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Preferential Repayment Right of Lessee Who Has Paid a Small Deposit

Preferential repayment right of lessee who has paid a small deposit

- Where a lessee who has paid a small deposit has obtained the opposing power for the leased house before an application for auction had been registered by the person holding a prior security right, the lessee shall be entitled to receive a repayment of a specified amount of the deposit in preference to other persons holding the security rights in the leased house (Articles 3(1) and 8(1) of the Housing Lease Protection Act).

Requirements for Preferential Repayment of Lessee Who Has Paid a Small Deposit

To be in the scope of lessees who have paid a small deposit

- A lessee entitled to be preferentially repaid as a top priority shall be a lessee whose deposit does not exceed the following relevant amount (Articles 8(3) and 8-2 of the Housing Lease Protection Act and Article 11(1)　of the Enforcement Decree of the Housing Lease Protection Act):

· Seoul Special Metropolitan City: KRW 165 million;

· Over-concentration control regions under the Seoul Metropolitan Area Readjustment Planning Act (excluding Seoul Special Metropolitan City), Sejong Metropolitan Autonomous City, Yongin-si, Hwaseong-si, and Gimpo-si: KRW 145 million;

※ Refer to Attached Table 1 of the Enforcement Decree of the Seoul Metropolitan Area Readjustment Planning Act for over-concentration control regions.

· Metropolitan Cities (excluding areas included in over-concentration control regions under the Seoul Metropolitan Area Readjustment Planning Act and Gun areas), Ansan-si, Gwangju-si, Paju-si, Icheon-si, and Pyeongtaek-si: KRW 85 million;

· Other areas: KRW 75 million

To satisfy the requirements for opposing power before an application for auction of the house is registered

- The lessee shall be provided with a leased house and complete resident registration, which is the requirements for opposing power before an application for auction of the leased house is registered (Article 3(1) and the latter part of Article 8(1) of the Housing Lease Protection Act).

- The requirements for opposing power shall continue to exist until the date of successful bid which is the time of termination of a demand for distribution prescribed by the court of execution (Supreme Court Decision, October 10, 1997, 95 Da 44597).

The leased house to be sold by auction or disposition for arrears

- Only when a leased house is sold by auction or disposition for arrears, the lessee who has paid a small deposit may exercise the preferential repayment right (Articles 3-2(4) and 8(2) of the Housing Lease Protection Act).

Distribution to be demanded or the exercise of the preferential right to be reported

- Where a leased house is sold by auction or disposition for arrears, the lessee shall demand distribution from the court of execution or report the exercise of the preferential right to the agency which has ordered the disposition for arrears (Supreme Court Decision, January 22, 2002, 2001 Da 70702).

· Distribution shall be demanded with a document stating the causes and amounts of the claims. In such cases, a document proving the qualifications for a demand for distribution shall be attached (Article 88(1) of the Civil Execution Act and Article 48 of the Regulation on Civil Execution).

Effect of Preferential Repayment Right

Protection of a specified amount of the deposit

- Where a lessee who has paid a small deposit has obtained the opposing power before an application for auction of the leased house had been registered, the lessee shall be entitled to receive a repayment of a specified amount of the deposit in preference to other persons holding the security rights in the leased house (Articles 3 (1) and 8 (1) of the Housing Lease Protection Act).

· The extent of a specified amount of a deposit to be preferentially repaid to a lessee who has paid a small deposit shall not exceed the following relevant amount, and where an amount of preferential repayment exceeds 1/2 of the value of a housing unit, the right of preferential repayment shall only apply to the amount equivalent to 1/2 of the value of the housing unit (Article 10(1) and (2) of the Enforcement Decree of the Housing Lease Protection Act):

√ Seoul Special Metropolitan City: KRW 55 million;

√ Over-concentration control regions under the Seoul Metropolitan Area Readjustment Planning Act (excluding Seoul Special Metropolitan City), Sejong Metropolitan Autonomous City, Yongin-si, Hwaseong-si, and Gimpo-si: KRW 48 million;

√ Metropolitan Cities (excluding areas included in over-concentration control regions under the Seoul Metropolitan Area Readjustment Planning Act and Gun areas), Ansan-si, Gwangju-si, Paju-si, Icheon-si, and Pyeongtaek-si: KRW 28 million;

√ Other areas: KRW 25 million

- Where at least two lessees dwell in a housing unit, and the total sum of specified amounts of security deposits exceeds 1/2 of the value of the housing unit, 1/2 of the value of the housing unit multiplied by the rate of a specified amount of the security deposit of a lessee to the total sum of specified amounts of security deposits shall be deemed the amount of preferential repayment of each lessee (Article 10(3) of the Enforcement Decree of the Housing Lease Protection Act).

Lessee Paying Small Amount Who Shall Not Exercise Preferential Repayment Right

Lessee paying small amount who shall not exercise the preferential repayment right

- The lessee who has leased a house, for which the leasehold registration is completed following the execution of the leasehold registration order thereafter, shall not exercise the preferential repayment right even when he/she is deemed a lessee who has paid a small deposit (Article 3-3(6) of the Housing Lease Protection Act).

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