[1] Requirements for part of one building to become the object of sectional ownership, and whether the purchaser can acquire ownership in the auction procedure, part of the building which failed to meet the physical requirements suitable for the object of sectional ownership (negative)

[2] Notwithstanding the fact that a person, who registered the portion of a building not having independence in structure and use as a sectioned building on the building management ledger and completed the registration of preservation of ownership, concluded a sales contract for the part of a building and completed the registration of ownership transfer pursuant thereto, or the person, etc., who completed the registration of ownership transfer by entering into a mortgage contract and completed the registration of ownership transfer pursuant thereto, may be deemed as violating the principle of trust and good faith to claim the implementation of the registration of destruction or transfer of the said part of a building (affirmative)

[1] If a part of one building is to be the object of sectional ownership, its part must be independent from other parts in terms of its use, structure, as well as from other parts. A sectional ownership right cannot be established for a part of the building which fails to meet the physical requirements suitable for such sectional ownership. Even if such part of the building is registered as an independent sectional building on the building management ledger and is registered as an independent sectional ownership on the register, and the auction procedure is conducted for the purpose of sectional ownership and the purchase price was paid after obtaining a permit for sale based on such registration, the registration alone is not effective and its registration cannot be acquired by the buyer.

[2] Even though a person, who registered the part of a building as a sectioned building on his/her own as a building management ledger and completed the registration of preservation of ownership, could have independence in structure and use of the building, it is reasonable to conclude that such registration is null and void against the person, who completed the registration of ownership transfer by entering into a contract with him/her, or the person, etc. who completed the registration of ownership transfer by entering into a contract with him/her and entering into a mortgage contract with him/her, and claims the performance of the registration of destruction or loss or the delivery of the said part of the building. This legal principle also applies to a case where a person, who purchased the relevant part of a building and completed the registration of ownership transfer as a sectioned building in a voluntary auction procedure based on the right to collateral security

[1] Article 215 of the Civil Act, Article 1 and Article 2 subparagraph 1 of the Act on the Ownership and Management of Aggregate Buildings / [2] Articles 2, 186, and 215 of the Civil Act, Article 1 and Article 2 subparagraph 1 of the Act on the Ownership and Management of Aggregate Buildings

[1] Supreme Court Order 2009Ma1449 dated January 14, 2010 (Gong2010Sang, 703)

Young-jin Development Co., Ltd. (Law Firm Apex, Attorneys Scar-gi et al., Counsel for the plaintiff-appellant)

Lot shopping Co., Ltd. (Attorneys Son Ji-yol et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2013Na75344 decided December 4, 2014

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 grounds of appeal are examined.

1. A. If a part of a building intends to become an object of sectional ownership, its part must be independent from other parts in structure, as well as from the usage thereof. A sectional ownership right cannot be established for the part of the building that failed to meet physical requirements, which is an object of sectional ownership. Even if such part of the building is registered as an independent sectional building on the building management ledger and is registered as an object of sectional ownership on the register, and the auction procedure was conducted for the purpose of sectional ownership and the purchase price was paid after receiving a permit for sale based on such registration, the registration alone is not effective, and the buyer cannot acquire ownership (see Supreme Court Order 2009Ma1449, Jan. 14, 2010, etc.).

B. However, even in such a case, even if one building was newly constructed and the person who registered the portion of the building as a sectioned building and completed the registration of preservation of ownership could have independence in structure and use, it may be argued that such registration is null and void against the person who completed the registration of ownership transfer or the person who completed the registration of ownership transfer by entering into a sales contract with him/her as to the part of the building, or the person who completed the registration of ownership transfer by entering into the contract with him/her and entering into the contract with him/her, and claiming the implementation of the registration procedure for destruction or the above delivery of the said part of the building is against the principle of trust and good faith. Such a legal principle also applies to a case where a person who purchased the relevant part of the building and completed the registration of ownership transfer as a sectioned building in an arbitrary auction procedure based on the right

(1) In a sales contract aimed at acquiring ownership of a sectioned building, the seller’s duty to transfer ownership is original impossibility, so that the contract is null and void, it should be deemed that the object of the sale is a sectioned building at the time of the sales contract, and the object of the sale and purchase should have independence in structural structure and use pursuant to the terms and conditions agreed between the parties (see Supreme Court Decision 2017Da225398, Dec. 22, 2017). Therefore, even if the object of the sale and purchase fails to meet the physical requirements appropriate for the object of the sectional ownership at the time of registration of ownership preservation, such circumstance alone cannot be deemed null and void. Rather, the title holder bears the duty to allow the buyer or the mortgagee to meet the requirements of the object of the sale and purchase as a sectioned building according to the sales contract, etc.

