Where the owner of land, etc. completed the registration of transfer of ownership and the transfer of the ownership of the land, building, etc. in the settlement of cash under Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents but did not cancel the registration of creation of a neighboring mortgage, the scope of liquidation money which the reconstruction association may refuse payment by asserting simultaneous performance with the cancellation of the registration of creation of a neighboring mortgage (=the liquidation money equivalent to

In cases where land, buildings, etc. (hereinafter “land, etc.”) are to be liquidated in cash because they fall under the requirements prescribed by Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 11293, Feb. 1, 2012; hereinafter “former Act”), the obligation to pay liquidation money to the reconstruction association which is a project implementer and the obligation to transfer ownership without registration of restriction on the rights to be borne by the owner of land, etc. are concurrently performed.

However, where the owner of land, etc. completed the registration of transfer of ownership and transfer to a reconstruction association, but did not cancel the registration of relocation, the scope of liquidation money which the reconstruction association may refuse to pay by asserting simultaneous performance with the cancellation of the registration of establishment of relocation in cash settlement pursuant to Article 47 of the former Act shall be determined in accordance with the concept of equity and the principle of good faith in light of the fundamental purpose of recognizing the right to defense of simultaneous performance.

Article 47 of the former Act on the Maintenance and Improvement of Urban Areas provides that owners of land, etc. falling under the subparagraphs of Article 47 of the same Act shall be liquidated in cash, irrespective of their owners’ intent, for the smooth implementation of a reconstruction project. During that process, owners of land, etc. shall be obliged to cancel the registration of establishment of a mortgage with respect to land, etc. without having an opportunity to form a contractual relationship with a reconstruction association to acquire the right to collateral security established with respect to land, etc., and a reconstruction association to whom delivery is delivered may enjoy benefits from promoting a reconstruction project by using land, etc., and may claim cancellation of the registration of establishment of a mortgage within the scope of the maximum debt amount determined by Article 364 of the Civil Act. Considering that the registration of establishment of a mortgage within the scope of the maximum debt amount determined by Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Areas and the purport of Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Areas and the purport of the Act on the Maintenance and Improvement of Land, Etc.

Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 11293, Feb. 1, 2012; see current Article 47(1)); Articles 364 and 536 of the Civil Act

Supreme Court Decision 2008Da37780 Decided October 9, 2008 (Gong2008Ha, 1544) Supreme Court Decision 2009Da32850, 32867 Decided September 10, 2009 (amended) Supreme Court Decision 2012Da69159 Decided August 20, 2014

Plaintiff 1 and four others (Attorney Choi Han-chul, Counsel for the plaintiff-appellant)

Pool Market Reconstruction Project Association

Seoul High Court Decision 2011Na99896 decided October 26, 2012

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

The grounds of appeal are examined.

1. Where land, buildings, etc. (hereinafter “land, etc.”) is to be liquidated in cash as it falls under the requirements prescribed by Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 11293, Feb. 1, 2012; hereinafter “former Act”), the obligation to pay liquidation money and the obligation to transfer ownership without the restriction on the right to be borne by the owner of the land, etc., who is the project implementer, are in a simultaneous performance relationship (see Supreme Court Decision 2008Da37780, Oct. 9, 2008).

However, where the owner of land, etc. completed the registration of transfer of ownership and transfer to a reconstruction association, but did not cancel the registration of relocation, the scope of liquidation money which the reconstruction association may refuse to pay by asserting simultaneous performance with the cancellation of the registration of establishment of relocation in cash settlement pursuant to Article 47 of the former Act shall be determined in accordance with the concept of equity and the principle of good faith in light of the fundamental purpose of recognizing the right to defense of simultaneous performance.

Article 47 of the former Act on the Maintenance and Improvement of Urban Areas provides that owners of land, etc. falling under any of the subparagraphs of Article 47 of the same Act shall be liquidated in cash, irrespective of their owners’ intent, for the smooth implementation of a reconstruction project; (2) owners of land, etc. shall be obliged to cancel the registration of establishment of a neighboring housing association without having an opportunity to form a contractual relationship with a reconstruction association as to the acquisition of the right to collateral security established with respect to land, etc. in the process; (3) Housing associations transferred the registration of establishment of ownership with respect to land, etc. may enjoy profits accruing from the promotion of a reconstruction project using the land, etc.; and (4) if owners of land, etc. fail to file a claim for cancellation of the registration of establishment of a collateral security right within the scope of the maximum debt amount established pursuant to Article 364 of the Civil Act, such as the right to collateral security right to claim cancellation of the registration of establishment of a new housing association and the right to claim cancellation of the registration of establishment of a new housing association within the scope of 2070 percent of land, etc.

Unlike this, Supreme Court Decision 2009Da32850, 32867 Decided September 10, 2009, etc., which held that the reconstruction association may refuse payment by asserting simultaneous performance of the cancellation of the establishment registration of a mortgage on the whole liquidation amount if the ownership registration was not cancelled even after the owner of land, etc. completed the transfer registration and the transfer registration, etc., shall be modified to the extent inconsistent with this Opinion.

2. According to the evidence duly admitted by the court below, the plaintiffs were co-ownership owners of the land in Yangcheon-gu in Seoul and its ground buildings, and the plaintiffs did not apply for the purchase by May 27, 2006, which is the expiration date of the application period for purchase determined by the defendant. The management and disposal plan approved on December 18, 2008 was excluded from the objects of purchase. The plaintiffs completed the registration of transfer of ownership on October 4, 2005 or November 14, 2007 with respect to their own shares among the above land and buildings. The plaintiffs delivered the part of the plaintiffs' possession of the above land and buildings before the removal of the above building on February 207, and the registration of establishment of a mortgage was completed prior to the completion date of the registration of the trust, but the registration of establishment of a mortgage was not cancelled by the closing date of arguments in the court below.

In light of these facts, the lower court: (a) deemed that the Defendant may refuse payment of the entire liquidation amount on the basis of the defense of simultaneous performance, and ordered simultaneous performance with the cancellation of the registration of establishment of a neighboring mortgage; (b) on the other hand, dismissed the Plaintiffs’ claim for damages for delay.

However, according to the legal principles seen earlier, if a landowner completes the registration of ownership transfer based on a trust to a project implementer, the Plaintiff is not obligated to separately transfer ownership to receive the liquidation amount (see, e.g., Supreme Court Decisions 2008Da37780, Oct. 9, 2008; 2012Da11047, Nov. 28, 2013; 2013; 201Da10484, Nov. 28, 2013); and the Plaintiff already completed the registration of ownership transfer based on the cash settlement under Article 47 of the former Urban Improvement Act. Moreover, the Plaintiffs completed delivery to the Defendant on his possession. Therefore, the Defendant’s refusal to pay the liquidation amount based on the right of objection to simultaneous performance on the ground that the establishment registration was not cancelled, is limited to the maximum debt amount or the debt amount determined within the scope of the established debt amount.

Therefore, the above judgment below erred by misapprehending the legal principles on the scope of simultaneous performance in the cash settlement relationship under Article 47 of the former Act, which affected the conclusion of the judgment.

3. 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 Yang Sung-tae (Presiding Justice)