Plaintiff 1 and one other (Law Firm LLC, Attorneys Lee Young-hoon et al., Counsel for the plaintiff-appellant)

Industrial Bank of Korea (Law Firm Shin & Yang, Attorney Kang Jae-hoon, Counsel for defendant-appellant)

on March 30, 2004

Suwon District Court Decision 2002Da7168 delivered on May 22, 2003

1. Revocation of a judgment of the first instance;

2. Of the distribution schedule prepared by the above court on March 19, 2002 with respect to the case of applying for auction of real estate rent in Suwon District Court, Sung-nam Branch, 2001, 1708, the amount of dividends of 103,004,224 won against the defendant shall be changed to 35,004,224 won, and the amount of dividends of 35,000,000 won shall be changed to the plaintiff 1, and the amount of new dividends of 33,00,000 won shall be changed to the plaintiff 2.

3. The total costs of the lawsuit shall be borne by the defendant.

It is marked as Disposition Nos. 1 and 2

1. Basic facts

(a) A lease contract for an unregistered building;

(1) The non-party 1, who owns, constructed a multi-household house with the fourth floor above the ground after obtaining a building permit under its name on the land surface (limited to the site in this case) of Gwangju-gun, Gwangju-gun, the ownership of which was located, and completed most of the construction works except for the finishing construction of the building, but leased it to another person in advance, even though it did not undergo the completion inspection.

(2) In the process, on February 26, 1997, Plaintiff 1 paid 301 of the above multi-household housing by leasing 301 of the above multi-household housing from Nonparty 1 to KRW 35,00,000. On March 1, 1997, Plaintiff 1 moved in on March 1, 1997 and completed a move-in report to that place and obtained a fixed date on the above lease agreement on the 8th day of the same month. Plaintiff 2 and Nonparty 1 paid 401 of the above multi-household housing to KRW 33,00,000, and paid the above deposit to Nonparty 1, around February 27, 1997, and completed the move-in report to that place on the same day, and received the fixed date on March 8, 1997.

(3) In addition to the Plaintiffs, Nonparty 2, 3, and 4 leased each of the above Multi-household Housing Nos. 101 and 402, but did not obtain a fixed date in the lease contract.

(b) Establishment of a collateral security;

On the other hand, around February 24, 1998, Nonparty 1 donated the instant building site and multi-household housing to Nonparty 5, his wife, and completed the registration of ownership transfer on the instant building site due to the said donation on February 25, 1998. Regarding multi-household housing, Nonparty 5 changed the said owner’s name to Nonparty 5. On October 7, 1998, Nonparty 5 completed the registration of ownership transfer on the instant building site to Nonparty 6, the debtor, and the Defendant as the mortgagee, the maximum debt amount of KRW 240,000,000.

(c) Voluntary auction and objection to distribution;

(1) The Defendant filed an application for voluntary auction on the instant site as the obligor of the foregoing right to collateral security had failed to repay the above loan, and the Suwon District Court 2001 Sungnam Branch 1708, which commenced upon the above application, newly constructed four-story lending on the instant site through a survey on the current status, and confirmed that each household’s lessee had both the Plaintiffs, Nonparty 2, 3, and 4, and conducted the auction procedure. Plaintiff 2 submitted a demand for distribution on February 14, 2001, and Plaintiff 1 submitted each of them on February 15, 201.

(2) Meanwhile, the instant land was awarded a bid of KRW 105,00 on September 10, 2001 with the first appraisal price of KRW 318,942,00,000.

(3) On March 19, 2002, the above court prepared a distribution schedule to distribute to the defendant the full amount of KRW 103,004,224 calculated by deducting the execution cost from the sale price of the above site and the interest on deposit without making any distribution to the plaintiffs on the date of distribution. Accordingly, the plaintiffs raised an objection against the amount of demand for distribution among the above distribution portion, and filed the lawsuit of this case on March 26, 2002.

(4) The above multi-household house has not been registered until now since it was impossible to obtain permission for completion as prior to completion and construction cost.

【Ground for Recognition: Facts without dispute, Gap evidence 1-2, Gap evidence 2-9, Gap evidence 10-1 through 20, and the purport of the whole pleadings

2. Determination as to whether the plaintiffs have preferential right to payment

A. The parties' assertion

In light of the overall circumstances, the Plaintiffs asserted that the Plaintiffs, who have the requisite for counterclaim and the fixed date under Article 3(1) of the Housing Lease Protection Act, have the right to be paid deposits in preference to subordinated creditors and other creditors from the proceeds of realizing leased housing (including the site) at the time of auction under the Civil Execution Act or public auction under the National Tax Collection Act, and the Defendant also received the said right to collateral security under the circumstances, such as the fact that the above multi-household house was constructed and the existence of lessees was sufficiently known, the Plaintiffs, who are the housing tenants having the requisite for counterclaim and the fixed date, should be preferentially paid the full amount of each deposit from the proceeds of realizing the above site where the leased housing is located, prior to the Defendant, which is the mortgagee. Accordingly, the Defendant asserts that the instant building in which the Plaintiffs are residing, is not the object of bid, and that the lessees can continue to reside in the unregistered housing even after receiving the preferential repayment, while the Defendant, the mortgagee, the mortgagee of the right to collateral security, suffers damages.

