The meaning of "where a lessee fails to comply with conversion for sale in lots for at least six months after approval for conversion in lots" under Article 21 (7) of the former Rental Housing Act, and whether Article 21 (7) of the former Rental Housing Act applies in cases where a lessee who did not have preferential right to conversion in lots purchases a rental house residing by him/her in accordance with the procedures for conversion in lots or a third party purchases such rental house (negative)

Article 21(1), (3), (4), (7), and (10) of the former Rental Housing Act (Amended by Act No. 11021, Aug. 4, 201)

Lichi Development Co., Ltd. (Attorney Lee Im-soo, Counsel for the plaintiff-appellant)

Defendant (Law Firm Lee & Lee, Attorneys Kim U-woo et al., Counsel for the defendant-appellant)

Suwon District Court Decision 2016Na76220 decided July 13, 2017

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Article 21 of the former Rental Housing Act (amended by Act No. 11021, Aug. 4, 201; hereinafter “former Rental Housing Act”) provides, “Where a rental business operator constructs housing with funding from the National Housing Fund or constructs housing on a housing site developed by a public project after the expiration of the mandatory rental period with approval for a project plan pursuant to Article 16 of the Housing Act, the rental business operator shall make a conversion to parcelling-out preferentially to any of the following lessees,” and Article 21(1) of the former Rental Housing Act provides, “Where he/she intends to make a conversion of rental housing pursuant to paragraph (1), he/she shall apply for approval for conversion to parcelling-out to the head of a Si/Gun/Gu.” Furthermore, Article 21(4) of the former Rental Housing Act provides, “The head of a Si/Gun/Gu shall, upon receipt of an application for approval for conversion to parcelling-out, within 30 days, and the head of a Si/Gun/Gu shall grant approval for conversion to parcelling-out pursuant to paragraph (10).”

The purport of the former Rental Housing Act’s aforementioned provision is to ensure a lessee’s preferential right to convert into lots so that lessee can purchase a rental house in a stable manner. In light of the legislative purport of the former Rental Housing Act and the structure of Article 21(7) of the former Rental Housing Act, the term “where a lessee fails to comply with conversion into lots for at least six months after approval for conversion into lots” under Article 21(7) of the former Rental Housing Act refers to cases where a lessee who has the right to conversion into lots pursuant to Article 21(1) of the former Rental Housing Act fails to comply with conversion into lots for at least six months after approval for conversion into lots pursuant to Article 21(4) of the former Rental Housing Act. Therefore, Article 21(7) of the former Rental Housing Act does not apply to cases where a lessee who has no right to conversion into lots purchases a rental

2. A. The lower court acknowledged the following facts by citing the reasoning of the first instance judgment.

(1) The apartment house of this case is a constructed rental house constructed with the funding from the National Housing Fund, which is given a preferential right of purchase conversion to a homeless lessee.

(2) On April 29, 2010, the Defendant entered into a lease agreement with the Dong Mine Comprehensive Construction Co., Ltd., the project implementer of the instant apartment. Meanwhile, Article 21 of the former Rental Housing Act provides that only those tenants, etc. who have resided in the relevant rental house from the date of occupancy to the date of conversion for sale in lots shall be preferentially converted for sale in lots except in special circumstances, and Article 6 of the said agreement prohibits transfer of the right of lease and sub-lease in accordance with the purport

(3) However, the Defendant was ordered to suspend indictment from the prosecution on August 11, 2016 on the grounds of the suspicion of violating the Rental Housing Act, such as making a resident registration on the instant apartment only after subleting the instant apartment to a third party and moving into it on December 3, 2014.

(4) On December 30, 2014, the Plaintiff, including the instant apartment, obtained succession to the status of the rental business operator and completed each registration of the transfer of ownership from the 270-household apartment including the instant apartment.

(5) On November 10, 2015, the Plaintiff obtained approval for the conversion of the instant apartment from the competent authority for sale in lots, and concluded a general sale agreement on the instant apartment with the Defendant on November 12, 2015 on the ground that the Defendant was not a lessee having preferential right of sale in lots. Meanwhile, the pre-sale conversion price for which the lessee having preferential right of sale in lots can purchase the instant apartment is KRW 80,125,00,00 for the pre-sale conversion price for which the lessee having preferential right of sale in lots can purchase the instant apartment.

B. Examining these facts in light of the legal principles as seen earlier, insofar as the Defendant did not continuously reside in the instant apartment from the date of occupancy under the instant lease agreement to the date of sale for sale for sale from the date of occupancy to the date of sale for sale for sale for sale, it is not a lessee holding the right to preferential sale conversion pursuant to Article 21(1) of the former Rental Housing Act. Therefore, Article 21(7) of the former Rental Housing Act that provides that the Plaintiff shall sell the relevant apartment

In the same purport, the lower court is justifiable in rejecting the Defendant’s assertion that the portion paid in excess of KRW 80,125,00, which was the pre-sale conversion price of the instant apartment under the former Rental Housing Act, should be returned as unjust enrichment on the ground that the Plaintiff could not demand compliance with the standard for calculating pre-sale conversion price under the former Rental Housing Act. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did

3. Therefore, the appeal is dismissed, 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 Cho Jae-chul (Presiding Justice)