Will My Deposit Be Reduced Because of One Joint Lessee's Debt... A Supreme Court Decision Clarifying the Scope of Effect of a Seizure and Assignment Order

The Key Issues Raised in This Case

The lower court focused on the fact that the person who substantially operated the business among the joint lessees was the non-party.

Accordingly, it determined that the effect of the set-off agreement concluded by the non-party with the lessor also extended to the other joint lessees.

It also held that, because part of the claim for the return of the lease deposit had been transferred to the assignee-creditor through the seizure and assignment order against the non-party, the right to claim the return of the deposit that the other joint lessees could exercise was likewise reduced to that extent.

An indivisible claim is a claim recognized where the object of the claim is, by its nature or by the parties' intent, difficult to exercise in divided portions.

Article 409 of the Civil Act provides that, in such cases, even if there are several creditors, each creditor may demand performance of the entire claim.

In addition, the debtor may extinguish the obligation owed to all creditors by performing the whole to any one creditor.

The system of indivisible claims may be regarded as one intended to allow the exercise of rights to proceed smoothly even where the claim is difficult to divide.

A creditor of an indivisible claim may demand performance of the entire claim rather than exercising the right limited to that creditor's internal share.

However, the fact that a right to demand the entire claim is recognized does not mean that the creditor may freely dispose of the other creditors' rights.

Where a partnership relationship is established, partnership property belongs to all partners in quasi-joint ownership.

Unlike ordinary co-owned property, quasi-jointly-owned property is managed and disposed of within the scope of the partnership's purpose, and certain restrictions may apply to an individual partner's independent exercise of rights.

An indivisible claim, by contrast, differs in that the claim itself is attributed to each creditor, and, within the scope set by law, each creditor may demand performance of the entire claim.

Because the scope of the exercise of rights and the effect of compulsory execution may differ depending on whether the joint lessees' claim for the return of the lease deposit is partnership property or an indivisible claim, distinguishing between the two carries important significance.

The lower court, taking into account such factors as the non-party's having substantially operated the restaurant, determined that the effect of the set-off agreement in question also extended to the other joint lessees.

The Supreme Court, however, did not accept this determination.

The Supreme Court held that, even if a creditor of an indivisible claim is recognized as having the authority to demand performance of the entire claim, this does not mean that the creditor is also recognized as having the authority to dispose at will of the other joint creditors' rights.

It further determined that the set-off agreement in this case included restaurant operation debts not directly related to the lease agreement, and that it was difficult to conclude that such debts were as a matter of course secured by the lease deposit.

The Supreme Court held that, even if one of the joint lessees concluded an agreement with the lessor on the settlement of the deposit, its effect could not be extended to all the joint lessees unless it was established that the lessee had been granted separate authority of agency by the other joint lessees or had obtained their subsequent approval.

The lower court held that, because part of one joint lessee's claim for the return of the lease deposit had been transferred to the assignee-creditor, the right to claim the return of the deposit that the other joint lessees could exercise was likewise reduced to that extent.

The Supreme Court, however, determined that the effect of the seizure and assignment order arises only as to the execution debtor.

The Supreme Court held that, where a seizure and assignment order is issued with one of the creditors of an indivisible claim as the execution debtor, that creditor's claim is transferred to the assignee-creditor, but its effect does not extend to the other creditors of the indivisible claim who are not the execution debtor.

Accordingly, it determined that the other joint lessees could, even after the seizure and assignment order, demand performance of the entire claim for the return of the lease deposit against the lessor in the same manner as before.

The Supreme Court also ruled on how the legal relationships change after the assignment order becomes final.

Once an assignment order becomes final, the claim held by the execution debtor is transferred to the assignee-creditor, but this does not mean that the scope of the claim for the return of the lease deposit held by all the joint lessees is itself reduced.

“Because the seizure and assignment order has no effect as to the other creditors of the indivisible claim who are not the execution debtor, no change arises in the attribution of the other creditors' claims.”