(b) Markets:

(1) The issues of the instant case

The main issue of this case is whether the plaintiffs, who were judged to have acquired the ownership of multi-household housing from non-party 1 who were judged to have acquired the ownership of multi-household housing in the original condition of non-party 1, who leased the relevant housing and have met the requisite to set up against the plaintiff and the fixed date under Article 3 (1) of the Act, are entitled to preferential repayment from the proceeds of realizing the sale of the site of this case, rather than the defendant who established the right to collateral security with respect to the site of this case after the fixed date, in the auction procedure conducted only with respect to the site of this case, not the non-registered multi-household housing. The following arguments are examined, and

1) Part of the exercise of preferential right to reimbursement of the price for the site of a housing lessee

(1) Article 3(2) of the Act provides that “A lessee who has the requisite for counterclaim under Article 3(1) and the fixed date on the lease agreement document shall have the right to be reimbursed deposits in preference to junior creditors or other creditors from the proceeds of realizing leased house (including the site) at the time of auction under the Civil Execution Act or public auction under the National Tax Collection Act.” In addition, a lessee may obtain a preferential repayment from the proceeds of realizing leased house as well as from the proceeds of realizing leased house in preference to junior creditors or other creditors in preference to the proceeds of realizing leased house (including the site) under the National Tax Collection Act. In addition, a lessee may obtain a preferential repayment from the proceeds of realizing leased house in addition to the proceeds of realizing leased house, in cases where an application for a public auction is not filed with respect to a house regardless of the intention of a housing lessee and only the site in the site has been filed at a different time, or where the house and the site are separately sold at a different time (see Supreme Court Decisions 96Da7595, Jun. 14, 1996).

② There is a question as to whether the right to preferential payment of the lessee of the fixed date is recognized even in cases where the leased house is unregistered. As Article 2(1) of the Act provides, “The Act applies to lease in whole or in part of a residential building (hereinafter referred to as “house”) excluding the site, the Act applies only to the building itself, and further, Article 3(2) of the Act provides that “an auction under the Civil Execution Act or a public auction under the National Tax Collection Act is conducted after the leased house is registered.” Since the concept of the right to preferential payment is based on an auction and public auction unlike the opposing power, if the leased house is unregistered, it cannot be basically an auction or public auction, and therefore, the lessee of the unregistered house has no right to preferential payment, and there is no right to preferential payment on the site unless there is no right to preferential payment on the leased house.

③ However, in full view of the provisions of the law that stipulate that the proceeds from the sale of leased housing and the value of the site shall include not only the building, but also the proceeds from the sale of the leased housing and the value of the housing site, and the purpose of the law and the fact that the lease of the building is naturally accompanied by the use of the site, the term "residential building" under Article 2 of the Act refers to the lease in the case of a residential building which is not a store or office, but also the use of the building among the leased objects. The meaning of the above "residential building" is not limited to the building that is not a store or office, but also to the case of a residential building that is not a building subject to the Act. Therefore, the meaning of the above "residential building" has a broad meaning including the building site, so long as the whole or part of the house is used as a residential building, it is possible to apply the law to the site as well as the building site, as long as the building site is determined to be a building by social norms, the building constructed by the competent government office or the building building without permission is not a building for auction.

2) Protection of lessees

① In light of the legislative intent of the law that intends to protect a housing lessee as a policy in order to protect the housing lessee and promote the residential stability of the people, it is reasonable to deem that, in the event that a fixed lessee rents an unregistered house, the house can not be referred to an auction without registration, only the site may be referred to the auction procedure, and the deposit may be collected in preference to the fixed lessee based on the preferential right to payment recognized under the law from the proceeds from the proceeds of realizing the land. As such, unlike the fixed lessee of an unregistered building that has not been constructed thereafter, it is reasonable to protect the expectation for the fixed lessee in the above case. In addition, in such a case, in order for the fixed lessee to receive the amount distributed from the proceeds from the proceeds of realizing the site, it is necessary to have a written confirmation of the intention of the unregistered owner of the house, and therefore, it is impossible for the fixed lessee to continue residing in an unregistered house after having received the preferential right to payment from the proceeds from the proceeds of realizing the site in the above case.

② In addition, if a person holding an unregistered house without financial ability delays the return of the lease deposit even after the lease term has expired, if a person holding an unregistered house’s right to preferential payment for the return of the site is denied to a fixed lessee, it is necessary to recognize a right to preferential payment for the return of the site deposit to a fixed lessee in such cases, even in order to protect a fixed lessee in the above case, even if it is necessary to recognize a right to preferential payment for the return of the

3) Whether the interests of the secured party are infringed

If the right to preferential reimbursement of the price of a site is denied to a fixed lessee of an unregistered house, it is sufficient for the secured party to investigate only the register of the building or the register of the register of the building; and it is not necessary to investigate whether there is an unregistered house by examining the current status; and it is not necessary to protect the interest of the secured party because there is no likelihood that an unexpected senior right holder may occur even at the time of distribution.

