Unauthorized Building | Buyer's Claim "Dismissed in Full"

In the complaint, the plaintiff claimed that the client and the others had conspired to deceive the plaintiff regarding the actual use and rental viability of the building, and had committed a tort for the purpose of defrauding the purchase price.

The plaintiff argued in particular that, even though this building was an unauthorized building with an unauthorized change of use, the plaintiff had been told there was no problem despite the impossibility of operating a studio rental business, and had purchased the building on that basis.

In response, the client took the position that the client had not deceived the buyer, that the building's current condition and its use as recorded in the public registers had been sufficiently verifiable, and that the buyer could have been aware of this before the contract, and so requested that Daeryun Law Firm respond.

The attorney first focused on contesting the core of the plaintiff's claim, namely "whether the seller had deceived the buyer into believing that the building was a lawful building suitable for studio rental."

The attorney refuted this, arguing that the client had never directly stated that the building could be used as studio apartments, and that nowhere in the lease agreements, transcripts, or advertising materials submitted by the plaintiff was there any content indicating that the client had directly given such an explanation to the plaintiff.

In particular, the attorney emphasized that even if the expression "studio" appeared in part of a lease agreement, this was merely a contract with an existing tenant and was not material prepared in order to deceive the buyer, and that, on the contrary, other contracts and the public registers clearly indicated that it was a neighborhood living facility.

The attorney further emphasized that public and contractual documents, such as the certified copy of the full building registry, the building register, the sales contract, and the confirmation and explanation statement for the brokerage object, recorded the building's use as a neighborhood living facility and housing or a Class II neighborhood living facility, and that since the buyer had also signed these, the buyer could have known the building's lawful use and condition.

The attorney emphasized that, even assuming an unauthorized building or an unauthorized change of use existed, the plaintiff could readily have ascertained the legal use of the building if it had reviewed the basic public records before entering into the contract, so it was difficult to conclude that the plaintiff had entered into the contract with no knowledge of the matter whatsoever.

The attorney further argued that, even though the plaintiff had visited the building before concluding the contract to confirm its condition, and even though the building's uses were outwardly distinguishable, such as a gosiwon and studio apartments, this alone could not support a belief that lawful studio leasing was guaranteed.

Alongside the issue of the unauthorized building, the plaintiff also asserted a deficiency in fire safety equipment as a ground for damages.

In response, the attorney emphasized that the obligation to install fire safety facilities had newly become an issue as a result of an amendment to the law, and that it was difficult to characterize the situation as a serious and immediate violation at the time of the contract. The attorney further stressed that the client had executed a fire safety construction agreement for the plaintiff and had taken steps, at the client's own expense, to carry out the fire safety work so that a certificate of completion of safety facilities could be obtained.

Daeryun also actively used the outcome of the criminal complaint filed by the plaintiff.

The plaintiff had filed a complaint against the client and others on charges of fraud and violation of the Licensed Real Estate Agents Act, but the related case resulted in a disposition of non-prosecution for no suspicion of crime, and both the appeal and the application for adjudication were dismissed.

Relying on these points, the attorney noted the lack of credibility in the plaintiff's assertions and the insufficient proof of any deceptive conduct, and argued that civil liability for damages likewise did not arise.

The crux of this case is that the mere existence of an unauthorized building or an unauthorized change of use does not, by itself, immediately establish fraud or liability for damages on the part of the seller.

When the central concern raised by the buyer in a real estate sale is the lawful usability of the building, courts generally consider the following factors together.

• What was recorded in public records, such as the building register, the registry, and the confirmation and explanation statement
• What specific explanations the seller provided
• Whether the buyer could also have verified the relevant facts before the contract
• Whether any remediation of defects or follow-up measures occurred after the contract was concluded

In other words, in disputes concerning unauthorized buildings, the outcome may turn on whether there was a breach of the duty to disclose, whether deceptive conduct is proven, and whether the buyer had the opportunity to verify the facts independently.

Unauthorized buildings frequently give rise to disputes, particularly in real estate transactions and leasing businesses.

Representative examples are as follows.

• Cases in which a damages dispute arises after the purchase of a building because the building turns out to be an unauthorized building
• Cases in which a building was purchased for the purpose of a leasing business but leasing is difficult because of a use-related issue
• Cases in which the building register differs from the actual form of use
• Cases in which an unlawfully extended portion becomes subject to an administrative disposition

As shown, an unauthorized building issue can extend beyond a violation of the Building Act into a real estate sales contract, damages, or fraud dispute, so an accurate legal review is necessary before a transaction.

Our firm responds to unauthorized building disputes on a one-stop basis, with relevant legal specialists, including real estate attorneys, damages attorneys, and criminal attorneys, handling the full range of derivative cases.

If you are in a situation that requires legal assistance, we invite you to make a 🔗legal consultation reservation with our firm.