[1] Whether the provisions on the procedure and method of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents including the provisions on the approval of a management and disposal plan and the transfer notification based on the approval of a housing construction project plan under the former Housing Construction Promotion Act are excluded (affirmative)

[2] In a case where a reconstruction association has sold a new house or site to its members without following procedures such as the approval of a management and disposal plan as stipulated in Articles 33 through 45 of the former Urban Redevelopment Act, which are applied mutatis mutandis pursuant to Article 44-3 (5) of the former Housing Construction Promotion Act, and the public notice of sale disposal, whether the ownership of the former house or site may be deemed to be a right for common use by forced exchange and alteration into ownership of a new house or site (negative) and whether the reconstruction association can register the land and constructed facilities pursuant to Article 40 of the former Urban Redevelopment Act and Article 5 of the former Urban Redevelopment Act (negative)

[3] Whether a person who purchased a section for exclusive use in the auction procedure conducted according to the commencement decision of auction on the section for exclusive use and the seizure of the section for exclusive use acquires the right to use the site together with the section for exclusive use (affirmative in principle), and in a case where the land and public land, which is the right to use the site, are sold together with the section for exclusive use and the price is paid in full, whether the collateral security as a separate registration established on the land before the right to

[4] In a case where Gap reconstruction association established under the former Housing Construction Promotion Act had removed apartment houses which are an aggregate building and newly built apartment units on the site without going through procedures such as approval of management and disposal plan and announcement of sale disposition, and concluded each sale contract and completed registration of ownership preservation as to the corresponding section for exclusive use, the case holding that Eul bank's collateral security right, which was established as to each section prior to the destruction of the former house, cannot be deemed as effective as a new one, and Eul bank's collateral security right as to each section prior to the destruction of the house, cannot be deemed as effective as a new one, and Eul bank's right to use site among the sale proceeds of each new section, is in a position to receive dividends in preference to collateral security right as a mortgagee, in a case where each new section was sold to a third party at an auction procedure conducted pursuant to an application for compulsory auction by creditors for compulsory auction against Gap reconstruction association, etc., and the distribution schedule was completed

[1] Article 7 (1) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (wholly amended by Act No. 14567, Feb. 8, 2017; hereinafter “former Act”) provides that “The former Act shall apply to a reconstruction association which has obtained approval of a project plan or a project implementation authorization under the previous Act” as the title "the transitional measure for the project implementation method". Thus, with respect to a reconstruction association which has obtained approval of a housing construction project plan under the former Housing Construction Promotion Act (amended by Act No. 6852, Dec. 302), the authorization of a management and disposal plan, which is the implementation method of a reconstruction project under the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (wholly amended by Act No. 14567, Feb. 8, 2017; hereinafter “former Act”). In principle, the involvement of an administrative agency by approval of a project plan is terminated, the association members acquire rights by acquiring them, and the new housing site and a new ownership transfer method between members.

[2] Where a reconstruction association parcels out a new house or site to its members without following procedures such as the approval of the management and disposal plan and the announcement of the sale disposal plan pursuant thereto under Article 4-3(5) of the former Housing Construction Promotion Act (amended by Act No. 6852, Dec. 30, 2002; hereinafter the same shall apply), the association members are not entitled to acquire new house or site ownership, and the old house or site is subject to compulsory exchange and alteration of the right to new house or site as a right to new house or site regardless of the intent of the right holder. However, where a new house or site is sold to its members without following procedures such as the approval of the management and disposal plan and the announcement of the sale disposal plan pursuant thereto, the association members are not entitled to acquire new house or site, and ownership of new house or site and ownership of new house or site shall not be deemed to have been converted into a new house or site by force.

