In the interpretation of Article 35-2 (1) of the former Real Estate Brokerage Act, whether the Korea Licensed Real Estate Agent Association (formerly named: the Korean Real Estate Brokerage Association) can conduct a mutual aid business to guarantee only the responsibility of Article 19 (1) of the same Act, and whether the mutual aid business cannot be conducted to guarantee the responsibility of Article 19 (2) of the same Act (negative)

Articles 19(1) and (2), and 35-2(1) of the former Real Estate Brokerage Act (amended by Act No. 4628, Dec. 27, 1993); Article 19(1) of the former Real Estate Brokerage Act (amended by Act No. 7638, Jul. 29, 2005; see Articles 30(1) and (2) (see current Licensed Real Estate Agents’ Business Affairs and Report of Real Estate Transactions Act; see current Licensed Real Estate Agents’ Business Affairs and Report of Real Estate Transactions) and (3) (see current Licensed Real Estate Agents’ Business Affairs and Report of Real Estate Transactions) and 35-2(1) (see current Licensed Real Estate Agents’ Business Affairs and Report of Real Estate Transactions Act).

Plaintiff

Korean Licensed Real Estate Agent Association (Law Firm Lin-type, Attorneys Sung-hwan et al., Counsel for the plaintiff-appellant)

Daejeon District Court Decision 2005Na5445 Decided September 9, 2005

The judgment below is reversed, and the case is remanded to Daejeon District Court Panel Division.

We examine the grounds of appeal.

1. The measure of the court below

According to the reasoning of the judgment below, the court below held that the non-party 1, a broker of non-party 2, caused property damage to the plaintiff who is a party to a transaction while acting as a broker at the non-party 1's brokerage office. Thus, the non-party 1, who provided his/her own brokerage office to another person's place of brokerage act, is liable for damages to the plaintiff pursuant to Article 19 (2) of the Real Estate Brokerage Act (hereinafter "the Brokerage Act"), but the plaintiff's claim seeking the payment of mutual aid money pursuant to the mutual aid agreement between the defendant and the non-party 1, who is a mutual aid business operator to guarantee the liability for damages of the broker, is not liable for damages under Article 19 (3) of the Brokerage Act. The non-party 1, a broker, in order to guarantee the liability for damages under Article 35-2 (1) and (2) of the Act, is not liable for damages to the plaintiff as a whole under Article 19 (1) of the Act.

2. Judgment of party members

A. Interpretation of the Brokerage Business Act

Article 19(1) of the former Brokerage Business Act (amended by Act No. 4628 of Dec. 27, 1993) provides that a broker shall be liable for damage to a transaction party in the course of acting as a broker; Article 19(2) provides that a broker shall buy a guarantee insurance or enter into a mutual aid association or deposit to guarantee his/her liability; Article 35-2(1) provides that “the Association may carry on a mutual aid business to guarantee the broker’s liability pursuant to Article 19(1).”

After that, upon the amendment of the Brokerage Act by Act No. 4628 of Dec. 27, 1993, Article 19(2) was newly established that “a broker is liable to compensate for damages incurred to a transaction party by providing his/her brokerage office to another person’s brokerage place.” In this case, Article 19(2) of the former Act provides that “(3) of the former Act provides that “(1)” shall be “paragraphs (1) and (2)” and Article 19(2) of the former Act provides that “the broker shall subscribe not only Article 19(1) but also Article 19(2)” and Article 35-2(1) of the Brokerage Act provides that “Article 19(1) of the former Act provides that the broker shall subscribe to the deduction, etc. to guarantee the responsibility of Article 19(1) and (2).”

As above, establishing Article 19(2) of the Brokerage Act with the amendment of Article 4628 of the Act, and requiring a broker to enter into a mutual aid agreement to guarantee responsibilities under paragraphs (1) and (2) of the Article 19 is to ensure that a real estate broker is liable for damages suffered by a transaction partner even if he/she lends his/her license without operating his/her office directly. Thus, if it is interpreted that a mutual aid project under Article 35-2 of the Brokerage Act is solely to guarantee responsibilities under Article 19(1) of the Act and that a mutual aid project is not carried out to guarantee responsibilities under paragraph (2) of the Article 4628, it does not comply with the purpose or legislative intent of the above amendment of the Brokerage Act.

