[1] Where a title trust agreement and registration based thereon are invalidated after the grace period under the Act on the Registration of Real Estate under Actual Titleholder’s Name has expired, whether the title truster may seek cancellation of the registration under the name of the title trustee, in subrogation of the seller, in order to preserve the seller’s right to claim ownership transfer registration based on the sales contract

[2] In the so-called three-party registered title trust, where the title trustee arbitrarily disposes of the trusted real estate after the registration of title trust becomes null and void by the enforcement of the Act on the Registration of Real Estate under Actual Titleholder’s Name, whether the seller may be deemed to have suffered loss due to the disposal of the title trustee

[1] According to the Act on the Registration of Real Estate under Actual Titleholder’s Name, in the case of a so-called three-party registered title trust, the existing title trust agreement and the registration thereof are invalidated after the lapse of the grace period stipulated under the same Act, and as a result, the real estate trusted in title return to the seller’s ownership. As such, the seller can seek cancellation of the registration under his/her name, which is null and void. Meanwhile, as the law does not deny the validity of the sales contract between the seller and the title truster, the sales contract between the seller and the title truster still remains valid after the lapse of the grace period. Thus, the title truster may file a claim for the registration of ownership transfer against the seller.

[2] In a case where a title trustee arbitrarily sells or disposes of real estate held in trust, the buyer acquires ownership. If the seller transferred the title of the registration to the title trustee at the request of the title truster before the title truster enters into force the Title trust agreement and the Act on the Registration of Real Estate under Actual Titleholder’s Name that invalidates Change in Real Rights to Real Estate held in Registration, the buyer shall be deemed to have acquired ownership. If the seller transferred the title of the title to the title trustee at the request of the title truster before the enforcement of the title trust agreement and the Act on the Registration of Real Estate under Actual Titleholder’s Name that was made thereunder, it is difficult to view that there is any cause attributable to the conclusion of the sales contract or the implementation thereof. Therefore, the title truster who requested the transfer of the title trustee’s future registration for his own convenience does not request the seller to return the purchase price or re-register the title of the real estate after the grace period set forth in the Act has expired. Therefore, even if the title trustee disposes of the real estate held in trust before the title trustee restores the title of the title, the title trustee may refuse the performance of the obligation.

[1] Articles 4 and 12(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name / [2] Articles 4, 11(1), and 12(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name, Articles 2, 390, and 536(1) of the Civil Act

[1] Supreme Court Decision 99Da21738 delivered on September 17, 1999 (Gong1999Ha, 2189)

Plaintiff (Attorney Lee Tae-hoon, Counsel for the plaintiff-appellant)

Defendant

Seoul High Court Decision 2000Na41556 delivered on August 7, 2001

All appeals are dismissed. The costs of appeal are assessed against each party.

1. We examine the Plaintiff’s grounds of appeal.

A. On the third ground for appeal

According to the reasoning of the judgment below, the court below rejected the Defendant’s assertion that the Plaintiff did not sell the real estate in the name of Nonparty 1,851 square meters prior to 1,261 square meters prior to 20,000 square meters prior to 3,071 square meters prior to 30,000 square meters prior to 20,000, and that the Plaintiff did not sell the real estate in the name of Nonparty 2 under the same title as that of the Plaintiff’s 7,000 square meters, or that the Defendant did not sell the real estate under the same title as that of the Plaintiff’s 4,000 square meters prior to 193, and that the Defendant did not sell the real estate under the same title as that of the Plaintiff’s 5,000 square meters prior to 27,000,0000 won, and that the Defendant did not sell the real estate under the same title as that of the Plaintiff’s 4,000,000 won.

According to the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “the Act”), in the case of a so-called three-party registered title trust, the existing title trust agreement and registration based thereon are null and void due to the lapse of the grace period prescribed by the Act, and as a result, the real estate trusted in title is returned to the seller’s ownership. As such, the seller can seek cancellation of the registration in the name of title trust. Meanwhile, even after the grace period has elapsed since the seller and the title truster did not have any provision denying the validity of the sales contract between the seller and the title truster, the sales contract between the seller and the title truster still remains valid. As such, the title truster may file a claim for the registration of ownership transfer based on the sales contract against the seller, and may seek cancellation of the registration in the name of title trustee by subrogation of the seller (see Supreme Court Decision 9Da2

However, in cases where a title trustee arbitrarily sells or disposes of real estate held in trust, the buyer acquires ownership (Article 4(3) of the Act), barring any special circumstance, and in cases where the seller transferred the title of registration to the title trustee at the request of the title truster before the enforcement of the title trust agreement and any change in real rights due to the registration made pursuant to the title trust agreement as well as the registration made pursuant thereto, if the seller transferred the title of registration to the title trustee at the time of the title truster, it is difficult to deem that there is any cause attributable to the conclusion or execution of the sales contract. Therefore, it is not permissible in the principle of good faith to seek the return of the purchase price to the seller, or to demand the title truster to re-register the ownership of real estate for his/her convenience, based on the circumstances that

In this case, even if the non-party 1, who already transferred the name of ownership to the defendant who was the title truster prior to the enforcement of the law, was to dispose of the real estate of this case to another person, the non-party 1, who was the title trustee, may refuse to perform the obligation to return the purchase price in relation to simultaneous performance pursuant to the good faith principle or the main sentence of Article 536(1) of the Civil Act until the defendant restores the title of ownership, and on the other hand, the plaintiff's claim for ownership transfer registration is not allowed. Thus, the non-party 1, the title truster, has no loss due to the defendant's act of disposal that was the title trustee. Accordingly, although the judgment of the court below differs from its reasoning, the conclusion of dismissing the plaintiff's claim for damages on the ground that the plaintiff subrogated the non-party 1, the seller, or acquired his claim

The grounds of appeal pointing out this issue are rejected.

B. As to the first and second points

As seen earlier, as long as Nonparty 1, a seller, cannot be deemed to have suffered any loss due to the Defendant’s act of disposal, regardless of whether the sales contract prepared and delivered by the Plaintiff to Nonparty 2 was drafted as a means to settle his/her obligation, or whether Nonparty 2 had the authority to dispose of the real estate of this case, the Plaintiff’s claim for damages or the claim for transfer money against the Defendant against the Defendant is without merit. Thus, the fact-finding of the lower court is erroneous or contradictory to the reasoning.

The grounds of appeal pointing out this issue are rejected.

2. We examine the defendant's grounds of appeal.

In light of the records, except the evidence duly rejected by the court below, there is no evidence that the plaintiff agreed to provide the defendant with 1,071 square meters prior to the same Ri ( Address 4 omitted) for the obligation to be borne by the defendant as collateral, and further, as alleged in the ground of appeal, it is difficult to recognize the fact of such agreement solely on the ground that the defendant made a monetary convergence to the plaintiff in the form of debt guarantee, check exchange, construction work execution, etc. in excess of the market price of the real estate, and there is no violation of the rules of evidence.

The grounds of appeal disputing this issue are rejected.

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against each losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yoon Jae-sik (Presiding Justice)