Therefore, where a reconstruction association has gone through the procedures such as the authorization of a management and disposal plan and the announcement of sale in lots under Articles 33 through 45 of the former Urban Redevelopment Act, which are applied mutatis mutandis pursuant to Article 44-3(5) of the former Housing Construction Promotion Act, it may register the site and constructed facilities by attaching a management and disposal plan and a document proving such authorization and a document proving the announcement of sale in lots pursuant to Article 40 of the former Urban Redevelopment Act and Article 5 of the former Urban Redevelopment Registration Rules (repealed by Article 3 of the Addenda to the Rules on the Registration of Management of Urban and Residential Environment Rearrangement, Act No. 1833, Jun. 28, 2003). However, if a reconstruction association fails to go through the procedures prescribed in Articles 33 through 4

[3] Unless there are special circumstances, such as that a sectional owner's right to use a site in an aggregate building is stipulated as a provision to enable a separate disposition from a section for exclusive use, it is recognized that the section for exclusive use and its subordinate subdivision are subordinate to the section for exclusive use (Article 20 (1) and (2) of the Act on the Ownership and Management of Aggregate Buildings). Thus, the decision to commence auction and the effect of seizure on a section for exclusive use by a sectional owner shall naturally extend to the right to use a site, which is a accessory or accessory right, and a purchaser of a section for exclusive use in an

In addition, in accordance with Article 91(2) of the Civil Execution Act, all mortgages on the sold real estate shall be extinguished by the sale. For the above reason, if the land and public land, which is the right to use the site, are sold together with the section for exclusive use, and the price is paid in full, as long as the special sale condition was not separately determined to the effect that the purchaser shall continue to exist before the establishment of the right to the site, and take over the land during the auction even if the right to the site was established as a separate registration, the said right to the collateral constitutes a mortgage on the sold real estate, to the extent of the land and public land

[4] Where Gap reconstruction association established pursuant to the former Housing Construction Promotion Act (amended by Act No. 6852 of Dec. 30, 2002; hereinafter the same) concluded contracts for sale in lots with members of each sectional building before destruction without following procedures such as approval of management and disposition plan and notification of sale in lots, and Eul bank, a mortgagee of each sectional building, filed a lawsuit of demurrer against distribution, where Gap bank established pursuant to the former Housing Construction Promotion Act and approved approval of the project plan, concluded new contracts for sale in lots with members of each sectional building before destruction, and completed registration of ownership in the relevant section for exclusive use, and Eul bank, a mortgagee of each sectional building, filed a lawsuit of demurrer against distribution, the court held that the court below erred in the misapprehension of legal principles as to each of the newly established sections for exclusive use under Article 44-3 (5) of the former Housing Construction Promotion Act (amended by Act No. 6852 of Dec. 30, 202 and Article 25 of the Addenda of the former Housing Construction Promotion Act) and that each of the newly established section for sale in lots and each of each of each section can be deemed as valid.

[1] Article 3(1) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 6852 of Dec. 30, 202) (see Article 15(1) of the current Housing Act), Article 48 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 14567 of Feb. 8, 2017), Article 54(2) of the former Act (see Article 86(2) of the current Act), Article 7(1) of the Addenda (see Article 40 of the current Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents), Article 44-3(5) of the former Housing Construction Promotion Act (amended by Act No. 6852 of Dec. 30, 202), Article 20 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, Article 30 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents

[1] [2] Supreme Court Decision 2010Da96072 Decided April 14, 201 (Gong2011Sang, 911) / [1] Supreme Court Decision 2009Da78368 Decided January 28, 2010 (Gong2010Sang, 419) / [2] Supreme Court Decision 2008Da1132 Decided June 23, 2009 (Gong2009Ha, 1177) / [3] Supreme Court Decision 94Da1272 Decided August 22, 1995 (Gong195Ha, 3232), Supreme Court Decision 97Ma814 Decided June 10, 197 (Gong197Ha, 2253Ha, 208Da41549 decided March 25, 2005)

National Bank of Korea (Law Firm Sejong, Attorneys Min Young-young et al., Counsel for the defendant-appellant)

E.C. Elevator Korea Co., Ltd. and two others (Attorneys already appointed and one other, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2016Na2071806 decided November 10, 2017

Of the lower judgment, the part of the lower judgment regarding Defendant Hodu Construction Co., Ltd. and Defendant Korea Housing Finance Corporation is reversed, and that part of the case is remanded to the Seoul High Court. The final appeal by Defendant Escurf elevator Korea Co., Ltd. is dismissed. The costs of appeal incurred between the Plaintiff and Defendant Escurf Korea Co.

