Compulsory Execution Against Real Estate Procedure

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Select your current step and the content for that step will appear below.

1. 1Application for compulsory auction
2. 2Auction commencement decision and attachment registration
3. 3Setting and announcing the deadline for demands for distribution
4. 4Status investigation and appraisal
5. 5Preparing the specification of property for sale and announcing the sale date
6. 6Sale date (bidding)
7. 7Decision permitting the sale
8. 8Payment of price and transfer of ownership
9. 9Distribution date and distribution

• Basic step
• Additional action / option
• Rejection / objection
• End of procedure

Time required

From application to distribution varies by case, so check the progress with the execution court

Cost

Stamp fee (court fee), service fee, auction advance deposit (amount set by the court), registration and license tax

Procedure guide

Read from start to finish in order. Red text marks deadlines set by law.

1. 1

   Before applying, you must analyze the rights by checking the certificate of registered matters for mortgages and jeonse rights that will be paid before you, and for tenants' deposits. Distribution is made in order of rank, so if there are many such senior claims, there may be almost nothing left for you to receive even if the property is auctioned.

2. 2

   Attach the enforceable title bearing a certificate of execution (a judgment or other document that is the basis for compulsory execution), certificates of service and finality, and the certificate of registered matters for the real estate, and apply for a compulsory auction to the court where the property is located. At this point you pay the auction advance deposit (the costs of the auction, such as appraisal fees, status investigation costs and newspaper notice fees) in advance. The advance deposit is returned first when the proceeds are distributed, so if the auction goes all the way through, the cost burden is reduced.

3. 3

   The court issues an auction commencement decision, asks the registry office to record that the auction has started (entry registration), and sends the decision to the debtor. For the owner (debtor), this decision is the first notice that an auction has begun. Even after this, the auction can be withdrawn if the debt is paid or an agreement is reached with the creditor. However, after a purchase bid has been made, the consent of the winning bidder (and of the second-highest bidder, if there is one) is required (Civil Execution Act §93(2)), so the earlier you act, the more options you have.

4. 4

   The court sets and announces the last day on which a demand for distribution (reporting that you have a right to receive money) can be made, that is, the deadline for demands for distribution. Tenants and other creditors must make a demand for distribution by this day to receive a distribution. So the applying creditor should also check around this time who has made demands for distribution, to estimate how much they will actually receive. Around this time, after the court execution officer's status investigation and the appraiser's valuation, the starting price of the auction (minimum sale price) is set.

5. 5

   A specification of the property for sale, describing the rights and the conditions of sale, is kept at the court, and the sale date (auction day) and the sale decision date are announced. On the sale date, the person who bids the highest price (the highest bidder) is determined by the sale method set by the court (bidding on the date, bidding over a period or open outcry auction, Civil Execution Act §103), and if the sale fails, it is held again at a lower price. If the sale fails repeatedly, the winning price falls and distribution is delayed.

6. 6

   On the sale decision date, if there is no reason to refuse, the court permits the sale. Interested parties such as the owner and creditors can file an immediate appeal against this decision within 1 week, and after this deadline the decision is hard to contest. To appeal a decision permitting the sale, you must deposit one-tenth (1/10) of the sale price as security (Civil Execution Act §130(3)). After that, when the buyer (winning bidder) pays the price within the set deadline, ownership passes, and the court asks the registry office to register the transfer and the cancellations.

7. 7

   The court prepares a distribution table showing who receives how much, and on the distribution date it hands out the money to the creditors in order of priority. If you object to the order or amount of distribution, state your objection on the spot on the distribution date and contest it by filing a lawsuit of objection to distribution. If you do not state an objection on the spot, the distribution table becomes final as it is. The time from application to distribution varies by case, so check the progress with the execution court.

Frequently asked questions

Practical questions that come up right away in this procedure.

QWhich court do I file with, and what documents do I need?

File with the district court or branch court with jurisdiction over where the property is located. The documents to attach are: the authentic copy of the judgment with a certificate of execution, a certificate of service and certificate of finality, and the certificate of registered matters for the real estate.Also submit the debtor's resident registration abstract (for a company, its corporate register) and a list of the property. You must also pay the registration and license tax for registering the auction commencement decision and the service fee.The court where you file can tell you how to pay. If documents are missing, you will be asked to correct (supply what is missing), which can delay the process accordingly.

QHow much does it cost?

The basic costs are a KRW 5,000 stamp fee on the application, registration and license tax (0.2% of the claimed amount), local education tax (20% of the registration and license tax) and the service fee. In addition, you must pay an auction advance deposit in advance, covering appraisal fees, the fee for the status investigation, newspaper notice fees and so on.The advance deposit varies with the property price, the number of interested parties and so on, so check with the court where you file; it is returned first when the proceeds are distributed.

QI am the owner and received an auction commencement decision. Can I stop it?

There are ways to stop it. If you pay the debt to the creditor or reach an agreement, the creditor can withdraw the auction. Withdrawal is possible until the winning bidder pays the price.However, after a purchase bid has been made, the consent of the winning bidder (and of the second-highest bidder, if there is one) is required. So it is best to negotiate as early as possible.The claim set by the judgment may have changed or ceased to exist, for example because you paid the debt after the judgment. In that case, file a lawsuit of objection to the claim and apply for a stay of compulsory execution at the same time. If there is a problem with the requirements for execution, file an objection to the commencement decision.

QI am a tenant and the house has gone to auction. How do I get my deposit back?

You can receive a distribution only if you file an application for a demand for distribution with that auction court by the deadline for demands for distribution set by the court. Attach the lease contract and a resident registration certificate (to confirm your move-in date) to the application.If your move-in report and fixed date (확정일자) are earlier than the senior mortgage, you are paid first. Even if they are later, a small-sum tenant (a tenant whose deposit is at or below a certain amount) receives part of it before anyone else.In that case, you must have moved in and reported your move-in before the auction application was registered. If you miss the deadline, you will not receive a distribution, so when you receive the notice, check the deadline first.

QHow long does it take, and when do I get the money?

The time from application to distribution varies by case, so check the progress with the execution court. Once there is a winning bid and the buyer pays the price, the court sets a distribution date and notifies you. On that day, the court carries out the distribution according to the distribution table.Follow the execution court's instructions on how to receive the distribution. If the sale repeatedly fails (no bidders), the auction must be held again at a lower price, which causes further delay.

QWhat happens if the winning bid is less than the debt?

You may not receive the full amount. This is because only what remains after deducting senior claims and auction costs from the sale price is distributed in order of rank.The unpaid amount remains as a debt, and you can use the same judgment to carry out compulsory execution again against the debtor's other property (deposits, salary, etc.). This is exactly why you should check the senior mortgages and tenants' deposits in the register before applying.