[1] In a case where a house owned by a lessor was transferred to another person at the time of the establishment of a housing lease and the owner of a leased house and site changed, whether a lessee may exercise a preferential right to payment from the proceeds of realizing the housing site (affirmative)

[2] Whether unregistered or unauthorized buildings are subject to the Housing Lease Protection Act (affirmative)

[3] Whether a lessee of an unregistered house can exercise preferential right to payment under the Housing Lease Protection Act against the proceeds from the sale of the leased house site (affirmative)

[1] A lessee and a small-sum lessee with requisites for counterclaim and a fixed date may exercise preferential right to payment from the proceeds of realizing a leased house and its site, in cases where only the site is sold separately from the leased house, as well as from the auction of the leased house, and such preferential right to payment is recognized to protect a lessee based on the value of the leased house and the site, which is the object leased at the time of the establishment of the lease. The same applies to cases where a building site owned by the lessor was transferred to another person at the time of the establishment of the lease, and the owner

[2] The Housing Lease Protection Act provides that the purpose of this Act is to ensure the stability of the residential life of citizens by prescribing special cases for the Civil Act with respect to the lease of a house, and that all or part of a house is to apply to the lease of a house, but does not distinguish whether a leased house is a building permitted by the competent authority or a building completed a registration. Thus, as long as a building constitutes a house used for the purpose of the residential life of citizens, barring any special provision, even if the registration has not yet been completed or is not possible, it is subject to the said Act

[3] Since Articles 3-2 and 8 of the Housing Lease Protection Act, which recognize the right to preferential payment of lessees and small-sized tenants with requirements for counterclaim and a fixed date, do not have any special provision dealing with unregistered houses, the legal principles on the right to preferential payment of the leased house site of lessees and small-sized tenants with requirements for counterclaim and a fixed date apply as they are, even in cases where leased houses are unregistered. Other interpretation of the right to preferential payment according to the right to preferential payment according to the right to lease registration is unfair because it is unreasonable to reduce or limit the scope of application without reasonable grounds, and it is unreasonable in light of the purport of the same Act that recognizes the opposing power and right to preferential payment without the registration of the right to lease, unlike the Civil Act, in the latter part of Article 8(1) of the Housing Lease Protection Act on small-sized tenants, the lessee shall satisfy the requirements for counterclaim prior to filing a request for auction of the house. However, the purport of limiting the requirements for counterclaim against the small-sum lessee in order to prevent the discontinuation of the right to preferential payment for the small-sum deposit can not be deemed as the legislative provision on the right to request for auction.

[1] Articles 3-2 (2) and 8 of the Housing Lease Protection Act / [2] Articles 1 and 2 of the Housing Lease Protection Act / [3] Articles 2, 3-2 (2) and 8 of the Housing Lease Protection Act

[1] Supreme Court Decision 99Da2555 delivered on June 14, 1996 (Gong1996Ha, 2180) Supreme Court Decision 99Da25532 delivered on July 23, 199 (Gong1999Ha, 1740) / [2] Supreme Court Decision 86Da164 delivered on March 24, 1987 (Gong1987, 708) / [3] Supreme Court Decision 2001Da39657 delivered on October 30, 2001 (Gong201Ha, 2566) (amended) (1)(hereinafter referred to as the "amended")

Plaintiff 1 and one other

Industrial Bank of Korea (Law Firm Spah, Attorneys Park Jong-chul et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2003Na40653 delivered on April 27, 2004

All appeals are dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Article 3-2(2) of the Housing Lease Protection Act (hereinafter “the Housing Lease Protection Act”) provides that the requirements for setting up against a tenant under Article 3(1) and the fixed date indicated in a lease agreement document shall be prescribed by the Presidential Decree to have the right to receive a security deposit in preference to junior creditors and other creditors from the proceeds from the sale of the housing and the proceeds from the sale of the housing site shall be included in the proceeds from the sale of the proceeds from the sale of the housing site. Article 8(1) of the same Act provides that the right to receive a security deposit shall be preferentially paid to a tenant who meets the requirements for setting up a security deposit (hereinafter “small amount of security deposit”) and a lessee who satisfies the requirements for setting the scope of and standards for the small amount of security deposit shall be prescribed by the Presidential Decree within the limit of a half of the value of the housing and the housing site.

Therefore, a lessee and a small-sum lessee with requisite for counterclaim and a fixed date may exercise preferential right to payment from the proceeds of realizing the leased housing and its site, even in cases where the leased housing and its site are sold at auction separately from the leased housing, as well as from the leased housing (see, e.g., Supreme Court Decisions 96Da7595, Jun. 14, 1996; 99Da25532, Jul. 23, 1999). Such preferential right to payment has the nature of the statutory security right, and is recognized to protect the lessee based on the value of the leased housing and the site, which is the object leased at the time of the establishment of the lease. Thus, the same applies to cases where the leased housing and the site owned by the lessor were transferred to a third party at the time of the establishment of

2. The purpose of the Act is to ensure the stability of the residential life of citizens by providing for special cases concerning the Civil Act with respect to the lease of a house (Article 1), and does not distinguish whether a house leased is a building permitted by the competent authority or a building completed a registration (Article 2). Thus, inasmuch as a building constitutes a house used for the purpose of the residential life of citizens, even if the building is not yet completed a registration or is unable to be completed a registration, it is reasonable to interpret that the Act is subject to the said Act unless there are other special provisions (see Supreme Court Decision 86Meu164, Mar. 24, 1987, which recognized the opposing power against the transferee of an unregistered building without permission).

However, Articles 3-2 and 8 of the same Act, which recognize the right to preferential reimbursement to the lessee and the lessee with the requisite for counterclaim and the fixed date, do not have any special provision dealing with unregistered houses. Thus, the legal principles on the right to preferential reimbursement to the leased housing site of the lessee and small-sum lessee with the aforementioned requisite for counterclaim and the fixed date shall be deemed as they apply even in cases where the leased housing is unregistered

On the contrary, interpreting differently the right to preferential payment depending on the registration of a leased house is unfair as it reduces or limits the scope of the application without any reasonable reason or ground. Unlike the Civil Act, it is unreasonable in light of the purport of the same Act that recognizes opposing power and preferential payment right even without the registration of the right to lease.

However, in the latter part of Article 8 (1) of the same Act regarding the right to preferential payment of small-sum lessee, the lessee shall satisfy the requirements for setting up against the lessee prior to the registration of a request for auction of the house. However, the purport of limiting the time of setting up the requirements for setting up against the lessee in order to prevent the closure of the application for setting up against the lessee by neglecting the distribution procedure for the purpose of receiving a small-sum security deposit, such as making the most prompt lessee by making the sale of the leased house and the site, is not to limit the cases where the request for auction of the leased house itself is to be registered or the registration of a request for auction of the leased house is possible. The legislative intent can be sufficiently achieved if the above requirements for setting up are satisfied prior to the registration of a request for auction of the building site, so the above provision does not constitute a provision

Therefore, the Supreme Court Decision 2001Da39657 Decided October 30, 2001, which had different views on the right to preferential reimbursement of small tenants from the proceeds of realizing unregistered housing sites, is to be amended.

3. In the same purport, the court below is just in holding that the plaintiffs, who are tenants of non-registered multi-household houses of this case, have met the requirements for counterclaim and the fixed date before the defendant was established with regard to the site of this case, and therefore, in the auction procedure concerning the site of this case filed by the defendant with the right to collateral security, the plaintiffs can receive dividends in preference to the defendant's claims from the proceeds of realizing the site of this case, and there is no error of law

4. 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.

Chief Justice Lee Yong-chul (Presiding Justice)