The case recognizing the right to preferential payment of small tenants under the Housing Lease Protection Act to the lessee of a building, the use of which has been changed without permission, after mortgage is established;

The case recognizing a small lessee's preferential right to payment under the Housing Lease Protection Act to the lessee of a building, the use of which has been changed without permission, after mortgage is established.

Articles 1, 2 and 8 (1) of the Housing Lease Protection Act

Seocho-gu Agricultural Cooperatives (Attorney Jeon Young-chul et al., Counsel for the plaintiff-appellant)

Defendant 1 and 12 others (Attorney Park Jong-chul et al., Counsel for the defendant-appellant)

Defendant 3

May 14, 2008

1. The plaintiff's claim of this case is all dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The amount of dividends to the plaintiff among the distribution schedule prepared by this court on October 2, 2007 with respect to the auction auction case of real estate in 2006, 51759, is KRW 340,542,882, and the amount of dividends to the defendants and the designated parties in the attached list No. 1 shall be changed as stated in the corresponding list.

1. Facts of recognition;

A. On January 28, 199, the Plaintiff concluded a mortgage agreement of KRW 392,00,000 with Nonparty 1, the owner of the real estate listed in the Attachment List No. 2 (hereinafter “instant real estate”) on the 30th of the same month, and completed the registration of establishment of a mortgage on the 30th of the same month. At that time, the Plaintiff lent KRW 280,000,000 to Nonparty 1.

B. At the time of the establishment of the above right to collateral security, the current status of the building of this case was as stated in attached Table 2(2). At that time, the first floor was a church for the first floor, the second floor for the party hall for the second floor, the third floor for the office, and the fourth floor for the second floor

C. However, the above non-party 1, after completing the registration of the establishment of the above right to collateral security, remodeled the entire building of this case into studio housing and leased it to the Defendants and the designated parties as shown in the attached Table 1. The indication on the register of the building of this case was modified as shown in attached Table 3 Section 2.

D. The Plaintiff filed an application for auction of real estate rent (No. 2006, No. 51759) with respect to the instant real estate to recover the principal and interest of the instant loan to Nonparty 1.

E. In the above auction procedure, the court recognized the Defendants and the designated parties as a lessee of small claims under the Housing Lease Protection Act, as stated in the separate sheet No. 1, and distributed the pertinent amount in the order of priority, and then prepared a distribution schedule that distributes the remaining amount of 265,710,176 won to the Plaintiff, who is the right to collateral security, in sequence.

[Reasons for Recognition] Uncontentious Facts, Gap evidence 1, Gap evidence 2-1 and 2, the purport of the whole pleadings

2. Judgment on the plaintiff's claim

A. The plaintiff's assertion

(1) If the right to preferential reimbursement is acknowledged from the time when the right to collateral security was established to the lessee of a small amount without permission, the scope of damage that the mortgagee would incur is excessively expanded and unfair. As such, as in the instant case, the “where the portion of a building which was not a house was changed to a house after the establishment of the right to collateral security was changed to a house” should not be deemed as a lessee of a small amount under the Housing Lease Protection Act, and thus, the lessee of the relevant house cannot oppose the mortgagee before the lease because

(2) Therefore, it is unreasonable for this court to prepare a distribution schedule with the contents that recognize the Defendants and the designated parties as prior right holders rather than the Plaintiff. As such, the distribution schedule should be revised by revoking the amount of KRW 74,832,706 out of the dividend amount for the Defendants and the designated parties, as stated in the [Attachment 1] column, and distributing the amount additionally to the Plaintiff.

(b) Markets:

(1) In light of the legislative purport of the Housing Lease Protection Act, the issue of whether the housing is subject to protection should be determined based on the substance, not in the form of the public record building. According to the evidence adopted earlier, the part of the building of this case leased and occupied by the Defendants and the designated parties is clearly installed not only in the room but also in the independent main room and the toilet and the toilet, so it is evident that the building of this case has the substance of the house. Thus, even if the above housing structure was caused by illegal alteration of the purpose of use

(2) Furthermore, as to whether the Defendants and the designated parties can be protected as a lessee of small amount under the Housing Lease Protection Act, there was a result of imposing unexpected damages on the lessee of small amount without permission when the right to preferential reimbursement is acknowledged from the time when the right to preferential reimbursement was established after the establishment of the right to collateral security, but the above alteration of use is basically criticized for the lessor. ② Even if there was some error in failing to verify the use of the building in the register of small amount lessee, it is difficult for the mortgagee to deny the mistake that the alteration of the current state of the object of collateral security is not properly verified. ③ Since the legislative purpose of the Housing Lease Protection Act is to guarantee the stability of the residential life of ordinary people, the above provision of the Housing Lease Protection Act should not be interpreted disadvantageous to the lessee without a clear ground. ④ However, the Housing Lease Protection Act provides that the purpose of this Act is to “this Act applies to the lease of residential building (Article 2)” and does not exclude the application of the provisions of the Housing Lease Protection Act with regard to the housing that has been altered after the establishment of the right to collateral security.

3. Conclusion

Therefore, the plaintiff's claim against the defendants and the designated parties is dismissed as it is without merit. It is so decided as per Disposition.

Judge Choi In-bok