[1] Requirements for a debtor, etc. to seek cancellation of ownership transfer registration completed for the purpose of securing a claim pursuant to Article 11 of the Provisional Registration Security Act / The legal nature of the period under the proviso of Article 11 of the same Act (=the exclusion period) and whether the debtor, etc.’s right to claim cancellation is extinguished finally with the lapse of the exclusion period (affirmative)

[2] In a case where a claim for cancellation is extinguished due to the expiration of the exclusion period under the proviso of Article 11 of the Provisional Registration Security Act, and thereby a creditor finally acquires the ownership of a secured real estate, whether the creditor is liable to pay the liquidation money calculated pursuant to Article 4 of the same Act to the debtor, etc. (affirmative)

[1] The main sentence of Article 11 of the Provisional Registration Security Act (hereinafter “Provisional Registration Security Act”) provides that an obligor, etc. under Article 2 subparagraph 2 of the same Act (hereinafter “debtor, etc.”) may pay the amount of secured debt (including interest and losses until a refund) to a creditor and claim cancellation of the ownership transfer registration made for the purpose of securing the obligation, but this provision shall not apply where ten years have elapsed since the maturity date of the obligation under the former part of the proviso of the same Article.

Therefore, in order for a debtor, etc. to seek cancellation of the ownership transfer registration completed for the purpose of securing a claim pursuant to the main sentence of Article 11 of the Provisional Registration Security Act, the requirements should be met by paying the amount of the secured obligation, including interest and damages, up to that time. In addition, the ten-year exclusion period under the proviso of Article 11 of the Provisional Registration Security Act is the ten-year exclusion period, and the exclusion period itself takes effect on the extinction of the right. Thus, the debtor, etc., as provided in the main sentence of Article 1

[2] The legislative purpose of the Provisional Registration Security Act (hereinafter “Provisional Registration Security Act”) is to clarify the legal relationship of provisional registration security contract, etc., thereby protecting the debtor and rationally coordinating the legal relationship with interested parties, such as creditors and junior creditors. For this purpose, Articles 3 and 4 of the Provisional Registration Security Act, etc. stipulate that a creditor’s acquisition of ownership of secured real estate by exercising a security right under a provisional registration security contract must necessarily go through liquidation procedures in order to ensure that a creditor acquires the ownership of secured real estate. In light of the legislative intent of the Provisional Registration Security Act and the respective provisions of Articles 3 and 4 of the Provisional Registration Security Act, in light of the legislative intent of the provisional registration Security Act and the legislative purport of the provisional registration Security Act, the right to claim cancellation of the debtor’s right to claim expiration of the limitation period under the proviso of Article 11 of the Provisional Registration Security Act, and thereby, if the creditor has acquired the ownership of secured

[1] Article 11 of the Provisional Registration Security Act / [2] Articles 3, 4, and 11 of the Provisional Registration Security Act

[1] Supreme Court Decision 2005Da3304 Decided June 1, 2007 Supreme Court Decision 2012Da47074 Decided August 20, 2014 (Gong2014Ha, 1748)

Plaintiff (Law Firm Sejong, Attorneys Song-hee et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm Line, Attorneys Kim Hyun-young et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2017Na2054105 decided January 24, 2018

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 2

A. The main sentence of Article 11 of the Provisional Registration Security Act (hereinafter “Provisional Registration Security Act”) provides that an obligor, etc. under Article 2 subparagraph 2 of the same Act (hereinafter “debtor, etc.”) may pay the amount of secured debt (including interest and losses until a refund) to a creditor and claim cancellation of the ownership transfer registration made for the purpose of securing the obligation, but this provision provides that the same shall not apply where ten years have elapsed since the maturity date of the obligation under the former part of the proviso of the same Article.

Therefore, in order for a debtor, etc. to seek cancellation of ownership transfer registration completed for the purpose of securing a claim pursuant to the main sentence of Article 11 of the Provisional Registration Security Act, the requirements should be met by paying the amount of secured obligation, including interest and losses, up to that time (see Supreme Court Decision 2005Da3304, Jun. 1, 2007, etc.). In addition, the ten-year period stipulated in the proviso of Article 11 of the Provisional Registration Security Act is the exclusion period, and the exclusion period itself results in the extinction of the right. As such, the obligor, etc.’s right to claim cancellation of ownership transfer registration completed for the purpose of securing a claim under the main sentence of Article 11 of the Provisional Registration Security Act is finally extinguished upon the lapse of the exclusion period (see Supreme Court Decision 2012Da47

B. The purpose of the Provisional Registration Security Act is to clarify the legal relationship of provisional registration security contract, etc. to protect the debtor and to reasonably coordinate the legal relationship with interested parties, such as creditors and junior creditors. For this purpose, Articles 3 and 4 of the Provisional Registration Security Act, etc. provide that in order for creditors to acquire ownership of secured real estate by exercising a security right pursuant to a provisional registration security contract, etc. In light of the legislative purport of the Provisional Registration Security Act and the respective provisions of Articles 3 and 4 of the Provisional Registration Security Act, the right to claim cancellation of the debtor, etc. becomes extinct after the lapse of the exclusion period under the proviso of Article 11 of the Provisional Registration Security Act, and thereby, if the creditor has finally acquired the ownership of secured real estate, the creditor has the obligation to pay the liquidation amount calculated pursuant to Article 4 of the Provisional Registration Security Act to the debtor, etc., and

C. The court below's decision to the effect that "the non-party, a creditor of the defendant, did not notify the execution of security right and the debtor of the secured debt has passed ten years from June 30, 2005, which was due for the repayment of the secured debt, and the non-party's claim for cancellation under the main sentence of Article 11 of the Provisional Registration Security Act against the defendant was extinguished upon the expiration of the exclusion period prescribed under the proviso of the same Article, and the non-party's claim for liquidation amount was created against the defendant," is just in accordance with the above legal principles, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending

2. Regarding ground of appeal No. 1

For reasons indicated in its reasoning, the lower court determined that the Defendant’s assertion that the value of each of the instant real estate at the time of December 31, 2004, which entered into the instant collateral contract, was KRW 4,164,90,000, and that the amount of each of the instant real estate at that time reaches KRW 1.8 billion, or that the lessee’s claim for the return of the lease deposit reaches KRW 700,000,000, or that the lessee’s claim for the return of the lease deposit under the Housing Lease Protection Act

Examining the evidence admitted by the lower court in light of the foregoing, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the Provisional Registration Security Act, or by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, without exhaust all necessary deliberations.

3. Conclusion

Therefore, the appeal is dismissed, and the 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 Cho Jae-chul (Presiding Justice)