Regarding the return of lease deposits, the Supreme Court has ruled that if a tenant loses possession of a residence, the previously extinguished enforceability of the lease cannot be revived even if a new leasehold registration is made. The Supreme Court Civil Division 2 (Presiding Justice Kwon Youngjun) overturned the lower court's ruling in favor of the plaintiff in the appeal trial (2024Da326398), filed by Seoul Guarantee Insurance Co., Ltd. against Lee, and remanded the case to the Seoul Central District Court on April 15.
[Facts]
In 2017, A leased a house owned by B for a deposit of 95 million won. After moving in, A completed the resident registration and obtained a fixed date for the lease contract. While the lease was ongoing, B established a mortgage of 66 million won on the property in 2018.
When the lease ended, B failed to return the deposit to A. A received an insurance payout from Seoul Guarantee Insurance Co., Ltd. through a lease deposit return insurance policy previously purchased, and in return, the company acquired A's claim for the return of the deposit.
Seoul Guarantee Insurance notified B of the assignment of the claim and applied for a leasehold registration order, which was completed. Subsequently, Seoul Guarantee Insurance initiated a compulsory auction procedure, and the defendant, Lee, purchased the property through the auction. In the auction distribution, Seoul Guarantee Insurance received approximately 12.7 million won, but then filed a lawsuit against Lee, claiming the remaining lease deposit and delayed damages of about 82 million won, arguing that Lee had succeeded to the lessor's position.
[Issue]
The issue was whether the enforceability of the leasehold was extinguished when tenant A lost possession of the residence in April 2019.
[Lower Court Rulings]
The courts of first and second instance ruled in favor of the plaintiff, stating, "Since the defendant succeeded to the lessor's position, in the absence of any special circumstances, Seoul Guarantee Insurance is entitled to receive the remaining lease deposit and delayed damages."
[Supreme Court Ruling]
The Supreme Court reached a different conclusion. The Court stated, "According to the Housing Lease Protection Act, a tenant acquires 'enforceability' against third parties only after taking possession of the residence and completing resident registration. This enforceability must be continuously maintained during the contract period, and if the tenant loses possession, the enforceability is also lost." The Court further explained, "Although a new leasehold registration can grant enforceability and preferential repayment rights, these arise only from the time of registration and do not retroactively revive previous enforceability." The Court also noted, "A person who acquires the property through auction is not considered an 'acquirer of a leased residence' under the Housing Lease Protection Act, and therefore, the tenant cannot assert previous lease relations against the new owner." The Supreme Court concluded, "The lower court should have examined when A lost possession of the residence and determined whether the enforceability of the leasehold could be asserted against the defendant. The lower court's ruling was flawed as it misunderstood the legal principles regarding enforceability under the Housing Lease Protection Act, which affected the outcome of the judgment."
Reporter: An Jaemyung, Law Times
※This article is based on content supplied by Law Times.
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