The grounds of appeal are examined.

1. As to the grounds of appeal by Defendant Name Construction Corporation and Korea Housing Finance Corporation

A. Case summary

Review of the reasoning of the lower judgment and the record reveals the following facts.

1) The establishment and approval of the project plan of the reconstruction association of this case

A) The ○○○ Urban Rebuilding Housing Association (hereinafter “instant reconstruction association”) is a reconstruction association established to construct an apartment on the 9,261 square meters of land (hereinafter “instant land”) located in Yangcheon-gu Seoul Metropolitan Government (hereinafter “instant reconstruction association”) where the sectional owners of the ○○ Urban Housing located in Yangcheon-gu, Seoul ( Address omitted), which is an aggregate building for which the registration of site ownership has been completed, remove the building before its destruction and construct the apartment on the land (hereinafter “instant reconstruction association”) (hereinafter “instant reconstruction project”).

B) The reconstruction association of this case obtained authorization for the establishment on June 23, 2003 pursuant to the former Housing Construction Promotion Act (amended by Act No. 6852 of Dec. 30, 2002; hereinafter the same) and obtained approval for the business plan on June 30, 2003 pursuant to Article 33(1) of the same Act.

C) The above project plan was intended to remove the building before its destruction and build six new apartment units on the instant land with a scale of 155 households.

2) The registration of establishment of a neighboring mortgage in the Plaintiff’s name and the registration of ownership transfer in the name of the reconstruction association of this case

A) Among the buildings before their destruction (number 1 omitted), (number 1 omitted), (number 2 omitted), (number 3 omitted), number 4 omitted, (number 5 omitted), number 5 omitted, (number 6 omitted), number 7 omitted), and (number 8 omitted), among the buildings before their destruction (hereinafter referred to as “each partitioned building before their destruction”), each “land subject to site right” was registered with respect to each “land subject to site right: The instant land, ownership right, ownership right, ownership ratio: 96.468/9261” among the buildings before their destruction. On July 23, 2003 and October 1, 2003, the Plaintiff borrowed each relocation expenses to the sectional owners of each partitioned building before their destruction, and completed the registration of the establishment of the relevant individual debtor (hereinafter referred to as “registration of the establishment of the mortgage”).

B) The entire sectional owners (96) of the building before its destruction completed the registration of transfer of ownership and the registration of trust with respect to the relevant sectioned building among the reconstruction association of this case before its destruction.

C) As the building before its destruction was removed on May 31, 2004 due to the implementation of the reconstruction project of this case, the registration of destruction was completed on June 4, 2004. Accordingly, the registration of site ownership was also cancelled and the register was closed on each partitioned building before its destruction. The registration of site ownership in this case was cancelled. Pursuant to Article 102-4(2) of the former Registration of Real Estate Act (amended by Act No. 8922, Mar. 21, 2008), the registration of ownership transfer and the registration of trust was transferred to Nonparty 2 for each of the instant land under the name of the reconstruction association of this case, and the registration of ownership transfer and the registration of trust was transferred to Nonparty 7 for each of the instant land under the name of Nonparty 1, 7, and the order of transfer registration was 7,000,000,000,000 were 7,000,000,000 were 7,000,000.

