[1] The requirements for the application of the Act on Security over Provisional Registration, etc. in a case where the priority mortgage was established at the time of the reservation with respect to provisional registration security based on the pre-contract for transfer of property right

[2] In a case where a creditor has made a provisional registration for the purpose of securing a claim but failed to obtain repayment, but made a principal registration based on a provisional registration, the legal relationship in a case where the "Act on Provisional Registration Security, etc." is not applicable

[1] The Act on Provisional Registration, Security, etc. applies where the value at the time of the reservation of property exceeds the sum of the borrowed amount and the interest attached thereto with respect to provisional registration by the reservation for transfer of property rights. In case where prior collateral is established with respect to the property at the time of the promise for transfer of property rights, the Act shall apply only where the remaining value after deducting the secured amount from the value of the property exceeds the aggregate of the borrowed amount

[2] Even where the Provisional Registration Security Act is not applicable, where a creditor has made a provisional registration on a real estate for the purpose of securing a claim, but failed to obtain the repayment by the due date, and thereby made a principal registration of transfer of ownership on the basis of the provisional registration, barring any special agreement between the parties that the obligation ceases to exist if the debtor fails to repay the secured obligation at the due date, and that the ownership of the real estate is finally attributed to the creditor, the principal registration also becomes the so-called "a weak meaning of transfer for security" in which the settlement procedure is scheduled because the principal registration has been made for the purpose of securing a claim. In addition, where a weak meaning of transfer for security has been taken place, the debtor may repay the obligation at any time even after the due date for the obligation expires and request the creditor to cancel the principal registration on the basis of

[1] Article 1 of the Provisional Registration Security Act / [2] Article 372 of the Civil Act / [Transfer for Security], Article 1 of the Provisional Registration Security Act

[1] Supreme Court Decision 90Da24526 delivered on February 26, 1991 (Gong1991, 1083), Supreme Court Decision 93Da2761 delivered on October 26, 1993 (Gong1993Ha, 3181), Supreme Court Decision 2005Da53 delivered on June 10, 2005 / [2] Supreme Court Decision 90Da1548 delivered on July 26, 1991 (Gong191, 2237), Supreme Court Decision 91Da35175 delivered on January 21, 1992 (Gong192, 894). Supreme Court Decision 94Da38135 delivered on February 17, 1995 (Gong194, 194), Supreme Court Decision 194Da38135 delivered on June 13, 2015).

Plaintiff (Law Firm Jin Law, Attorneys Im Soo-soo et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm Busan, Attorneys Park Mine-cheon et al., Counsel for the defendant-appellant)

Daejeon High Court Decision 2004Na9501 Delivered on September 7, 2005

The judgment of the court below is reversed, and the case is remanded to Daejeon High Court.

1. The judgment of the court below

In full view of the selected evidence, the court below held that the plaintiff 2 was liable for cancellation of the above provisional registration of 100 million won and 20 billion won for the loan interest rate of 10 billion won and 20 billion won for the above provisional registration of 100 million won and 200 million won for the loan interest rate of 10 billion won and 200 million won for the above provisional registration of the loan interest rate of 10 billion won and 300 million won for the loan of 20 billion won for the above provisional registration of the loan of 100 million won and 200 million won for the above provisional registration of the loan of 10.7 billion won for the loan of 20 billion won and 10 billion won for the above provisional registration of the loan of 30 billion won and 100 million won for the loan of 20 billion won and 100 million won for the above provisional registration of the loan of this case. The defendant completed the provisional registration of 100 million won and 200 million won for the loan of this case.

2. The judgment of this Court

However, we cannot accept the above decision of the court below for the following reasons.

The Provisional Registration Security Act applies when the value of the property as at the time of the reservation exceeds the sum of the borrowed amount and the interest attached thereto in a provisional registration based on the pre-contract for the transfer of property right (see Supreme Court Decision 93Da27611 delivered on October 26, 1993, etc.), but it is reasonable to view that the provisional registration security Act applies only when the prior mortgage has been established on the property at the time of the pre-contract for the transfer of property right, the remainder after deducting the secured amount from the value of the property exceeds the sum of the borrowed amount and the interest attached thereto (see Supreme Court Decisions 90Meu24526 delivered on February 26, 1991, 205Da53 delivered on June 10, 2005, etc.).

Therefore, as acknowledged by the court below, if the senior mortgage was established on the instant share at the time of the instant agreement, and the amount of the secured debt of the Plaintiff was KRW 350 million, the remaining amount which remains after deducting the above secured debt amount from the value of the instant share cannot be deemed to exceed KRW 200 million as the secured debt amount of the provisional registration of this case. Thus, the provisional registration of this case cannot be deemed to be subject to the Provisional Registration Security Act, and therefore, the provisional registration of this case cannot be deemed to be invalid registration solely on the ground that the Defendant did not undergo the liquidation procedure under the Provisional Registration Security Act.

Nevertheless, the court below decided that the principal registration of this case was null and void because it did not go through the liquidation procedure prescribed in the Provisional Registration Security Act. Thus, the court below erred in the misapprehension of legal principles as to the scope of application of the Provisional Registration Security Act, and it clearly affected the judgment.

In addition, the court below accepted the claim for cancellation of the provisional registration of this case on condition that the principal registration of this case is null and void because it did not go through the liquidation procedure prescribed in the Provisional Registration Security Act. As seen earlier, the judgment of the court below shall be reversed in its entirety, unless it cannot be deemed that the Provisional Registration Act applies to the provisional registration of this case.

However, in the case where the Provisional Registration Security Act is not applicable, if a creditor has made a provisional registration on a real estate for the purpose of securing a claim, but failed to obtain repayment by the due date, as in the case, and the principal registration of transfer of ownership on the basis of the above provisional registration was made, the obligation should be extinguished if the debtor fails to repay the secured obligation at the due date, and the ownership of the real estate is finally attributed to the creditor, unless otherwise expressly provided, the obligation shall also be deemed to have become the so-called “a weak meaning transfer of ownership” which is planned to settle as the object of securing a claim (see Supreme Court Decisions 94Da38113, Feb. 17, 1995; 2003Da46963, Jul. 15, 2005; 2003Da46963, Jul. 15, 2005). Thus, the court below shall determine whether the above provisional registration should be cancelled at any time before the creditor executes the security right, and it shall be determined by examining the above provisional registration between the Plaintiff and the obligee.

3. Conclusion

Therefore, 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 Kim Ji-hyung (Presiding Justice)