Therefore, it is difficult for a person who is obliged to meet the requirements as a sectioned building to seek the delivery of an object against the trading partner or the pre-paid transferee, etc. on the ground that he/she fails to meet the requirements as a sectionally partitioned building.

(2) In addition, even if part of a building does not meet the physical requirements suitable for the sectional ownership, registration of ownership preservation and registration of ownership transfer, etc. based thereon are completed, if the above requirements are met to be the objects of sectional ownership as prescribed by the Act on Ownership and Management of Condominium Buildings, such registration may be deemed effective (see Supreme Court Decision 2013Da59876, Jan. 28, 2016). In other words, registration completed on the sole ground that part of a building does not meet the requirements as a sectional ownership becomes final and conclusive.

2. The reasoning of the lower judgment reveals the following facts.

A. The Plaintiff newly constructed the Suwon-si Building ( Address omitted) ○○○○○○○ (hereinafter “instant commercial building”) and completed the registration of initial ownership on September 16, 2003 with respect to the 31 stores listed in the [Attachment 1] List of the lower judgment, which are part of the two stores of the instant commercial building (hereinafter “each of the instant stores”). At the time, the registration of initial ownership was completed on September 16, 2003, with respect to each of the instant stores listed in the [Attachment 1] list. A part of each of the floors of the instant stores was marked with a black tape, or a part of each of the instant stores was divided into a light rail with a wheels of 1.3 to 1.4 meters high, and there was no particular boundary mark or number (unit number).

B. As to each of the instant stores, the right to collateral security was set up by Suwon District Livestock Cooperatives, etc., but all of the stores was sold or sold by February 14, 2008 through the auction procedure or public sale procedure. The Defendant finally purchased all of them and completed each registration of ownership transfer on February 9, 2010.

C. The Defendant currently uses each of the instant stores as a single unit and operates a large toy store.

3. A. In this case, as each of the instant stores did not have independence in structure and use as a sectioned building at the time of registration of ownership preservation, the registration after registration of ownership preservation is null and void, and the Plaintiff asserts that it is the original acquisitor as the original acquisitor, and seek against the Defendant to implement the registration procedure for destruction of each of the instant stores and to deliver the part possessed by the Defendant.

B. However, in light of the aforementioned legal principles and records, it is highly probable that the Plaintiff’s claim is against the principle of trust and good faith for the following reasons.

(1) After constructing the instant commercial building, the Plaintiff voluntarily registered each of the instant commercial buildings as a sectioned building, and concluded a mortgage-backed contract with the Suwon District Livestock Cooperatives, etc. as to each of the instant stores, and completed the registration of establishment of mortgage. Even if each of the instant stores at the time of registration of establishment of ownership does not meet the requirements as a sectioned building, the above mortgage-backed contract cannot be deemed null and void insofar as it does not reach the extent that it would be deemed impossible in light of social norms to meet such requirements. Therefore, barring special circumstances, the Plaintiff bears the duty to ensure that each of the instant stores may meet the requirements as a sectioned building. The Plaintiff’s exercise of its ownership against the other party on the ground that the Plaintiff did not meet the requirements as a sectioned building violates the concept of justice. This also applies to the relationship with the former transferee, such as the Defendant.

(2) In addition, even if each of the instant stores at present fails to meet the requirements as a sectioned building, if it is prepared in the future, each transfer of ownership in the future of the defendant can be deemed effective as registration of the sectioned building.

(3) Furthermore, the Plaintiff appears to have not raised any objection in the auction or public auction procedure for each of the instant sectioned stores, and filed the instant lawsuit at the expiration of ten years after completing the registration of initial ownership preservation in its future.

C. Nevertheless, solely based on its stated reasoning, the lower court determined that each of the instant claims by the Plaintiff contravenes the principle of good faith. In so determining, the lower court erred by misapprehending the legal doctrine on independence in structure and use of an aggregate building, the legal doctrine on invalidation of a contract, and the principle of good faith, thereby adversely affecting the conclusion of the judgment. The Defendant’s allegation contained in the grounds of appeal

4. Therefore, without examining the remainder of the grounds of appeal, the part against the defendant among the judgment below is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jae-hyung (Presiding Justice)