[1] Whether Article 9(1) of the former Act on the Ownership and Management of Aggregate Buildings and the proviso of Article 671(1) of the Civil Act applied mutatis mutandis pursuant thereto are applicable to a rental apartment converted from the lease to the sale after obtaining a pre-use inspection or approval for use before May 26, 2005 (affirmative)

[2] In the case of an aggregate building converted for sale after lease, the starting point of the exclusion period of warranty liability (=the time of transferring an aggregate building by lease)

[1] Article 9(1) of the former Act on the Ownership and Management of Aggregate Buildings (amended by Act No. 7502, May 26, 2005; hereinafter “former Act”) provides that the provisions on the warranty liability under the Civil Act shall apply mutatis mutandis to the cases where an apartment building is constructed and sold, thereby clarifying the contents of the warranty liability, and where an apartment building is constructed and leased after the construction of an aggregate building, it is necessary to protect the owner of the aggregate building. The foregoing provision also provides that the warranty right shall belong to the current owner of the aggregate building, and even if the age of the apartment is assessed at the time of the determination of the pre-sale conversion price of the apartment, it shall not be readily concluded that the price of the apartment building is determined by reflecting all defects arising from defective construction, and the right to use the apartment before the lease period is recognized to be the same as the lessee's right to request the lease or the right to use the apartment building under the same status as the leased one under the former Act.

[2] The proviso of Article 671 (1) of the Civil Act, which applies mutatis mutandis to Article 9 of the former Act on the Ownership and Management of Aggregate Buildings (amended by Act No. 7502 of May 26, 2005, hereinafter "the former Aggregate Buildings Act"), shall be 10 years after "delivery", without considering the type of defects or the time when the defects occur. In light of each provision of Article 9 of the former Aggregate Buildings Act and Articles 67 through 671 of the Civil Act, it is reasonable to interpret the above "delivery" as "first delivery after construction" regardless of the cause of delivery. Thus, in cases of an aggregate building converted for sale after lease, it shall be deemed that the exclusion period from the time when the aggregate building was transferred by lease rather than the time of sale for sale for sale in lots is to run.

[1] Article 9(1) of the former Act on the Ownership and Management of Aggregate Buildings (amended by Act No. 7502 of May 26, 2005), Article 671 of the Civil Act / [2] Article 9(1) of the former Act on the Ownership and Management of Aggregate Buildings (amended by Act No. 7502 of May 26, 2005), Article 671 of the Civil Act

The council of occupants' representatives of Hosung-ro 1 and the second apartment (Law Firm Shin, Attorneys Lee Dong-young et al., Counsel for the plaintiff-appellant)

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

Columno Construction Co., Ltd.

Seoul High Court Decision 2010Na97558 decided June 16, 2011

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

1. The grounds of appeal are examined.

A. Article 9(1) of the former Act on the Ownership and Management of Aggregate Buildings (amended by Act No. 7502, May 26, 2005; hereinafter “former Act”) provides that the provisions of Articles 67 through 671 of the Civil Act shall apply mutatis mutandis to the warranty liability of a person who constructed and sold an aggregate building, and the proviso of Article 671(1) of the Civil Act provides that the contractor of a building made of stone, stone, brick, brick, metal or other similar materials shall be liable for the warranty liability for ten years after the delivery of the defect of the object.

Meanwhile, the Act on the Ownership and Management of Aggregate Buildings amended by Act No. 7502 on May 26, 2005 revised Article 6 of the Addenda to the Act on the Ownership and Management of Aggregate Buildings, which was amended by Act No. 3725 on April 10, 1984, requires that the provisions of Article 46 of the Housing Act, which was amended by Act No. 7520 on May 26, 2005, enforced on the same date, shall be followed. Article 46 (1) of the Housing Act excludes the provisions of Article 9 of the above Act as to the warranty liability for the sale of a building and separate provisions on warranty liability and defect repair. However, the provision of Article 3 of the Addenda to the Housing Act (amended by Act No. 7502 on May 26, 2005, which was amended by Act No. 7520 on July 31, 2008, which was amended by Act No. 10665, Apr. 26, 20105).

Therefore, the proviso of Article 671 (1) of the Civil Code is applied to concrete structures such as apartment buildings that had undergone a pre-use inspection or use approval before May 26, 2005, and the warranty against defects will be ten years after delivery.

