Procedure When Your Property Goes to Auction (Owners and Tenants)

Which step are you at?

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

1. 1Service of the auction commencement decision
2. 2Objection to the commencement decision and stay of execution
3. 3Seeking withdrawal through payment or agreement
4. 4Tenant's demand for distribution
5. 5Considering a voluntary sale
6. 6Sale date and permission of sale
7. 7Delivery order and responding to eviction
8. 8Distribution date and objection to distribution

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

Time required

From the commencement decision to sale and distribution varies by case (check the progress with the execution court); it ends at that point if there is a stay of execution (stopping the enforcement) or withdrawal

Cost

Stamp fees (court fees) and service fees for an immediate appeal or objection, and a deposit lodged as security for a stay of execution. To appeal a decision permitting the sale (a decision approving the winning bid), a deposit of one-tenth (1/10) of the sale price (lodging money with the deposit office). No stamp is attached to an application for demand for distribution

Procedure guide

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

1. 1

   The court issues an auction commencement decision, asks the registry office to record the auction (entry registration), and then sends the decision to the owner. Tenants find out through the court execution officer's status investigation or the court's notice of the deadline for demands for distribution. Check the applying creditor, the claimed amount and the case number in the decision, and look up the progress, the deadline for demands for distribution and the sale date (auction day) on the Supreme Court's court auction information website. These dates are the basis for the deadlines for your later responses.

   Current step
2. 2

   If there is a defect in the requirements for enforcing the auction, file an objection to the auction commencement decision. The objection can be made until the sale price has been paid in full (Civil Execution Act §86(1)), and a ruling on the objection can be challenged by immediate appeal within 1 week from the day you are notified (§86(3), §15). If the claim set by the judgment has changed or ceased to exist, for example because you paid the debt after the judgment, file a lawsuit of objection to the claim (§44) and apply for a stay of compulsory execution at the same time. Filing the lawsuit alone does not stop the auction; the procedure actually stops only when you submit the authentic copy of the stay decision to the auction court. A voluntary auction (an auction to enforce a security interest) proceeds without a judgment, so the ground that the security interest does not exist or has been extinguished can also be raised through an objection to the commencement decision (§265), and the procedure stops only when you submit, for example, the authentic copy of a judgment canceling the security interest or of a ruling staying the auction (§266).

3. 3

   Pay the creditor who applied for the auction the principal, interest and auction costs, or agree to pay in installments, so that the creditor withdraws the auction. Withdrawal is possible until the winning bidder pays the price, but after a purchase bid has been made, the consent of the highest bidder (winning bidder) and, if there is one, the second-highest bidder is required (Civil Execution Act §93(2)). So it is best to complete the agreement before the sale date. If another creditor has applied for an auction of the same property (duplicate auction), you must also reach an agreement with that creditor.

4. 4

   A tenant (lessee) submits a report of rights and application for demand for distribution to the auction court by the deadline for demands for distribution (Civil Execution Act §84, §88). Attach a copy of the lease contract, a resident registration certificate and fixed-date records. If your move-in report and fixed date are earlier than the senior security interest, you are paid first (Housing Lease Protection Act §3-2), and a small-sum tenant whose deposit is at or below a certain amount receives part of it before anyone else if they moved in and reported their move-in before the auction application was registered (§8(1)). If you miss the deadline, you will not receive a distribution, so when you receive the notice, check the deadline first.

5. 5

   Each time the sale fails, the court lowers the minimum sale price (the starting price of the auction) considerably (Civil Execution Act §119; the reduction rate differs by court). So if you find a buyer yourself before the sale date, sell at market price, pay the debt with the proceeds and get the auction withdrawn, you can reduce your loss. Include conditions on withdrawal of the auction and cancellation of the registration in the sale contract. That way, the buyer can take over the home with the auction record removed.

6. 6

   On the sale date, the person who bids the highest price (the highest bidder) is determined, and on the sale decision date a decision permitting the sale is made. Interested parties such as the owner and tenants can file an immediate appeal within 1 week. However, anyone who appeals must deposit (lodge) one-tenth (1/10) of the sale price with the court, and if the debtor's or owner's appeal is dismissed, this money is not returned (Civil Execution Act §130(3)(6)). The burden is heavy, so first weigh whether an appeal will actually benefit you.

