[1] The meaning of "delivery of a house" under Article 3 (1) of the Housing Lease Protection Act

[2] Whether the lease deposit is required to be paid in full at the time of a contract to grant the right to preferential payment to the lessee under the Housing Lease Protection Act (negative), and in cases where the lessee pays part of the lease deposit to the lessor and satisfies the requirements for counterclaim and the fixed date stated in the lease agreement document and then pays the remainder of the deposit later, whether the lessee has the right to preferential payment as to the whole lease deposit based on the time when the requirements for counterclaim and the fixed date are met

[1] When a lessee who has entered into a lease contract on a house completes the delivery of a house and resident registration, the third party has the opposing power from the following day. In this case, it shall be deemed that the resident registration has been made at the time of the moving-in report (Article 3(1) of the Housing Lease Protection Act). Moreover, the lessee who has the aforementioned requisite for counterclaim and the fixed date stated in the lease contract document has the right to receive the deposit from the proceeds of realizing the leased house (including the site), in preference to junior creditors or other creditors (Article 3-2(2) of the same Act).

Here, “delivery of a house” refers to the transfer of possession of a house, which is a leased object. In this context, possession refers to the objective relationship that can be deemed to have a factual control over a person under the generally accepted social norms. In order to be de facto control, the physical and practical control of the object is not necessarily required, and determination ought to be made in conformity with the generally accepted social norms in light of the time and spatial relationship between the object and the person, the principal right relationship, the possibility of interference with the other person, etc. In cases of transferring a rental house, whether the lessor transferred the key of the entrance or gate, whether the lessor informed the lessee of the automatic password, and whether the director can be

[2] The Housing Lease Protection Act does not require that the lease deposit be paid in full at the time of a contract, in addition to setting requirements for setting up against the lessee and having a fixed date on a lease agreement document to recognize the right to preferential payment of the lessee. Therefore, even if the lessee paid only a part of the lease deposit to the lessor, and the lessee subsequently paid the remainder of the lease deposit after meeting the requirements for counterclaim and the fixed date on a lease agreement document under Article 3(1) of the Housing Lease Protection Act, barring any special circumstance, it shall be deemed that the lessee has the right to be paid in preference

[1] Articles 3 (1) and 3-2 (2) of the Housing Lease Protection Act / [2] Articles 3 (1) and 3-2 (2) of the Housing Lease Protection Act

[1] Supreme Court Decision 2001Da78867 delivered on November 14, 2003, Supreme Court Decision 2005Da24677 Delivered on September 30, 2005

Plaintiff 1 and one other (Law Firm Subdivision, Attorneys Kim Jong-chul et al., Counsel for the plaintiff-appellant)

Defendant (Attorney Woo-chul et al., Counsel for the defendant-appellant)

Gwangju District Court Decision 2016Na50296 Decided January 13, 2017

The judgment below is reversed, and the case is remanded to the Gwangju District Court.

The grounds of appeal are examined.

1. When a lessee who has concluded a lease contract on a house has completed the delivery of a house and resident registration, the third party has the opposing power against the said lessee from the following day. In such cases, it shall be deemed that the resident registration has been made at the time of the moving-in report (Article 3(1) of the Housing Lease Protection Act). In addition, a lessee who has the aforementioned requisite for counterclaim and the fixed date stated in the lease contract document has the right to receive the deposit from the proceeds of realizing the leased house (including the site), in preference to any junior creditor or other creditors (Article 3-2(2)

Here, “delivery of a house” refers to the transfer of possession of a house, which is an object of lease. The possession refers to the objective relationship that can be deemed to have a factual control over a person under the socially accepted social norms. The possession does not necessarily require to physically and practically control an object to be de facto controlled. Determination ought to be made in conformity with the generally accepted social norms in light of the time and spatial relationship between the object and the human, the principal right relationship, the possibility of interference with the other person (see, e.g., Supreme Court Decisions 2001Da78867, Nov. 14, 2003; 2005Da24677, Sept. 30, 2005). In a case of delivery of a rental house, the following should be considered: (a) whether the lessor transferred the key to the present house or the gate to the lessee; (b) whether the lessor was informed of the automatic password, and whether the director could be appointed.

