The Owner Succeeding to the Status of the Lessor in Chonse Accidents: Comments on the Korean Supreme Court Decision 2023Da201218, May 18, 2023
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Chonse is a common form of lease in Korea, where the lessee provides a lump sum deposit (Chonsegeum) to the lessor instead of paying periodic rental payments, while the lessor benefits from the profits earned on the deposit until it is returned at the end of the lease period. The Chonse contract provides the lessee residence at a low cost and the lessor a financing channel. However, lessees face potential risks of housing instability and loss of the deposit (Chonse accident). This essay critically reviews the Supreme Court Decision 2023Da201218, which protected the lessee in a typical Chonse accident deciding that the lessee with opposing rights is a third person not affected by the rescission of the contract. This paper points out that the decision (1) assumes that the lease contract is null in principle and (2) results in unfair liability distribution. We propose an alternative perspective based on supplementary interpretation of the special agreements of the sale contract that grants the buyer the authority of disposition. Particularly, the lessee can claim that the owner (or the previous seller) succeeds to the status of the lessor in the case of rescission of the sale contract. Using the suggested legal principle, the stability of the lessee of Chonse accidents in terms of residence and deposit return can be highly improved, for lessees both with and without opposing rights. This perspective also imposes greater liability on the owner, who has taken the risk to provide the basis of a Chonse accident by separating ownership and the right to lease.
Abstract
Chonse is a common form of lease in Korea, where the lessee provides a lump sum deposit (Chonsegeum) to the lessor instead of paying periodic rental payments, while the lessor benefits from the profits earned on the deposit until it is returned at the end of the lease period. The Chonse contract provides the lessee residence at a low cost and the lessor a financing channel. However, lessees face potential risks of housing instability and loss of the deposit (Chonse accident). This essay critically reviews the Supreme Court Decision 2023Da201218, which protected the lessee in a typical Chonse accident deciding that the lessee with opposing rights is a third person not affected by the rescission of the contract. This paper points out that the decision (1) assumes that the lease contract is null in principle and (2) results in unfair liability distribution. We propose an alternative perspective based on supplementary interpretation of the special agreements of the sale contract that grants the buyer the authority of disposition. Particularly, the lessee can claim that the owner (or the previous seller) succeeds to the status of the lessor in the case of rescission of the sale contract. Using the suggested legal principle, the stability of the lessee of Chonse accidents in terms of residence and deposit return can be highly improved, for lessees both with and without opposing rights. This perspective also imposes greater liability on the owner, who has taken the risk to provide the basis of a Chonse accident by separating ownership and the right to lease.
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