Blog, Real Estate

“Opposing power (대항력)” is considerably important to your life in Korea. Some foreigners may already possess a house in Korea, but most may not for some reasons like you are not certain about how long you will live in Korea. Whatever the reason may be, if you had not bought a house in Korea, you must be on a lease contract with a lessor either by monthly rent (월세, wolse) or a lump-sum deposit system (전세, chonse). As we already wrote in the previous article, most of the “chonse” is just a lease contract. 

Here comes the problem – a lease contract is generally unfavorable for the lessee. To fix this problem, the law of Korea set up some protection laws, Housing Lease Protection Act (주택임대차보호법). We will briefly go on with the problems of a lease contract and check how you shall be protected by the law – the opposing power. 

Lease Contract and the Problems

Regardless of the name of the contract whether it is “wolse” or “chonse”, if you had not registered your right on the registry, your contract must be a “lease.” Then, what is so problematic about the lease contract? 

Most importantly, your right (leasehold) to the object (the real estate you are living in) is not a real right, but just a claim against the lessor. When it is just a claim, it is valid only between you and the lessor.

Second, you cannot contest against a third party that you have a leasehold to the object. For example, when you have rented a house, but the lessor had sold the house to the other, then you cannot contest against the purchaser of the house. If the purchaser, the new owner, does not want you to live in the house, then the purchaser would be able to kick you out of the house legally. This may happen because your leasehold is just a claim, not a real right, and you cannot contest your claim with any third party. A lease contract alone is a very dangerous contract for the lessee. 

Housing Lease Protection Act and The Opposing Power

Article 3 (Opposing Power, etc.)

(1) Even though it is not registered, if the lessee is provided with a house and completes resident registration, the lease shall take effect against any third person from the following day thereof. In such cases, the resident registration shall be deemed made at the time of the moving-in report.

(4) The transferee (including any person who has succeeded to the right to lease) of a leased house shall be deemed to have succeeded to the status of the lessor.

(5) Articles 575 (1) and (3), and 578 of the Civil Act shall apply mutatis mutandis where a house that constitutes the object of a lease under this Act, becomes the object of a sale or public auction.

(6) Article 536 of the Civil Act stipulating a right of defense to simultaneous performance shall apply mutatis mutandis to cases provided for in paragraph (5).

To make a reasonable balance between the lessor and the lessee, Housing Lease Protection Act (주택임대차보호법) was enacted in Korea. The gist of this law is to grant an “opposing power (대항력)” to the lessee. 

1. Requirements

Article 3 Paragraph 1 stipulates as follows: 

Even though it is not registered, if the lessee is provided with a house and completes resident registration, the lease shall take effect against any third person from the following day thereof. In such cases, the resident registration shall be deemed made at the time of the moving-in report.

Paragraph 1 requires you to 1) be provided with a house and 2) complete a resident registration. 

• Being provided with a house means that you need to dwell in the house in real. you need to start living in the object to obtain an opposing power.  

• You need to register your residence at the nearest Haengbok Center. It is also known as “동사무소(Dong office)” or “주민센터 (Joomin Center)”. They are all same, but the official name is Haengbok Center, an administration and welfare center. You just need to fill out some basic documents and register that you will now start dwelling in this house and town. This is a very simple process. 

• Article 2 of this law requires the object to be a ‘house.’ When is not a ‘house’ but when it is just a ‘commercial building,’ this law does not apply. As it is not written in Article 3, this requirement is frequently neglected, but still is an important requirement. 

2. Effect of the Opposing Power

While the requirements are simple, the legal effect is enormous. Your leasehold right shall be treated almost like a real right to the property.  

• Your leasehold contract shall take effect against any third person. (Article 3, Paragraph 1)

• The purchaser(transferee) of the house shall automatically become the lessor of the lease contract. It does not matter whether the purchaser of the house wants to be a lessor or not. The purchaser shall be deemed to have succeeded to the status as a lessor. (Article 3, Paragraph 4)

• When you obtain the fixed date on the lease contract document while you already hold an opposing power, you shall have a right to be paid in preference. When the lessor cannot pay the deposit you paid, then you shall have the right to auction the house and receive the repayment from the converted price of the leased house (Article 3-2, Paragraph 2). And to receive a fixed date on the lease contract document is a very easy task. You can receive a fixed date on the lease contract document at the nearest Haengbok Center or via the Internet (though English service is not available yet). 

Conclusion

The difference between the effect of your lease contract with or without the opposing power is tremendous. Without opposing power, you shall not be able to argue with the new landowner that you are a legitimate lessee. Moreover, you won’t be able to be repaid in preference from the converted price of the leased house. However, obtaining the “opposing power” is a very easy job. You just need to register your residence and start living in the house. 

Seoul Law Group has various experiences with lease contract and proxy registration. If you need any help, please do not hesitate to contact us.