The meaning of "construction costs at the time of sale conversion" under Article 3-3 (1) [Attachment 1] (2) (c) of the Enforcement Rule of the former Rental Housing Act (=construction costs calculated based on the standard construction costs at the time of sale conversion)

In light of the structure and language of Article 3-3(1) [Attachment Table 1](a), (b), (b), (c), and (d)(1) of the former Enforcement Rule of the Rental Housing Act (amended by Ordinance of the Ministry of Construction and Transportation No. 360 of Jun. 27, 2003), the construction cost reflected in the “calculated price” under Article 3-3(1) [Attachment Table 1](d) [Attachment Table 1] (hereinafter “Attachment Table 1”), and the purport of separately setting the upper limit of the pre-sale conversion price of rental housing in Article 3-3(1)(a) and (b) [Attachment Table 1] of the former Enforcement Rule of the Rental Housing Act (amended by Ordinance of the Ministry of Construction and Transportation No. 360 of Jun. 27, 2003), the construction cost refers to the “building cost” which serves as the basis for calculating the price of rental housing under Article 3-3(1)(d) [Attachment 1] of the former Enforcement Rule, and ultimately means the standard construction cost at the time of construction cost.

Article 3-3 (1) [Attachment 1] [Attachment 1] of the former Enforcement Rule of the Rental Housing Act (amended by Ordinance of the Ministry of Construction and Transportation No. 360 of June 27, 2003) (see Article 9 (1) [Attachment 1]

Plaintiff (Appointed Party) (Law Firm Shin, Attorneys Noh Jeong-tae et al., Counsel for the plaintiff-appointed party-appellant)

Plaintiff 2 and seven others (Law Firm Shin, Attorneys Noh Jeong-tae et al., Counsel for the plaintiff-appellant)

Korea Land and Housing Corporation (Law Firm Shin & Yang, Attorneys Yang Ho-soo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2012Na89193, 89209 decided March 21, 2013

All appeals are dismissed. The costs of appeal are assessed against the Plaintiff (Appointed Party) and the Plaintiffs.

The grounds of appeal are examined.

1. Article 3-3(1) [Attachment Table 1] [Attachment Table 1] of the former Enforcement Rule of the Rental Housing Act (amended by Ordinance of the Ministry of Construction and Transportation No. 360 of June 27, 2003) provides that “The sale conversion price shall be the arithmetic mean of the construction cost and the appraised value.” Meanwhile, Article 3-3(1) Item (b) of the same Enforcement Rule provides that “the sale conversion price shall not exceed the amount calculated at the time of the sale conversion based on the construction cost of rental housing and the housing site cost (hereinafter “calculated price”) minus the depreciation cost during the rental period.” Accordingly, Article 3-3(2) of the former Enforcement Rule of the Rental Housing Act provides that the upper limit of the sale conversion price shall not exceed the amount calculated by deducting the depreciation cost during the rental period period from the housing price calculated on the basis of the construction cost of rental housing and the housing site cost at the time of the sale conversion.” (A) provides that the construction cost and appraisal price calculated on the “construction cost” under subparagraph (c) shall be included in the standard construction cost at the below.

In light of the structure and language of the aforementioned relevant provisions, and the purport of separately setting the upper limit of the pre-sale conversion price for rental housing under Paragraph (1) (a) of the attached Table 1, in setting the basis for calculating the pre-sale conversion price for rental housing under paragraph (1) (b) of the same Article, construction costs reflected in the “calculated price” for calculating the upper limit of the pre-sale conversion price under Paragraph (2) (c) of the attached Table 2 of the same case refers to construction costs, which serve as the basis for calculating rental housing prices under subparagraph (d) (1) of the same paragraph, and ultimately, the “construction costs at the time of sale conversion”, which serves as the basis for calculating the pre-sale conversion price, shall be deemed as “building costs” calculated based on the standard construction costs at the time of

2. On the grounds indicated in its reasoning, the lower court recognized that the “construction cost at the time of sale conversion” reflected in the “calculated price”, which is the factor for calculating the upper limit of the pre-sale conversion price for the apartment of this case, was not reasonable to regard the “construction cost at the time of sale conversion” as the same amount as the construction cost at the time of the public announcement of invitation of the Plaintiff (Appointed Party) and the Plaintiffs, and calculated the upper limit of the pre-sale

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the aforementioned measures by the lower court may be deemed to have been based on the legal doctrine as seen earlier, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on construction costs at the time of conversion

The Supreme Court precedents cited in the grounds of final appeal are different from this case, and thus are inappropriate to be invoked in this case.

3. Therefore, all appeals are 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.

[Attachment] List of Appointeds: Omitted

Justices Kim So-young (Presiding Justice)