordinate right of lease, the debtor is liable to compensate for damages suffered by the successful bidder pursuant to the provisions of Article 578(3) of the Civil Act.

[1] Article 3 of the Housing Lease Protection Act / [2] Article 3 of the Housing Lease Protection Act, Article 578 (3) of the Civil Act

[1] Supreme Court Order 98Ma1031 dated August 24, 1998 (Gong1998Ha, 2491)

Plaintiff (Law Firm Han, Attorneys Hong Jin-jin et al., Counsel for the plaintiff-appellant)

Defendant

Seoul High Court Decision 2002Na18604 delivered on November 1, 2002

The judgment below is reversed and the case is remanded to Seoul High Court.

1. Summary of the judgment of the court below

According to the reasoning of the judgment below, the court below, as the defendant's original ownership, notified the defendant of the auction on May 298, 36 million won, the establishment registration of a mortgage as the National Federation of Korea on October 18, 1999, the establishment registration of a mortgage as the non-party 1 was completed on the non-party 1, and the non-party 2 was initiated on December 23, 199 on the non-party 2, the Seoul District Court's non-party 5837, which was the non-party 2's non-party 2's non-party 1's claim for damages against the defendant on the non-party 3's auction on the non-party 20th day of December 13, 200, which was the non-party 3's claim for damages against the non-party 4's non-party 5's non-party 1's non-party 2's non-party 1's right to lease. On the other hand, the defendant 3's non-party 40.

2. The judgment of this Court

The judgment of the court below is not acceptable in the following respect.

In the auction procedure of real estate, where there is a priority priority right than the right of priority right which has the requisite for setting up under Article 3 of the Housing Lease Protection Act, if the priority right is extinguished due to the successful bid, the subordinate right will lose its opposing power in order to guarantee the secured value of the right of priority right. However, where the priority right has expired due to the successful bid and prior to the successful bid payment date, which is the time when the successful bidder acquires ownership, prior priority right has expired due to other reasons, there is no priority right which is damaged due to the existence of the right of lease with opposing power, and thus no priority right is extinguished (see Supreme Court Order 98Ma1031 delivered on August 24, 1998). However, if the debtor fails to notify the successful bidder of the fact that the priority right continues to exist due to the existence of the right of priority right, the debtor is liable for compensation for damages to the successful bidder pursuant to the provisions of Article 58(3)7 of the Civil Act.

When considering the facts acknowledged by the court below in light of the above legal principles, as long as the defendant, as the debtor, was well aware of the circumstances causing the burden of maintaining the right of lease with the opposing power of Nonparty 4 on the apartment of this case, which is the object of auction, and failed to notify the successful bidder thereof to the plaintiff, the defendant shall be liable to compensate for the damages

On the other hand, any person who intends to participate in an auction shall analyze the legal relationship on the objects of auction based on the public notice of auction, the specification of objects of auction and the records of execution, etc. under his responsibility and risk burden, and determine whether to participate in the auction and the bid price. However, as seen above, any change in circumstances that occurred after the date of auction shall not have the highest bidder or the successful bidder bear any burden.

On the grounds stated in its reasoning, the lower court determined that the Defendant cannot be liable for damages. In so doing, it erred by misapprehending the legal principles on auction under Article 578 of the Civil Act and seller's warranty liability.

3. Conclusion

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 Yoon Jae-chul (Presiding Justice)