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Demand for Distribution

Demand for distribution

- A demand for distribution refers to a request made by a creditor to receive a reimbursement from the sale price of the property by taking part in the execution procedure commenced by any other creditor.

Procedure of Demand for Distribution

Creditor who may demand distribution

- Any lessee who has obtained the preferential repayment right and who has paid a small deposit may demand distribution by taking part in the execution procedure commenced by any other creditor (Article 88 (1) of the Civil Execution Act and Articles 3-2 (2) and 8 of the Housing Lease Protection Act).

Timing for demanding distribution and the completion period

- A lessee shall demand distribution between the date when the seizure comes into force and the completion period for demanding distribution fixed by the court of execution (Article 91 (1) of the Regulation on Civil Execution).

· Where a lessee has filed an application for an auction of the property of the lessor, he/she may receive distribution even though he/she has not demanded distribution. In such cases, where the lessee has not received distribution but a person not entitled to receive distribution has received it, he/she has the right of claim for restitution of unjust enrichment against such person (Supreme Court Decision, October 10, 2000, 99 Da 53230).

Application for demand for distribution

- A lessee shall file a report on a right with and demand distribution from the court of execution with a document stating the causes for and the amount of the claim. In such cases, an executory exemplification or its copy and other documents attesting his/her qualifications for a demand for distribution (a copy of a written lease contract, a certified copy of resident registration, etc.) shall be attached to the application (Article 48 of the Regulation on Civil Execution).

The amount of distribution to the lessee

- Lessee who has obtained the opposing power and the fixed date

· Where any lessee who has obtained the opposing power and the fixed date has demanded a distribution not later than the completion period for demanding distribution, his/her order in distribution shall be determined depending on the order of other creditors of distribution such as the right to collateral security, etc. based on the date when the preferential repayment right has come into force and the apportioned amount shall be set accordingly (Article 3-2 (2) of the Housing Lease Protection Act).

- Lessee paying a small deposit who has obtained the preferential repayment right of top priority

· Where any lessee who has paid a small deposit has met the requirements for opposing power prior to the registration of a decision on commencing the first auction and has demanded a distribution not later than the completion period for demanding a distribution, he/she shall receive a specified amount of the deposit in preference to other persons holding the security rights (Article 8 (1) of the Housing Lease Protection Act).

- Lessee who has completed the registration of leasehold

· Any lessee who has completed the registration of leasehold prior to a decision on commencing an auction shall receive distribution even though he/she has not demanded distribution (Subparagraph 3 of Article 148 of the Civil Execution Act).

· Any lessee who has completed the registration of leasehold after a decision on commencing an auction may take part in distribution only when he/she has demanded distribution not later than the completion period for demanding distribution (Subparagraph 2 of Article 148 of the Civil Execution Act and Article 91 (1) of the Regulation on Civil Execution).

Making distributions

- Where there has been no lawful objection raised by any creditor or debtor or where the creditor has failed to appear on the date of distribution and is deemed to have agreed to carrying out distribution, the court shall distribute as described in the original distribution schedule (Article 153 (1) of the Civil Execution Act).

Need to Maintain Opposing Power and Preferential Repayment Right

Maintenance of opposing power and preferential repayment right

- Any lessee who has met the requirements for opposing power (delivery of the house + resident registration) and obtained the fixed date on the written lease contract shall be entitled to receive the repayment of the deposit, in preference to any junior obligees and other creditors, by taking part in an auction or a public sale. Any lessee who has paid a small deposit may be preferentially repaid as a top priority (Articles 3-2 (2) and 8 of the Housing Lease Protection Act).

Selective Exercise of Opposing Power and Preferential Repayment Right

Any lessee who has obtained the opposing power and the preferential repayment right may exercise the opposing power and the preferential repayment right selectively.

- The lessee may ① receive the repayment of the deposit preferentially from the converted price of the leased house by exercising his/her preferential repayment right with taking part in distribution, or ② claim the existence of the relation of the lease until he/she receives the repayment of the deposit by exercising his/her opposing power over the successful bidder of the leased house without taking part in distribution (Articles 3 (1) and 3-2 (2) of the Housing Lease Protection Act).

Lessee's Demand for Distribution and Termination of Lease

Where the lessee has received the entire amount of deposit

- Where a leased house is auctioned off, the relation of the lease shall be terminated by rescission at the time when the court of auction notifies the lessor of a demand for distribution (Supreme Court Decision, September 18, 1998, 97 Da 28407).

Where the lessee has not received the entire amount of deposit

- In cases where an auction has been held on the leased house, the right of lease shall become extinct by a knock-down of the leased house. However, the right of lease possessing the opposing power for which the entire amount of deposit is not repaid shall not become extinct (Article 3-5 of the Housing Lease Protection Act).

- Where any lessee who has demanded distribution for the entire amount of deposit by taking part in distribution has not received the entire amount of deposit with being pushed back on the priority list, he/she may demand the repayment of the deposit balance from the successful bidder, or use the leased house and take profits therefrom by claiming the existence of the relation of lease until he/she receives the repayment of the entire amount of deposit (Supreme Court Decision, June 26, 1998, 98 Da 2754).

Delivery of Leased House

Delivery of leased house

- A lessee who has the preferential repayment right is obligated to deliver the subject matter of the lease at the time when he/she receives the repayment of the deposit from the value of the leased house in preference to other creditors (Article 3-2 (2) of the Housing Lease Protection Act and Article 536 of the Civil Act).

- A lessee who intends to receive the deposit in an auction or a public sale shall prove the delivery of the leased house. It is not necessary that the lessee's duty to deliver the house shall be fulfilled prior to the lessor's duty to return the deposit (Article 3-2 (3) of the Housing Lease Protection Act and Supreme Court Decision, February 22, 1994, 93 Da 55241).

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