In a case where a housing constructor and a registered business entity have entered into a joint and several guarantee agreement for the completion of the housing concerned and the cancellation of the mortgage on the site, the case holding that the legal relationship is a contract for a third party

In a case where a registered housing constructor and a registered housing constructor agree to provide joint and several sureties for the completion of the relevant house and the implementation of cancellation of mortgage on the relevant site at the request of the housing developer prior to the submission of joint and several sureties under Article 7 of the former Rules on Housing Supply, unless there are any special circumstances otherwise, the housing developer has entered into a contract for a so-called conditional third party by which the registered housing developer agrees to perform the duty of housing supply in sales contract on behalf of the residents who have lawfully concluded a sales contract with the housing developer when the registered housing developer fails to perform the completion of the relevant house and cancellation of mortgage on the site. In a case where the housing constructor submitted to the competent authority for joint and several sureties provided by the registered housing constructor under such an agreement to delay the construction of the relevant house or lose its capacity, the residents who have lawfully concluded the sales contract may exercise their rights under the sales contract on behalf of the housing developer.

Articles 147 and 539 of the Civil Act, Article 32 of the former Housing Construction Promotion Act (amended by Act No. 4675 of Dec. 31, 1993), Article 7 of the former Rules on Housing Supply (amended by Ordinance of the Ministry of Construction and Transportation No. 537 of Sept. 1, 1993)

Stung Construction Co., Ltd. (Attorney Yang-soo, Counsel for defendant-appellant)

Defendant 1 and five others (Attorney Landscaping-dae et al., Counsel for the defendant-appellant)

Seoul High Court Decision 94Na15266, 15273, 95Na3597, 38037, 40085 delivered on December 12, 1995

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

The grounds of appeal are also examined.

(1) The purpose of Article 32 of the former Housing Construction Promotion Act (amended by Act No. 4675 of Dec. 31, 1993) is to provide for matters necessary for the construction, supply, financing, operation, etc. of housing for the purpose of stabilizing the residential stability of the non-resident of the housing and enhancing the housing standards for all citizens. Article 32 of the same Act (amended by Act No. 4675 of Dec. 31, 1993) delegates to the Minister of Construction and Transportation the terms, methods, and procedures, etc. of housing supply to be followed when a housing construction business operator registered under Article 6 of the same Act constructs and supplies housing. Accordingly, the former Rules on Housing Supply (amended by the Ordinance of the Ministry of Construction and Transportation No. 537 of Sep. 1, 1993) provides for the recruitment of occupants only when the construction process of the housing in question reaches or exceeds a certain standard, but it is possible for the said housing construction business operator to secure the ownership of the housing site and its construction right before the completion of the housing construction.

Therefore, where a housing construction business operator submits to the competent authority joint and several sureties of a registered business operator with three or more construction rights for the completion of the house in question and the execution of cancellation of mortgage on the site (hereinafter referred to as the “registered business operator”), even if the construction process of the house in question does not reach a certain standard and the site for construction of the house in question is the object of mortgage, it is possible to invite occupants. As such, under the premise that the recruitment of occupants is permitted in advance, requiring the registered business operator to submit joint and several sureties of the registered business operator to submit the registered housing as a premise that allows the recruitment of occupants. As such, even if the housing construction business operator fails to reduces the ability to cancel mortgage after the completion of the house in question and the receipt of the down payment and the intermediate payment from the occupants, or fails to cancel the mortgage on the site due to the delay of construction work on the house in question, the registered business operator who submitted joint and several sureties fails to complete the house and supply the house to the occupants and cancel the mortgage on the site.

Therefore, if a registered housing construction business operator and a registered housing construction business operator agreed to provide joint and several sureties for the completion of the relevant house and the cancellation of mortgage on the site prior to the submission of joint and several sureties, barring any special circumstance, it shall be deemed that the registered housing construction business operator entered into a contract for the so-called conditional third party by the agreement that the registered housing construction business operator carries out the completion of the relevant house and the cancellation of mortgage on the relevant site in lieu of the registered housing construction business operator and the residents who lawfully concluded the sales contract with the housing construction business operator in lieu of the registered housing construction business operator to perform the duty of housing supply under the sales contract. In the event that the conditions are fulfilled by the housing construction business operator who submitted the joint and several sureties provided by the registered housing construction business operator to the competent authority pursuant to such agreement, the residents who lawfully concluded the sales contract can express their intention of profit and exercise the right under the sales

(2) According to the reasoning of the judgment below, the non-party 1 and the non-party 1 and the non-party 1 and the non-party 1 and the non-party 1 and the non-party 1 and the non-party 2 and the non-party 1 and the non-party 1 and the non-party 1 and the non-party 1 and the non-party 2 and the non-party 1 and the non-party 1 and the non-party 1 and the non-party 2 and the non-party 1 and the non-party 1 and the non-party 3 and the non-party 1 and the non-party 9 were the non-party 1 and the non-party 2 were the non-party 1 and the non-party 1 and the non-party 2 were the non-party 1 and the non-party 1 and the non-party 1 and the non-party 1 and the non-party 2 were the non-party 1 and the non-party 1 and the non-party 1 and the non-party 1 and the non-party.

Nevertheless, the court below held that, when the non-party company applied for the announcement of the invitation of residents pursuant to Article 7 of the Rules on Housing Supply, it cannot be viewed that the plaintiff succeeded to the rights and obligations of the non-party company as a matter of course to the non-party company, or the guarantee company entered into a contract with the authority for the third party with the non-party company, even if the guarantee company, including the plaintiff, submitted the certificate to the effect that the non-party company is jointly and severally liable for the completion of the apartment construction and the cancellation of the mortgage on the site following the invitation of occupants of the above apartment, it is merely interpreted that the guarantee company, as it is on the face of the above joint and several surety, guarantees the relevant authority for the completion of the apartment construction and the cancellation of the mortgage on the site. Therefore, the court below's decision did not err by misapprehending the purpose of Article 7 of the Rules on Housing Supply and the legal principles as to the contract for the third party, and it did not affect the conclusion of the contract between the plaintiff and the non-party company (the non-party company).

(3) Therefore, without examining the remaining grounds of appeal by the Defendants, we reverse and remand the judgment below. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Don-hee (Presiding Justice)