Choi Joon-kyu, Revisiting Public Auction and Liability Due to a Defect in Title, JURIS, Vol.1, No.60 (2022), pp.383-422.
<Abstract>
This article examines the legal issues that arise when the collateral provided by the third party is sold to a buyer through the public auction, and the buyer claims the liability under Article 578 of the Korean Civil Code due to a defect in the collateral. The conclusions are as follows. 1. Article 578 of the Korean Civil Code shall be applied when the real estate owned by another person is sold through the public auction, regardless of the validity or invalidity of the public auction process. 2. If the third party mistakenly provided the collateral owned by another person, the public auction process initiated on the basis of the relevant mortgage is invalid, but the case law related to the legal effect of the invalid auction process does not apply. In this case Article 578 of the Korean Civil Code shall be applied as a special provision. And in principle the debtor to the mortgagee bears the primary liability to the buyer under the Article 578 (1) of the Korean Civil Code for the portion to which the mortgagee has been repaid in the distribution process. 3. If the third party mistakenly provided the collateral owned by another person, and the public auction process is started by the general creditor of the third-party provider, the auction process is valid. In this case as a general rule the debtor to the mortgagee bears the primary liability to the buyer under the Article 578 (1) for the portion to which the mortgagee has been repaid in the distribution process. 4. If the third party had provided the collateral owned by himself that had a hidden defect like a right of retention or an rental right with opposing power, and the buyer claims for the liability due to such defect on the basis of Article 578 of the Korean Civil Code, the third-party provider shall bear the primary liability in accordance with Article 578 (1) of the Korean Civil Code. 5. The principles of above 2. 3. 4. also apply to the third-party acquirer who acquired the ownership of the collateral from the third-party provider.
<Keywords>
Public auction and liability due to a defect in title, The duty of the collateral provider(third-party) to replenish the security, Unjust enrichment by performance(Leistungskondiktion), The invalidity of the public auction process
Choi Joon-kyu, Revisiting Public Auction and Liability Due to a Defect in Title, JURIS, Vol.1, No.60 (2022), pp.383-422.
<Abstract>
This article examines the legal issues that arise when the collateral provided by the third party is sold to a buyer through the public auction, and the buyer claims the liability under Article 578 of the Korean Civil Code due to a defect in the collateral. The conclusions are as follows. 1. Article 578 of the Korean Civil Code shall be applied when the real estate owned by another person is sold through the public auction, regardless of the validity or invalidity of the public auction process. 2. If the third party mistakenly provided the collateral owned by another person, the public auction process initiated on the basis of the relevant mortgage is invalid, but the case law related to the legal effect of the invalid auction process does not apply. In this case Article 578 of the Korean Civil Code shall be applied as a special provision. And in principle the debtor to the mortgagee bears the primary liability to the buyer under the Article 578 (1) of the Korean Civil Code for the portion to which the mortgagee has been repaid in the distribution process. 3. If the third party mistakenly provided the collateral owned by another person, and the public auction process is started by the general creditor of the third-party provider, the auction process is valid. In this case as a general rule the debtor to the mortgagee bears the primary liability to the buyer under the Article 578 (1) for the portion to which the mortgagee has been repaid in the distribution process. 4. If the third party had provided the collateral owned by himself that had a hidden defect like a right of retention or an rental right with opposing power, and the buyer claims for the liability due to such defect on the basis of Article 578 of the Korean Civil Code, the third-party provider shall bear the primary liability in accordance with Article 578 (1) of the Korean Civil Code. 5. The principles of above 2. 3. 4. also apply to the third-party acquirer who acquired the ownership of the collateral from the third-party provider.
<Keywords>
Public auction and liability due to a defect in title, The duty of the collateral provider(third-party) to replenish the security, Unjust enrichment by performance(Leistungskondiktion), The invalidity of the public auction process