Effects of principal registration without undergoing liquidation procedures in violation of Articles 3 and 4 of the Provisional Registration Security, etc. Act.

In light of the provisions of Articles 3 and 4 of the Provisional Registration Security Act, if the principal registration based on provisional registration is made in violation of the above provisions, the principal registration shall be null and void, and even if such principal registration was made by a special agreement between the person having the right to provisional registration and the debtor, if such special agreement is null and void because it is unfavorable to the debtor, the principal registration is still null and void, and it shall not be deemed null and void within the purpose of security as a weak security.

Articles 3 and 4 of the Provisional Registration Security, etc. Act

Seoul High Court Decision 201Na1488 decided May 1, 201

Defendant-Appellee et al., Counsel for the defendant-appellant

Seoul High Court Decision 91Na42748 delivered on April 10, 1992

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

Article 3 of the Provisional Registration Security Act (hereinafter referred to as the "Provisional Registration Security Act") provides that in order to acquire ownership of secured real estate by exercising a security right under a security contract, the creditor shall notify the obligor, etc. of the appraised value of the liquidation money as provided for in Article 4 after the due date of the claim. This notification shall specify the appraised value of the secured real estate as at the time of notification and the amount of claim as provided for in Article 360 of the Civil Act, and the period of liquidation shall expire two months from the date of receipt of notification. Article 4 (1) through (3) provides that the obligee shall pay the liquidation money after deducting the value of the secured real estate from the value of the secured real estate as at the time of notification. Where an ownership transfer registration has been already made with respect to secured real estate, the obligee shall acquire ownership of the secured real estate at the time of payment after the expiration of the due date, and if the provisional registration has been made, the principal registration based on the provisional registration may be requested after the expiration of the due date. Article 4 (4) of the same Act provides that the special agreement still becomes null and void if it is made within the period of the obligor's.

According to the facts duly established by the court below, the plaintiff company borrowed 50 million won from the defendant on Nov. 5, 198 with respect to the construction and sale of apartment 46 households of this case on Nov. 5, 198, with interest rate of 200 million won, interest rate of 4% per month, and interest rate of 4% on March 4, 1989, and with the security term of 46 households of this case, with provisional registration, etc. of this case had been completed for part of the borrowed principal, but the defendant did not complete the provisional registration of this case on Sep. 30, 1989 with respect to the remaining 46 households of this case under the provisional registration under the name of the defendant as of Sep. 1, 1989, while the plaintiff and the defendant did not pay the remainder of the borrowed principal, they did not complete the provisional registration of this case on Dec. 9, 1989.

According to this, the provisional registration made in the name of the defendant with respect to 46 apartment units of this case constitutes a provisional registration under the Provisional Registration Security Act, and the principal registration of this case, which was made without going through the liquidation procedure as seen earlier, is null and void because it violates the mandatory provisions of the Provisional Registration Security Act. Thus, the court below's decision to the same purport is justified, and the court below's decision to accept the plaintiff's request for cancellation of the principal registration of this case, and there is no error of law by misapprehending the legal principles on the right to claim cancellation

Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jeong Jong-ho (Presiding Justice)