1. Overview of the case

The plaintiffs are members of a housing redevelopment and maintenance association (hereinafter referred to as the "association") located in Anyang-si, Korea, which sold a rental house (hereinafter referred to as the "rental house") to our client in this case through a bidding process. The plaintiffs claimed damages against our client, asserting that, at the time of the bidding, the association presented excessive conditions, which harmed the fairness of the bidding process, contrary to the tender announcement, that, even though a certain period of time had elapsed after the selection of the winning bidder, the tender deposit was not forfeited from the client, that a procedure to pass the resolution of the general meeting to change the management plan in connection with the sale of the rental house was not taken, and that the rental house was sold at a significantly low price.

The issue in this case was whether each of the causes of action alleged by the plaintiffs existed, with the central issue being whether the association sold the rental house to the client at an undervalue. The plaintiffs alleged that the association sold the rental house to the client at a significantly low price, causing the plaintiffs, who were members of the association, to suffer damages. The plaintiffs brought suit against the client in subrogation of creditors based on these damages.

 

3. Our role and the content of the decision

In addition to pointing out that the plaintiffs, who were members of the association, could not be considered to have suffered any damages because it was before the association was liquidated, we specifically analyzed the sale price of the rental house, which was the core issue, and concluded that it was true that the price of the rental house purchased by the client was lower than that of the general sale, but (if) the rental house was originally planned to be sold to a municipal corporation at a much lower price, and the sale price increased significantly as it was sold to the private sector, (ii) the client purchased the rental house through a bidding process and there were no other bidders, and (iii) the association continued to increase the sale price through unilateral insistence even after the successful bidder was selected, to the extent that the sale price was partially increased, emphasizing that the client did not purchase the rental house at a low price.

The court accepted most of our arguments and issued a judgment dismissing the plaintiffs' claims (on the basis that they were improperly filed because the court could not find that the plaintiffs had claims to be preserved through the lawsuit).

The significance of the above judgment is that it provides various standards for disputes frequently arising between an association and its members, and between the members and a rental housing operator in reconstruction and redevelopment projects regarding the sale of rental housing to the private sector, including the standard for exercising the members’ right to subrogation of creditors, the fairness of the bidding process related to the sale of rental housing, and the appropriateness of the sale price.

​□ Attorneys in charge: Kim Yong-kyun, Park Sang-Oh