In case where a purchaser, who purchased farmland and paid the price for the public sale procedure, did not acquire the ownership because the purchaser failed to obtain the ownership by obtaining the qualification certificate for acquisition of farmland for the original owner, in civil execution procedure based on the provisional attachment claim against the original owner and acquired the ownership by completely paying the price, whether the purchaser of the public sale procedure may cancel the public sale in accordance with Articles 578 and 576 of the Civil Act

Even if the decision of sale and the payment for the sale are made in the public sale procedure for farmland under the Farmland Act, the purchaser cannot acquire ownership unless he/she obtains the qualification certificate for acquisition of farmland under the Farmland Act. Since the original owner of farmland subject to public sale is still the owner of farmland, while the purchaser of the public sale procedure failed to acquire ownership for the above reasons, if the purchaser of farmland was issued the qualification certificate for acquisition of farmland in civil execution procedure based on the claim for provisional attachment against the original owner and paid the purchase price in full, the purchaser of the public sale procedure can not acquire ownership. However, this conclusion does not arise not only because the purchaser of the public sale procedure cannot oppose the purchaser of the civil execution procedure due to the effect of prohibition of disposal of provisional attachment, but it is only the result of the buyer’s failure to pay national taxes and civil execution procedure being conducted separately. Thus, it cannot be deemed that Article 578 and Article 576 of the Civil Act is applied mutatis mutandis to such a case.

Articles 576 and 578 of the Civil Act, Article 8 of the Farmland Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Han-sung, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant)

Plaintiff (Law Firm Woo, Attorneys Park Jong-woo et al., Counsel for the plaintiff-appellant)

Republic of Korea and one other (Law Firm LLC, Attorneys White-gu et al., Counsel for the plaintiff-appellant)

Suwon District Court Decision 201Na6091 decided April 26, 2012

The judgment of the court below is reversed, and the case is remanded to the Gu Government District Court.

The grounds of appeal are examined (the defendant Seoul Special Metropolitan City ex officio).

In full view of the evidence in its holding, the court below determined that, although the Seoul Bank completed the provisional attachment registration of the real estate owned by Nonparty 1, the provisional attachment registration of the real estate was completed on the ground of Nonparty 1’s default on national taxes, and then requested the Korea Asset Management Corporation to conduct the public sale by proxy of this case. The Plaintiff failed to complete the registration of ownership transfer because it was ordered to purchase the real estate by bidding the public sale procedure of this case and paid in full, but failed to obtain the qualification certificate for acquisition under the Farmland Act. The Korea Asset Management Corporation distributed the remainder after deducting the administrative expenses for the public sale from the purchase price paid by the Plaintiff to the Defendants who are creditors. The Korea Asset Management Corporation acquired the above provisional attachment claim from the Seoul Bank and applied for the compulsory sale by acquiring the title of this case and completed the registration of ownership transfer by full payment. In light of Article 578(1) and (2) of the Civil Act and Article 578(1) of the Civil Act, if the purchaser of the real estate becomes disqualified by compulsory execution, it can be recognized that the provisions of Article 576 of the Civil Act can be applied mutatis mutandis.

However, we cannot accept the above determination by the court below for the following reasons.

Article 576(1) of the Civil Act provides, “If a purchaser of a mortgage or chonsegwon established on a real estate subject to sale becomes unable to acquire the ownership or loses the ownership so acquired due to the exercise of the mortgage or chonsegwon established on the real estate subject to the sale, the purchaser may rescind the contract.” If a purchaser of a real estate becomes disqualified due to compulsory execution based on a claim for provisional seizure thereafter, this is similar to the case where the buyer loses the ownership of the real estate acquired due to the exercise of the mortgage or chonsegwon established on the real estate subject to the sale, and thus, Article 576(1) of the Civil Act on the seller’s liability for warranty applies mutatis mutandis in such a case (see Supreme Court Decision 2011Da1941, May 13, 2011). In short, Article 576(1) of the Civil Act applies mutatis mutandis to a person who purchased a real estate subject to provisional seizure by entering into a sales contract after the record of the provisional seizure decision, and thus, loses ownership due to the loss of ownership due to the exercise of mortgage or chonsegwon.

Meanwhile, Article 578(1) of the Civil Act provides that “In the case of auction, a successful bidder may demand cancellation of a contract or reduction of the price to an obligor under the preceding eight Articles.” Paragraph (2) of the same Article provides that “In the case of the preceding paragraph, if an obligor does not own funds, a successful bidder may demand return of the price in whole or in part to the obligee who has received dividends.” The term “auction” referred to in the preceding provision includes a public auction on behalf of the Korea Asset Management Corporation pursuant to Article 61(9) of the National Tax Collection Act. However, as the procedures for default and civil execution are separate procedures, there are no provisions regulating mutual relations between those procedures, each procedure cannot interfere with the other, while each obligee in both procedures are bound to participate in other procedures, even if a provisional attachment on real estate was executed, if a public auction disposition is terminated by a disposition on default of national taxes, it becomes invalid for the purchaser of farmland to acquire ownership of farmland as a result of the public auction, and thus, it cannot be deemed that the purchaser of farmland still acquires ownership of farmland in the auction procedure (see Supreme Court Decision 2070.

Nevertheless, the court below erred by misapprehending the legal principles as to the seller's warranty liability under Articles 578 and 576 of the Civil Act, which held that the Plaintiff may rescind the public auction of this case pursuant to Articles 578 and 576 of the Civil Act.

Therefore, without further proceeding to decide on the remaining grounds of appeal, 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 Lee In-bok (Presiding Justice)