Accordingly, the Supreme Court held, as set out above, that the assignee-creditor acquires the status of a creditor of the indivisible claim in place of the existing joint lessee, within the scope of the claim amount assigned.

Ultimately, this is to be understood as a change in the status of the holder of the right, not a change in the content of the right.

Therefore, the mere fact that there was a seizure and assignment order against one of the joint lessees cannot be regarded as reducing even the other joint lessees' right to claim the return of the deposit.

This judgment confirmed that, where joint lessees' claim for the return of the lease deposit constitutes an indivisible claim, a legal relationship arising as to one of the joint lessees does not, as a matter of course, restrict the rights of the other joint lessees.

Accordingly, in a joint-lease relationship, even where a deposit-settlement agreement or set-off agreement concluded between one of the joint lessees and the lessor exists, one must also confirm whether the consent of the other joint lessees or a valid authority of agency was present.

In addition, because the effect of a seizure and assignment order against one of the joint lessees does not extend to the other joint lessees, it is necessary to review separately the legal relationships of the joint lessee subject to the seizure and those not subject to it.

Ultimately, where a joint lessee's right to claim the return of the deposit is at issue, it appears that the legal nature of the claim and the attribution of rights among the individual joint lessees should be reviewed first, ahead of the internal investment ratios or settlement relationships.

This judgment shows that an agreement concluded with only one of the joint lessees does not, by itself, settle the deposit-return relationship for all the joint lessees.

Therefore, when concluding an agreement on the set-off or settlement of the deposit, the lessor must also confirm whether the joint lessee in question holds the authority to act as agent for the other joint lessees and whether the consent of all the joint lessees has been obtained.

In addition, even where a seizure and assignment order against some of the joint lessees exists, the legal relationships of the other joint lessees may continue to exist independently, so it is necessary to review the scope of rights of those subject to the seizure and those not subject to it separately.

According to this judgment, a seizure and assignment order against only one of the joint lessees does not, by itself, allow a creditor to secure the claim for the return of the lease deposit held by all the joint lessees.

This is because the effect of the assignment order arises only as to the execution debtor and does not affect the rights of the other joint lessees.

Therefore, where a joint lessee's claim for the return of the deposit is targeted for execution, one must also review whether the claim constitutes an indivisible claim, how many joint lessees there are, and how the legal relationships attributed to each joint lessee are formed.

In particular, where execution has been carried out targeting the claim of only one of the joint lessees, it must be taken into account that the scope of rights acquired by the assignee-creditor is likewise limited to the scope of the execution debtor's status.

In matters such as the above, even where an agreement is concluded by one of the joint lessees, one must first confirm whether the consent or authority of agency of the other joint lessees exists.

In addition, even where a seizure and assignment order has been issued, it is necessary to review the legal relationships of the joint lessee subject to execution and those not subject to it separately.

In particular, at the stage of deposit return, how the external legal relationships toward the lessor are formed may become an important issue, ahead of the internal investment ratios or settlement relationships, so one must also confirm the circumstances under which the agreement was concluded, the structure of the deposit contribution, and whether any delegation of authority took place.

Real estate disputes are not resolved by reviewing the contractual relationship alone; various legal doctrines, including the law of claims, compulsory execution, authority of agency, and the legal relationships of joint lessees, must be reviewed together.

In particular, where a joint lessee's claim for the return of the deposit is at issue, the scope of effect of a set-off agreement and a seizure and assignment order may differ depending on the legal nature of the claim, so a case-by-case legal review is crucial.

Daeryun, ranked 9th among law firms in Korea (based on 2025 value-added tax filings with the National Tax Service), with experience handling numerous cases in the fields of real estate, construction, civil litigation, and compulsory execution, provides comprehensive legal services for joint-lease deposit disputes, lease-deposit return disputes, and cases involving seizure and assignment orders through the collaboration of attorneys handling these matters.

If you need a legal review concerning a joint-lease deposit-return issue or a lease dispute, you are welcome to review your course of response through a 🔗real estate attorney legal consultation booking.