The Housing Lease Protection Act does not require the lessor to pay the lease deposit in full at the time of the contract, in addition to having the requisite for setting up against the lessee and the fixed date indicated in the lease agreement document. Therefore, even if the lessee paid only part of the lease deposit to the lessor and has the requisite for setting up against the lessor and the fixed date specified in the lease agreement document, and subsequently has paid the remainder of the deposit later, barring any special circumstance, it shall be deemed that the lessee has the right to be paid in preference to the subordinate right holder or other creditors with regard to the total lease deposit as at

2. The reasoning of the lower judgment and the record reveal the following facts.

A. On July 16, 2012, the Plaintiffs agreed to pay KRW 5 million out of the lease deposit to Nonparty 1 on August 16, 2012, the third floor detached housing (hereinafter “instant housing”) which is a new building located in the Gwangju Mine-gu ( Address 1 omitted), for the lease deposit of KRW 65 million, and the lease term of the instant housing from the delivery date to August 15, 2014 (24 months) (hereinafter “instant lease”). On the same day, the Plaintiffs paid KRW 5 million out of the lease deposit to Nonparty 1, and the remainder of KRW 60 million to be paid on August 16, 2012.

B. The Plaintiffs asked Nonparty 1, on the date of the contract, whether they can immediately move to Nonparty 1 as the instant housing No. 101, and Nonparty 1 notified the Plaintiffs of the present automatic number of the instant housing No. 101. On July 16, 2012, the Plaintiffs completed the move-in report as the instant housing No. 101, and obtained the fixed date, and transferred some of the instant apartment No. 101, including a household, etc., from the Gwangju North-gu ( Address 2 omitted) (hereinafter “the instant apartment”).

C. From that time until August 17, 2012, Plaintiff 1 resided in the instant housing No. 101 for the convenience of going out and going out of work in the neighborhood, and used mainly for the purpose of use, and on the weekend, Plaintiff 2 and Plaintiff 2 were sent out of the instant apartment that was the previous residence with Plaintiff 2. On the same day, Plaintiff 2 received the lease deposit of the instant apartment on August 17, 2012 and paid KRW 60 million to Nonparty 1 as the remainder of the lease deposit under the instant lease agreement, and thereafter, Plaintiff 1 and Plaintiff 1 lived together with the instant housing No. 101.

D. On July 30, 2012, the Defendant entered into a lease agreement with Nonparty 1 on the instant housing No. 303, and completed the registration of the establishment of a lease on a deposit basis on August 2, 2012 regarding the instant housing.

E. On August 21, 2012, Nonparty 1 sold the instant housing and housing site to Nonparty 2. Thereafter, Nonparty 2’s creditor filed an application for a compulsory auction on the instant housing and housing site with the Gwangju District Court Decision 2014Hu12155 on May 26, 2014, and carried out the auction procedure.

F. On July 1, 2015, the Gwangju District Court drafted a distribution schedule with the content that distributes the remaining amount of KRW 60,295,651 (hereinafter “instant distribution schedule”) in the order of five higher priority than the Plaintiffs on the date of distribution.

G. On July 8, 2015, the Plaintiffs raised an objection to the amount of distribution on the aforementioned date of distribution, and filed a lawsuit of demurrer against the distribution of the instant case.

3. The lower court, on the grounds that Plaintiff 2’s life in the instant apartment until August 17, 2012, and the 2.5t truck used at the time of the director on July 17, 2012, was used to move very low things compared to ordinary straws, and thus, cannot be deemed as a director for residential life, on the grounds that the Plaintiffs cannot be deemed to have been transferred the possession of the instant apartment house 101 around July 16, 2012.

However, at the time of the instant lease agreement, No. 101 was unfolded, and the lessor Nonparty 1 notified the Plaintiffs, the lessee, of the password, and the Plaintiffs transferred the instant house No. 101 on July 17, 2012. Therefore, it should be deemed that the instant house was handed over on July 17, 2012.

As seen earlier, the Plaintiffs paid part of the lease deposit on the date of the instant lease agreement, and completed the move-in report and the fixed date, and paid the remainder of the lease deposit, as prescribed by the instant lease agreement. Therefore, the base point of time for preferential payment is July 18, 2012 following the completion of the move-in report and the move-in report. Therefore, barring any special circumstance, the Plaintiffs are entitled to be paid prior to the Defendant with respect to the dividend on the auction of the instant housing and housing site.

Nevertheless, the lower court determined otherwise, that the Plaintiffs cannot be deemed to have received the instant housing No. 101 on July 16, 2012, and that there was no right to receive repayment prior to the Defendant who completed the registration of the establishment of a right to lease on a deposit basis by paying five million won out of the lease deposit and paying the remainder of the lease deposit before paying the lease deposit. In so doing, the lower court erred by misapprehending the legal doctrine on the delivery of housing and the right to preferential payment, which is the requisite for the counterclaim as prescribed in Articles 3(1) and 3-2(2) of the Housing Lease Protection Act, thereby adversely affecting the conclusion

4. The plaintiffs' appeal is with merit, and the judgment below is reversed, and 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 Chang-suk (Presiding Justice)