Whether partition of co-owned property by auction is allowed for an unregistered building constructed without a building permit or report (negative)

The proviso of Article 81 (1) 2 of the Civil Execution Act provides that an application for compulsory auction for a unregistered building shall be accompanied by documents evidencing a construction permit or building report on such building, so that the preservation and registration for execution of real estate may be made only if the building which has completed the construction permit or building report has not obtained approval for use. Article 274 (1) of the same Act provides that an auction for partition of co-owned property shall be conducted in the same manner as an auction for exercising a security right. Article 268 of the same Act provides that the provisions of Articles 79 through 162 of the same Act shall apply mutatis mutandis to an auction for exercising a security right to real estate. Thus, the partition of co-owned property by auction for unregistered building constructed without a construction permit or report is not allowed.

Article 269 of the Civil Act, Articles 81(1)2, 268, and 274(1) of the Civil Execution Act

Plaintiff (Law Firm Yellow Sea, Attorneys Jeon Ho-le et al., Counsel for the plaintiff-appellant)

Defendant 1 and four others (Law Firm LLC, Attorneys Park Gi-sung et al., Counsel for the defendant-appellant)

Defendant 6

Seoul High Court Decision 2010Na99561 decided July 20, 201

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

1. The judgment of the court below

(1) According to the reasoning of the judgment below, with respect to the lawsuit for partition of co-owned property of this case, where the plaintiff and the defendants jointly owned a unregistered building (hereinafter "the building of this case") located on the same (number 2 omitted), approximately 398.3m3m2 of the same (hereinafter collectively referred to as "the site of this case") as the same (number 1 omitted) and the same (number 2 omitted), the court below acknowledged the following facts: ① the building of this case was originally owned by the non-party, the mother of the plaintiff and the defendant, and the non-party donated only part of the site of this case on April 20, 190 to the plaintiff on April 27, 200, and the non-party died on April 27, 200, and the non-party inherited the ownership of the building of this case to 1/7m2 and the defendants acquired legal superficies under the customary law on the building of this case; ② the building of this case and the remaining 1/6m2 of the building of this case, the market price of this case, the building of this case.

(2) Based on the above findings of fact, the court below held as follows: (1) it is practically impossible to divide the building of this case in kind, and it is inappropriate for the parties as well as the economic value of the building; (2) although the building of this case is owned solely by the plaintiff, the plaintiff acquired the site under the construction of the building of this case; and (3) if the building of this case is owned solely by the plaintiff, the defendants have a duty to establish legal superficies under customary law; (4) if the building of this case is owned solely by the plaintiff, it would deprive the plaintiff of the profit equivalent to the rent as at the time when the defendants can enjoy superficies of the building of this case; (4) it is reasonable for the plaintiff to match the owner of the building and the building site to maximize the utilization of each real estate and economic value; (4) It is not reasonable when it is based on the premise that the plaintiff would continue to sell the building of this case, and therefore, it is reasonable to determine that the remaining amount of the building of this case should be sold to the plaintiff in kind, not the auction of the building of this case.

2. Judgment of the Supreme Court

However, we cannot agree with the above determination by the court below for the following reasons.

A. The proviso of Article 81(1)2 of the Civil Execution Act provides that an application for a compulsory auction for a unregistered building shall be accompanied by documents evidencing the building permit or building report on the building, so that a preservation and registration for execution of real estate may be made only if the building which has completed the building permit or building report lawfully fails to obtain approval for use. Article 274(1) of the same Act provides that formal auction such as auction for partition of co-owned property shall be conducted in the same manner as auction for exercising a security right. Article 268 of the same Act provides that Articles 79 through 162 of the same Act shall apply mutatis mutandis to the auction for exercising a security right to real estate. Thus, a partition of co-owned property by auction is not allowed for unregistered building without a building permit or report.

B. According to the admitted evidence and the record of the court below, the facts that the building of this case was not registered and that it was constructed without building permission or report can be known. Thus, the court below erred by misapprehending the legal principles as to the object of auction of real estate, which determined that the partition of co-owned property as to the building of this case should be conducted at auction.

Meanwhile, when comprehensively considering the causes of co-ownership, the proportion of co-ownership, the economic value of co-ownership in the case of division, and the desire of co-owners in the method of division, in a case where it is deemed that acquiring the value of co-ownership to a specific co-owner does not impair the substantial fairness among co-owners, the co-owners shall own the jointly-owned property separately or jointly with one of the co-owners, but the division by the method of allowing the co-owners who own the property in kind to compensate for the appropriate and reasonable value of the share to another co-owner is allowed as one of the goods division in kind (see, e.g., Supreme Court Decisions 93Da27819, Dec. 7, 1993; 2004Da30583, Oct. 14, 2004). If the Plaintiff becomes the sole owner of the building in this case, the Defendants would have to own the economic interest of the Plaintiff during the duration of the superficies of the building in this case as well as the economic interest of the Defendants.

3. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)