Commercial-Unit Sale Fraud | A Judgment Holding That a Sale Contract May Be Rescinded Where the Presence of a Pillar Was Not Disclosed When Selling a Commercial Unit

In the matter relating to commercial-unit sale fraud, the plaintiffs who brought the lawsuit were people who had purchased, or been allocated through the sale, units in a mixed-use residential and commercial building in Incheon.

However, they later learned that there were pillars in the commercial units they had been allocated, and they filed suit against Company A and Company B, which had constructed the building and entrusted the sale business.

The plaintiffs argued that, at the time the sale contracts were concluded, Company A and Company B had not disclosed the presence of the pillars and the fact that this could create space whose use would be restricted.

In response, Company A contended, “At the time the sale contracts were concluded, we explained the presence of the pillars and the like to the plaintiffs through pamphlets, floor plans, and three-dimensional models.”

In the trial relating to commercial-unit sale fraud, the court rendered a judgment partially in favor of the plaintiffs on the plaintiffs' action for the return of the purchase price. It recognized Company A's breach of the duty to disclose.

As to the 9 plaintiffs who sought rescission of the sale contracts, the court ordered Company A to return the full sale price together with all delay interest; and as to the 4 plaintiffs who claimed damages, the court found a 10% comparative fault on the part of the buyers, who could have learned of the facts subject to the duty to disclose but failed to do so, and accordingly limited Company A's liability to 90%.

The court explained, “The commercial-building pamphlet and the model-house information board each contained floor plans, and the pillars were marked on the drawings with a ‘■,’ but there was no separate notation indicating that the mark signified a pillar,” and it determined that Company A and the others had not properly fulfilled the duty to disclose.

It also stated, “Where, in a real estate transaction, it is clear that the other party would not have entered into the transaction had it received disclosure of a particular circumstance, there is, under the principle of good faith, a duty to disclose such a circumstance to the other party in advance.”

We have analyzed the District Court's judgment holding that, in a matter relating to commercial-unit sale fraud, where the presence of pillars and the like was not clearly disclosed, the buyer may rescind the sale contract or claim damages.

Among commercial-unit sale fraud lawsuits, the most frequently brought are breach-of-contract cases arising from a breach of the duty to disclose, such as the case above.

Even if a model was provided, if it was not properly realized and the buyers therefore did not receive sufficient information, this may serve as evidence of a breach of the duty to disclose. If the buyers suffered loss as a result, rescission of the sale contract or a 🔗action for return of the purchase price is possible.

The 🔗real estate attorneys of Daeryun Law Firm LLP draw on extensive experience across a range of real estate disputes, including construction, lease, and ownership matters, and work to protect the rights and interests of their clients.

If you are facing difficulties relating to commercial-unit sale fraud, you are welcome to request a legal consultation at any time.