Meanwhile, the Act on Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions, which was enacted by Act No. 7638 on Jul. 29, 2005 and enforced on Jan. 30, 2006, replacing the Brokerage Act, provides the same contents as Article 30(1) through (3) of the Brokerage Act, and Article 19(1) through (3) of the Act on Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions, and Article 42 of the Act on Mutual Aid, which is a provision on Mutual Aid, may carry on mutual aid business to guarantee the liability of the broker under Article 30, and Article 42 of the Act on Mutual Aid, which is a provision on Mutual Aid, provides that a mutual aid business may be carried on to ensure not only the liability under Article 19(1) of the Brokerage Act, but also

In light of the overall structure of the provisions of the former Brokerage Act, the current Brokerage Act, and the Act on Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions, and the purpose and circumstances of the amendment under Article 4628 of the Act, etc., Article 19(2) of the Act on the Brokerage Business (amended by Act No. 4628) is newly established, and Article 4628 is amended to “Paragraph 1 and Paragraph 2 of the same Article,” and Article 35-2(1) of the Act on Mutual Aid, which is one of the measures, provides that the broker shall take measures to guarantee the liability of Paragraph 2 of the newly established Article 35-2(1), while Article 35-2(1) of the Act on the Brokerage Business (amended by Act No. 19(1) does not change the provisions referring to “Article 19(1) and (2)” to “Article 19(1) is highly likely to cause mistake in the process of amendment, and thus, Article 35(1)9-2(1) of the Act does not apply only to mutual aid business.

Thus, Article 35-2(1) of the Brokerage Business Act provides that the defendant's mutual aid business is only subject to the responsibility under Article 19(1) of the Brokerage Business Act and the responsibility under Article 19(2) cannot be a ground provision for not subject to the responsibility. Thus, in general, whether the defendant operated a mutual aid business to guarantee only the responsibility under Article 19(1) of the Brokerage Business Act, and in this case, whether the mutual aid agreement between the non-party 1 and the defendant is a content that guarantees only the responsibility under Article 19(1) of the Brokerage Business Act should be separately reviewed.

B. Actual operation of mutual aid projects by the defendant and interpretation of the terms of mutual aid by the defendant

If the Defendant’s mutual aid business guarantees only the liability of Article 19(1) of the Brokerage Business Act and does not guarantee the liability of Article 19(2), Article 22(1)6 of the Brokerage Business Act provides that “where a broker commences his/her business without taking measures to guarantee liability for damages under Article 19(3)” as the ground for cancellation of registration, the broker cannot be deemed to have fulfilled his/her obligation under Article 19(3) by itself, and it is inevitable to take measures such as purchase of a surety insurance or deposit to guarantee liability under Article 19(2). Thus, it is doubtful that the effectiveness of mutual aid can be significantly reduced, and it is not doubtful that the Defendant’s normal operation of mutual aid business is not possible, and that the Defendant is not liable for damages under Article 19(2)6 of the Brokerage Business Act for establishing a comprehensive mutual aid business without taking measures to guarantee the minimum amount of liability for damages under Article 9(2)9 of the Enforcement Decree of the said Act (the broker is not liable for establishing a mutual aid business under Article 19(2).

The court below cited that the provision of Article 1 of the Terms and Conditions of Mutual Aid is identical to that of Article 19(1) of the Act, on the ground that there is no liability to compensate the Defendant for the liability under Article 19(2). However, in light of the above circumstances of the amendment process of the Brokerage Act, the above provision of Mutual Aid is insufficient to serve as a ground for restricting the scope of mutual Aid by the Defendant.

C. Sub-committee

Therefore, the court below should have determined whether the defendant actually operated the mutual aid to guarantee only the responsibility under Article 19(1) of the Brokerage Business Act; in this case, what measures are taken to guarantee the liability under Article 19(2) of the same Act; how to determine the scope of the mutual aid business; further, the circumstances where the non-party 1 entered into a mutual aid contract with the defendant in this case and the parties' intent at the time of entering into the above contract; and accordingly, the court below should have determined whether the liability of the plaintiff 1 under Article 19(2) of the Brokerage Business Act is subject to the defendant's liability under Article 35-2(1) of the Brokerage Business Act and Article 1 of the Terms and Conditions of Mutual Aid; the defendant's mutual aid business is subject to compensation under Article 19-2(2) of the Brokerage Business Act; the court below should have determined that the defendant's mutual aid business is subject to the defendant's compensation under Article 19(2) of the same Act; or it did not err in the misapprehension of legal principles as to the terms and conditions.

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal by the Plaintiff, 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 Shin Shin-chul (Presiding Justice)