3) New construction of the new building of this case and registration of preservation of ownership in the name of the reconstruction association of this case

A) ① Nonparty 3, a partner of the former sectional building (number 3 omitted) among the △△△△ apartment units (hereinafter “new building of this case”) to be newly constructed following the progress of the reconstruction project of this case (hereinafter “new building of this case”), ② Nonparty 4, a partner of each sectional building before destruction (number 6 omitted), among the new buildings of this case (number 10 omitted); ③ Nonparty 1, a partner of the former sectional building of this case (number 11 omitted); ④ Nonparty 5, a partner of the former sectional building of this case (number 12 omitted); and Nonparty 6, a partner of the former sectional building of this case (number 12 omitted); and Nonparty 1, a member of the instant sectional building of this case (number 13 omitted); and Nonparty 5, a partner of the instant sectional building of this case (number 6 omitted); and Nonparty 1, a partner of the instant new building of this case among the newly constructed new buildings of this case (number 13 omitted); and Nonparty 6, a partner of the instant building of this case of this case (number 4 omitted);

B) The new building of this case was newly constructed in around 2007 on the land of this case with a scale of 155 households. On February 20, 2008, the application for provisional attachment was accepted by the joint defendant and the joint defendant corporation of the court below, a creditor to the reconstruction association of this case, and the provisional attachment court entrusted the provisional attachment registration, and the provisional attachment registration was completed in relation to each of the relevant sections of this case with respect to each of the instant sections of exclusive ownership. The area of the section of exclusive ownership (number 9 omitted) on the register was 84.95 square meters on the register, (number 10 omitted), (number 10 omitted), (number 11 omitted), the area of the section of exclusive ownership was 84.83 square meters on the land of this case, (number 12 omitted), 89.25 square meters on the size of the section of exclusive ownership, (number 13 omitted), 84.71 square meters on the size of the area of the section of exclusive ownership of this case, and number 184.4.9444.

On the other hand, the right to use a site for each new section of exclusive ownership is the share corresponding to the ratio of the area of the relevant section of exclusive ownership among the shares of the reconstruction association of each of the instant case Nos. 14, 72, 131, 9, 5, 81, 81, 35, and 25 of the order of priority of section A of the land registry of this case. However, the right to use a site for each new section of exclusive ownership was not actually completed for the relevant co-ownership.

4) The instant auction procedure, dividends, etc.

A) According to the application, etc. for compulsory auction of the Winter Timber Industry, which is a creditor to the instant reconstruction association, 20 households (hereinafter “each of 20 households united of each of the new buildings of this case”) including new sections among the new buildings of this case were sold to a third party at the auction procedure of this case (Seoul Southern District Court 2010 Mata1108, etc.), each of 20 households united of each of the new buildings of this case was sold to a third party, including the right to use the site at the time, and the appraisal of each new section, including the right to use the site, was conducted, and the land of this case subject to the right to use the site,

On the other hand, in the auction procedure of this case, the condition of special sale that the purchaser of each of the new sections of this case shall continue to maintain the individual mortgage of this case established on the right to use site for each of the new sections of exclusive ownership and the purchaser of each of the new sections of this case shall take over

B) Even if the registration of the establishment of a new building was not completed in the future of the plaintiff with respect to each newly constructed new building, the plaintiff as a mortgagee on the premise that the effect of the establishment of a new building of this case, which was owned by the plaintiff with respect to each building of this case before its destruction, is uneffectively effective, and the plaintiff submitted a claim statement stating the amount of money to be distributed as a provisional seizure right holder against each unit of 20 households subject to auction based on the credit regarding relocation expenses to the reconstruction association of this case.

C) On December 3, 2015, the executing court recognized only the Plaintiff’s status as the person entitled to provisional seizure against the instant reconstruction association, and prepared the instant distribution schedule with the content that: (a) preferentially distributes some of the actual dividends for each of the instant 20 households subject to auction to small tenants and the persons entitled to deliver the relevant taxes; and (b) distributes the remainder to the creditors against the instant reconstruction association, including the Plaintiff and the Defendants, the creditors of the instant reconstruction association. Accordingly, the Plaintiff was present on the date of distribution on the date of distribution, and raised an objection against some of the dividends to the Korea Housing Finance Corporation on December 9, 2015.

D) Meanwhile, on December 6, 2016, approval for the use of the instant new building was granted. The instant reconstruction association did not go through the procedures, such as approval for a management and disposal plan and announcement of sale disposition, while implementing the instant reconstruction project.