B. Article 9(1) of the former Act on the Ownership and Management of Aggregate Buildings provides that in order to induce a person who constructed and sold an aggregate building to build a solid building and to effectively protect the owners of an aggregate building constructed in bad faith, the provisions on the warranty liability of a contractor under the Civil Act apply mutatis mutandis to the provisions on the warranty liability of a contractor, which clearly define the contents of the warranty liability, and also has become a mandatory provision. The same applies to a case where an aggregate building was constructed and sold directly, but a rental apartment, which is an aggregate building, was constructed and leased for sale in lots.

In addition, the right to demand a defect security under the above provision belongs to the current owner of an aggregate building, and even if the degree of deterioration of an apartment is assessed when determining the pre-sale conversion price of a rental apartment, it cannot be readily concluded that the price has been determined by reflecting all defects of an apartment due to defective construction, and it is difficult to conclude that the tenant can demand a defect repair based on a lease contract during the lease period prior to the conversion of ownership. However, it is difficult to view that the right to demand a defect repair recognized as a lessee and the right to demand a defect security based on

Therefore, in full view of these circumstances, it is reasonable to view that Article 9(1) of the former Aggregate Buildings Act and the proviso of Article 671(1) of the Civil Act applied mutatis mutandis pursuant thereto are applicable to rental apartments that are converted from the lease to the sale after obtaining a pre-use inspection or approval for use before May 26, 2005.

C. The lower court acknowledged the fact that the Defendant newly built the instant apartment and leased it as a long-term leased house around June 30, 1997 after undergoing a pre-use inspection, but converted for sale on September 1, 2002, and determined that the content and scope of the warranty liability for the instant apartment was determined accordingly, on the ground that the proviso of Article 9 of the Aggregate Buildings Act and Article 671(1) applicable mutatis mutandis pursuant thereto was applied to the instant apartment.

The judgment of the court below is just as it is in accordance with the above legal principles, and there is no error of law by misapprehending the legal principles as to the warranty against defects under Article 9 of the former Aggregate Buildings Act.

2. However, the ten-year warranty period under the proviso of Article 671(1) of the Civil Act, which applies to the apartment of this case, is the exclusion period, and the plaintiff's ex officio complies with the exclusion period.

The proviso of Article 671(1) of the Civil Act, which applies mutatis mutandis to Article 9 of the former Act, stipulates that the period of exclusion of warranty liability shall be ten years after delivery, without considering the type of defects or the time of occurrence of defects. In light of each provision of Article 9 of the former Act and Articles 667 through 671 of the Civil Act, it is reasonable to interpret that the above "delivery" means "first delivery after construction, regardless of the cause of "delivery". Thus, in the case of an aggregate building converted for sale after lease as in this case, the period of exclusion of warranty liability shall commence from the time of delivery of the apartment by lease rather than the time of sale for sale for sale for lots.

According to the records, there is no dispute between the parties that the apartment of this case was delivered to the lessee around June 30, 1997, which was the date of the inspection of the use of the apartment of this case, and around August 12, 2008, around 10 years thereafter, around January 2009, and around June 7, 2010, the notification of the transfer of the right to claim damages in lieu of the defect repair was given to the defendant from some sectional owners who purchased the apartment of this case, and the plaintiff filed the lawsuit of this case on August 21, 2008. Therefore, since it is apparent that the time when the plaintiff filed the lawsuit of this case after the acquisition of the right to claim damages from the above sectional owners or exercised the right to claim damages from the above sectional owners, if it is not recognized that the above sectional owners exercised the right to claim damages before June 30, 207.

Nevertheless, the lower court determined otherwise on the premise that the warranty period stipulated in Article 9 of the former Act on the Ownership and Management of Aggregate Buildings shall continue to exist for ten years from the time when the buyer received the apartment due to the conversion of the sale in lots, on the condition that the period of exclusion was not over ten years since September 1, 2002 when the lawsuit of this case was filed before the lapse of ten years from September 1, 2002, and thus, the lower court erred by misapprehending the legal doctrine on the exclusion period of warranty liability for the aggregate building which was converted for sale in lots after the lease

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Chang-soo (Presiding Justice)