However, even in the case of a building registered at the time of the establishment of a security right to the site, it is the reality that the secured party has assessed the collateral value in preparation for the case where the current status is not clear, and the lessee may suffer unexpected damages in the event of distribution due to the lessee’s demand for distribution not identified at the time of the current status survey. In particular, in granting a loan to a specialized credit institution such as a financial institution, it is necessary to conduct an ordinary appraisal based on the owner’s statement, and to investigate the current status of the site in the appraisal procedure, and to consider the calculation of the collateral value and the existence of the lessee. Therefore, if a building exists on the site, it cannot be said that the actual difference depending on the registration of the building. Furthermore, as in this case, if the Defendant knew of the unregistered housing on the site of this case at the time of establishment of a collateral security right, and could sufficiently have known the lessee’s existence, it cannot be said that the Defendant’s interest was excessively infringed by recognizing the right to preferential reimbursement to the Plaintiffs.

(iv) the convenience of auction practice;

If a lessee of an unregistered house denies the right to preferential payment of the price of the building site, it is true that it is convenient in the progress of auction. In such cases, the auction court will proceed after checking only the building management ledger of the site and the register of the building register, and even if the lessee of an unregistered house requests a distribution during auction, it is unnecessary to take into account the preparation of the specifications of goods or the timing of

However, it is unreasonable to lower the fundamental purport of the law that intends to protect housing tenants on the ground of convenience in the above auction procedure. Regardless of whether the right to preferential payment is granted to the lessee of unregistered housing, in the event there is a building unregistered on the site, the auction court has identified the lessee through a survey and appraisal, and has treated the lessee as an interested party and has notified the bidding date, etc. by treating the lessee as an interested party. In the event of a demand for distribution, it is necessary to enter the details of the tender in the tender document and to set the successful bid price in consideration of the above circumstances. Therefore, there is no substantial difference in practice in determining convenience in the auction process due to whether to

5) The convenience of the applicants for auction relating to the determination of whether or not a surplus exists

① Article 608(1) of the former Civil Procedure Act (wholly amended by Act No. 6626, Jan. 26, 2002) provides that “no real estate shall be sold unless it is recognized that there is any shortage to have the successful bidder take over the burden of real estate regarding the claim preceding the claim of the seizure creditor or repay the burden with the proceeds of sale.” This is intended to allow an auction applicant of the leased house to determine the possibility of sale by making the applicant recognize the housing and the housing site burden based on the registry of the real estate, so that he/she can determine whether to proceed with the auction by determining

② In relation to the above provision, in a case where a right to preferential payment concerning the price of the site is denied to a fixed lessee of a unregistered leased house, the applicant for the auction of the site is convenient as to whether there is a right or burden which takes precedence over the claim of the applicant for auction on the site. However, as the auction procedure is in progress, the determination of whether the applicant for auction has surplus or not. However, in an auction case requested by a financial institution, since the financial institution had already been identified as to the right or burden which takes precedence over the site and the right of the lessee of a unregistered house, it cannot be said that the determination of surplus is more convenient than the protection of the housing lessee recognized under the law, since it is difficult to determine whether the applicant for auction has surplus or not.

(2) Sub-determination

In light of the above facts, the plaintiffs had a multi-household house at the time of establishing a mortgage on the site of this case, and the plaintiffs had met the requisite and the fixed date set forth in Article 3(1) of the Housing Lease Protection Act by leasing the relevant house from Nonparty 1, who appears to have acquired the ownership of the building as the owner of the site of this case, and the plaintiffs had met the requisite and the fixed date set forth in Article 3(1) of the Housing Lease Protection Act. Furthermore, in the auction procedure concerning the site of this case filed by the right to collateral security established after about one year and six months from the above fixed date, the plaintiffs made a legitimate demand for distribution. Accordingly, according to the above facts of recognition, the plaintiffs can be preferentially paid the deposits

If so, with respect to the case of applying for a real estate auction as to Suwon District Court's Sung-nam Branch 2001, 1708, the above court distributed dividends on March 19, 2002 to the defendant, and it is unfair that the above court did not distribute all of the plaintiffs to the defendant. Thus, the above court should revise the dividend amount of 103,004,224 won to the defendant among the distribution schedule prepared on March 19, 202 as 35,004,224 won, and revise the distribution amount of 35,00,000 won to the plaintiff 1, and new dividends of 33,00,000 won to the plaintiff 2.

3. Conclusion

Therefore, the plaintiffs' claims of this case should be accepted in its entirety with due reasons, and the judgment of the court below which concluded otherwise is unfair, so it is so revoked, and it is so decided as per Disposition by ordering the correction of the distribution schedule.

Judges Maximum number (Presiding Judge) Lee Sang-hoon