B. The judgment of the court below

For the reasons indicated in its holding, the lower court determined that the instant reconstruction association was in the status of a mortgagee for each new subdivision, and accepted all of the Plaintiff’s claims against Defendant Dual Construction and Korea Housing Finance Corporation on the ground that, regardless of whether the instant reconstruction association had gone through the procedures such as the authorization of management and disposal plans prescribed in Articles 33 through 45 of the former Urban Redevelopment Act (repealed by Act No. 6852, Dec. 30, 2002; hereinafter the same shall apply) and the notification of the sale in lots pursuant thereto, the Plaintiff’s individual right to collateral security established with respect to each subdivision prior to the destruction should have effect on each new subdivision newly constructed after the approval of the project plan for the instant reconstruction project pursuant to Article 44-3(5) of the former Housing Construction Promotion Act.

C. Judgment of the Supreme Court

1) However, we cannot accept the judgment of the court below for the following reasons.

A) Article 7(1) of the Addenda to the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) (Article 7(1) of the Addenda to the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) provides that “The progress of the project implementation is in accordance with the previous Act after obtaining approval for the project plan or the authorization for the implementation of the project under the previous Act.” As regards a reconstruction association which has obtained approval for the housing construction project plan under the former Housing Construction Promotion Act, the previous Act excludes the provisions on the authorization for the management and disposal plan, which is the implementation method of the reconstruction project under the Urban Improvement Act, and the procedures and methods of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, and in principle, the administrative agency’s involvement in the project plan is terminated with the approval of the project plan, and the association members acquire the right to purchase it, and the distribution of rights between the association members and the new building or the transfer of ownership on the newly built site, etc. (see, e.g., Supreme Court Decision 2009Da7368).

Meanwhile, in cases where a reconstruction association parcels out a new house or site to its members through procedures such as authorization of a management and disposal plan prescribed in Articles 33 through 45 of the former Urban Redevelopment Act applied mutatis mutandis under Article 44-3 (5) of the former Housing Construction Promotion Act and public notification of a sale disposal plan therefor, the right to the old house or site may be deemed to have been legally exchanged or modified for a new house or site as a right to the new house or site, regardless of the intent of the right holder. However, in cases where a new house or site was sold to its members without following the procedures such as authorization of a management and disposal plan and public notification of a sale disposal plan, it is merely that the relevant association members acquire ownership to the new house or site, which is a separate individual house or site, according to the association regulations or a sale sale contract, and the ownership to the old house or site shall not be deemed to have been refunded for common use by forcibly exchanging or changing the ownership to the new house or site (see, e.g., Supreme Court Decision 2008Da1132, Jun.

Therefore, where a reconstruction association has gone through procedures such as authorization of a management and disposal plan and a public announcement of sale in lots under Articles 33 through 45 of the former Urban Redevelopment Act, which are applied mutatis mutandis pursuant to Article 44-3(5) of the former Housing Construction Promotion Act, registration of the site and constructed facilities may be made by attaching a management and disposal plan and a document proving such authorization and a document proving the public announcement of sale in lots pursuant to Article 40 of the former Urban Redevelopment Act and Article 5 of the former Urban Redevelopment Registration Rules (repealed by Supreme Court Regulation No. 1833, Jun. 28, 2003). However, if a reconstruction association fails to go through the procedures prescribed in Articles 33 through 45 of the former Urban Redevelopment Act, such registration may not be made (see Supreme Court Decision 2010Da96072, Apr. 14, 201).

