[1] The legal nature of the penalty surcharge imposed on the title truster under the Act on the Registration of Real Estate under Actual Titleholder's Name and the Enforcement Decree (=the binding act)

[2] The case holding that even if the lessee of a public construction rental house violated the Act on the Registration of Real Estate under Actual Titleholder's Name by selling the rental house in the name of a third party as a means to achieve the "blue house creation", the disposition agency can reduce 50/100 of the penalty surcharge when the reason for statutory mitigation exists, and the disposition agency has no authority to fully reduce or exempt the penalty surcharge or to impose the penalty surcharge

[1] In full view of the provisions of Articles 3(1) and 5(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name, and Article 3(1) of the Enforcement Decree of the same Act, the issue of whether to impose a penalty on the title truster is an indecent act, and thus, the penalty can only be mitigated within a certain scope only if the title trust is not for the purpose of evading taxes or avoiding the restrictions pursuant to the relevant Acts and subordinate statutes, and it does not allow the imposition of a penalty surcharge or the full exemption of a penalty surcharge.

[2] The case holding that even if a lessee of a public construction rental house is a title trust act prohibited by the Act on the Registration of Real Estate under Actual Titleholder's Name by the title trust with a third party qualified as a tool to achieve a "blue house preparation" in order for the lessee to become a buyer due to the bankruptcy of a rental business operator, etc., the disposition agency can reduce the penalty surcharge by 50/10 if there is a statutory mitigation reason, and the disposition agency has no authority to fully reduce the penalty surcharge or not impose the penalty surcharge.

[1] Articles 3(1) and 5(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Articles 3(1) and 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name / [2] Articles 3(1) and 5(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Articles 3(1) and 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name

Plaintiff 1 and one other

The head of Yeonsu-gu

Seoul High Court Decision 2005Nu12307 delivered on November 23, 2005

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

The grounds of appeal are examined.

1. Article 3(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name provides that “No person shall register any real right to real estate under the name of the title trustee pursuant to a title trust agreement,” and Article 5(1) of the said Act provides that any title truster who violates the provisions of Article 3(1) of the said Act shall be punished by a penalty surcharge not exceeding the amount equivalent to 30/100 of the real estate value concerned. In addition, Article 3(1) of the Enforcement Decree of the said Act provides that the head of a Si/Gun/Gu shall notify the person who committed the offense to pay the penalty within one month after confirmation of the offense under Article 5(1) of the Act. Article 3-2 provides that where it is not for the purpose of evading taxes or avoiding restrictions under the Acts and subordinate statutes, the penalty surcharge may be reduced by 50/100 thereof. In full view of the above provisions, whether to impose the penalty on the title truster shall fall under the binding act, and thus, the penalty surcharge may not be reduced or exempted within a certain scope.

2. According to the reasoning of the lower judgment, the lower court: (a) based on the evidence adopted by the Defendant, established an apartment complex of 451 located in Yeonsu-gu, Incheon; (b) as prescribed by the Rental Housing Act that was constructed by the time comprehensive construction company (hereinafter “age comprehensive construction”) using the National Housing Fund; (c) was composed of 14 and 19 units of apartment housing; (d) the Plaintiffs were the lessees; and (e) the creditors of the age comprehensive construction were not entitled to purchase the apartment complex of 197, and thus, (e) were not entitled to purchase the apartment complex of 10,000 if it was impossible for the Plaintiffs to purchase the apartment complex under the name of 10,000, under the name of 194, on May 19, 198, for the following reasons: (a) it was difficult for the Plaintiffs to purchase the apartment complex under the name of 2, a lessee of the said apartment complex; and (b) it was also difficult for them to obtain the registration of ownership transfer from the new apartment complex.

In addition, even though the above act of title trust by the plaintiffs in family affairs violates the above law, the court below determined that the above act of title trust was unlawful since it exceeded and abused discretion in violation of the principle of equity or the principle of proportionality, in light of the circumstances where the defendant did not make or initiate any procedure for imposing penalty surcharges on the lessees other than the plaintiffs on the ground of violation of the above law, and the public interest in order to achieve it through the imposition of penalty surcharges in this case.

However, in light of the above legal principles, since it is clear that the plaintiffs' act constitutes a title trust act prohibited under Article 3 (1) of the Act on the Registration of Real Estate under Actual Titleholder's Name, the defendant can only reduce the penalty surcharge by 50/100 only in cases where there are legal grounds, and the defendant does not have the authority to fully reduce or exempt the penalty surcharge or to not impose the penalty surcharge. Therefore, the disposition of imposition of the penalty surcharge in this case cannot be deemed unlawful. Therefore, the judgment of the court below that revoked the disposition of imposition of the penalty surcharge in this case on the ground that it is unlawful is erroneous, which affected the conclusion

3. Meanwhile, Article 5(2) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (amended by Act No. 8418, May 11, 2007) provides that when imposing a penalty on a person who violates the obligation to register under the name of actual right holder of real estate, the value of the real estate as of the date a penalty surcharge is imposed regardless of the termination of title trust relationship, existence of real name-registration, etc. (hereinafter “real estate appraised value”) shall be the real estate value which serves as the basis for calculating the penalty surcharge (hereinafter “real estate appraised value”). Article 5(2) of the same Act provides that on May 25, 2006, the application was suspended until the Constitutional Court 2005Hun-Ga17, declared that the real estate was inconsistent with the Constitution, and accordingly, Article 5(2) proviso of the former Act on the Registration of Real Estate under Actual Right holder’s Name (hereinafter “former Act”) provides that the real estate under title trust relation was completed or the procedure for real name registration was not completed.

Therefore, in this case, the proviso of Article 5 (2) of the Addenda to the current Act is applied pursuant to the proviso of Article 5 (2) of the same Act, so it is pointed out that the amount of penalty surcharge should be calculated by calculating the value of the real estate as of November 29, 2002 at the time of the registration of transfer of ownership in the name of the plaintiffs for the apartment of this case.

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

Justices Kim Young-ran (Presiding Justice)