7. 7

   When the winning bidder pays the price, ownership passes. The winning bidder can apply for a delivery order (a court order to vacate the home) within 6 months after paying the price (Civil Execution Act §136). A tenant with opposability may refuse to vacate until the deposit is returned, and a tenant receiving a distribution can receive the deposit only after handing over the home to the winning bidder (Housing Lease Protection Act §3-2(3)). So there is room to negotiate the moving date and costs with the winning bidder. If you do not leave after receiving a delivery order, the court execution officer carries out compulsory execution (filing an immediate appeal against the delivery order does not by itself stop enforcement, §15(6)).

8. 8

   The court prepares a distribution table and, on the distribution date, hands out the money to creditors and tenants in order of rank. The owner receives back any money left after distribution. If you object to the order or amount of distribution, you must state your objection on the distribution date and then file a lawsuit of objection to distribution within 1 week (Civil Execution Act §151, §154). If you do not file the lawsuit, the distribution table becomes final as it is. If the winning price is less than the debt, the remaining debt stays and other property may be subject to compulsory execution.

Frequently asked questions

Practical questions that come up right away in this procedure.

QIf I receive an auction commencement decision, do I have to leave the house right away?

No. Ownership passes when the winning bidder pays the price.After that, you can keep living there until a delivery order (a court order to vacate the home) is enforced. The time from the commencement decision to the sale and payment of the price varies by case, and it gets longer if the sale repeatedly fails.In the meantime, consider whether to pay the debt, reach an agreement or sell the property yourself. How you use this period can change the size of your loss.

QIf I pay the debt, is the auction canceled? How much do I have to pay?

Yes, it can be canceled. If you pay the creditor who applied for the auction the principal, interest and auction costs, and the creditor files a withdrawal, the auction is canceled.This is possible until the winning bidder pays the price. However, after a purchase bid has been made, the consent of the highest bidder (winning bidder) is required.If there is a second-highest bidder, that person's consent is also required. If another creditor has applied for a duplicate auction, that creditor must also withdraw.To confirm exactly how much you must pay, ask the creditor for a payment confirmation. Getting the amount in writing prevents disputes later.

QI am a tenant. Where do I submit a demand for distribution, and what do I submit?

Submit a "report of rights and application for demand for distribution" to the auction section of the court handling the auction case. Attach a copy of the lease contract, a resident registration certificate (to confirm your move-in date) and the contract bearing the fixed date (확정일자); the cost is small.The deadline for demands for distribution can be checked on the court auction information website or in the notice. Once that day passes, you cannot receive a distribution of your deposit, so take care of this first.

QAs a tenant, is it better to make a demand for distribution or not?

It depends on the tenant's rank. A tenant who moved in before the senior security interest and has opposability can keep living there if they do not make a demand for distribution, because the winning bidder takes over the deposit. If they make a demand for distribution, they must take the distribution and move out.If you have no opposability or rank lower, a demand for distribution is the only way to get your deposit back. Which is better depends on the expected winning price and the senior amounts, so decide after looking at the register.

QThe property has been sold at auction. Can I get moving expenses? By when must I leave?

Moving expenses are not a right set by law; they are agreed with the winning bidder. The winning bidder can apply for a delivery order within 6 months after paying the price.Once a delivery order is issued, the court execution officer can carry out compulsory execution (an immediate appeal alone does not stop it). So it is best to settle the moving date before then.A tenant who is paid with priority (paid back first) can receive the deposit only after handing over the home to the winning bidder (transferee). This leaves room for both sides to negotiate.

QIf the winning price is less than the debt, what happens to the remaining debt?

The remaining debt stays as it is. This is because the debt does not disappear just because the home was sold at auction.The creditor can use the same judgment to carry out compulsory execution again against other property, such as deposits and salary. If the remaining debt is too much to handle, consider individual rehabilitation or bankruptcy.Conversely, if the winning price is more than the debt, the money left after distribution is returned to the owner.