B) We examine the aforementioned facts in light of the legal principles as seen earlier. The instant reconstruction association established pursuant to the former Housing Construction Promotion Act and approved approval of a project plan, without going through the procedures such as the authorization of management and disposal plan and the notification of sale disposal pursuant to Articles 33 through 45 of the former Urban Redevelopment Act, which apply mutatis mutandis pursuant to Article 44-3(5) of the former Housing Construction Promotion Act, entered into a sales contract with each of the members of the relevant association, and completed registration of preservation of ownership as to each of the relevant sections of exclusive ownership of each of the relevant sections of exclusive ownership. Therefore, the Plaintiff’s individual collateral security, which was established with respect to each of the sections of exclusive ownership prior to the destruction of the former housing, cannot be deemed to have effective

C) Nevertheless, the lower court determined that the Plaintiff’s individual right to collateral security established with respect to each of the instant partitioned buildings prior to destruction, regardless of whether the instant reconstruction association had gone through the procedures such as the authorization of the management and disposal plan under Articles 33 through 45 of the former Urban Redevelopment Act and the announcement of the sale in lots, etc. under Article 44-3(5) of the former Housing Construction Promotion Act, shall have effect on each of the new partitioned buildings newly constructed after the approval of the project plan for the instant reconstruction project pursuant to Article 44-3(5) of the former Housing Construction Promotion Act. In so determining, the lower court erred by misapprehending the legal doctrine on the interpretation

2) However, following the remand, the lower court should have further deliberated and determined on the following issues.

A) Unless there are special circumstances, such as that a sectional owner’s right to use a site in an aggregate building is stipulated as a separate disposition against a section for exclusive use and its subordinate non-joint ownership is recognized (Article 20(1) and (2) of the Act on the Ownership and Management of Aggregate Buildings). Thus, the decision to commence the auction of a section for exclusive use and the seizure of that section shall naturally affect the right to use the site, which is a accessory or accessory right, and a purchaser of a section for exclusive use in an auction proceeding based on it shall also acquire the right to use the site (see Supreme Court Decisions 94Da12722 delivered on August 22, 1995, 97, 97Ma814 delivered on June 10, 197, etc.). Since Article 91(2) of the Civil Execution Act provides that all mortgages of the above sold real estate shall be extinguished due to sale of the above real estate due to the above section for exclusive use and the right to use the site shall be separately established within the extent of 20 years prior to the sale of the above land.

B) Examining the facts in light of the aforementioned legal principles, the decision to commence compulsory sale of each new section and the effect of seizure on the right to use site for the corresponding section of exclusive ownership of each new section (the share corresponding to the ratio of the pertinent section of exclusive ownership among the rebuilding association's shares of each of the rebuilding association of this case of this case of No. 14, 72, 131, 9, 5, 81, 85, 35, and 25 of the order of priority in the land registry of this case) shall be extended to the right to use site for the corresponding section of exclusive ownership, barring special circumstances such as the fact that the agreement was stipulated to make it possible to separately dispose of the right to use site. In the auction procedure of this case, the purchaser of each of the new sections of exclusive ownership shall also acquire the right to use site at the same time in the auction procedure of this case. Unless special sale conditions are stipulated that the purchaser will continue to exist in the right to use site of this case and acquire it by the purchaser in full.

Therefore, the Plaintiff may be deemed to be in a position to be preferentially distributed to the Defendants with respect to the right to use site among the relevant sales proceeds of each newly partitioned building. Accordingly, the lower court after remanding the case, should have deliberated on whether there are special circumstances to be different from the Defendants, and on how much part of the right to use site among the relevant sales proceeds of each newly partitioned building is possible, and then examine the amount that the Plaintiff is entitled to preferential dividends from the amount that the Plaintiff and the Defendants, as the mortgagee, as the right to use site, as the right to use site from the sales proceeds of

2. As to the appeal by Defendant Esciff Korea Ltd. (hereinafter “Defendant Esciff Korea”)

Defendant Escuf’s petition of appeal did not state the grounds of appeal, and the above Defendant did not submit the grounds of appeal within the submission period of the grounds of appeal (the grounds of appeal was received on January 17, 2018, which was later than the deadline for submitting the grounds of appeal).

3. Conclusion

Therefore, the part of the judgment of the court below regarding the defendant Hodu Construction and the Korea Housing Finance Corporation is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The appeal by the defendant Lordum is dismissed, and the costs of appeal between the plaintiff and the defendant Lordum are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jae-hyung (Presiding Justice)