A mortgage is a right over a real estate granted to a creditor(mortgagee) in order to secure his claim against a debtor. Fundamentally it does not deprive the mortgager of the right to use the object and to enjoy its fruit.
When the mortgager or a thi...
A mortgage is a right over a real estate granted to a creditor(mortgagee) in order to secure his claim against a debtor. Fundamentally it does not deprive the mortgager of the right to use the object and to enjoy its fruit.
When the mortgager or a third party has constructed a building on the land after a mortgage was created over it, such building shall be sold by auction together with the land on the demand of the mortgagee. To satisfy all the necessary conditions for an auction, the property of the building must belong to the mortgager till the moment of auction. In other cases the application may be excluded. It is because a building is separate from the landownership and it constitutes an object of an independent right. As a result of the narrow and restrictive requisite for an auction
based on Art. 98 and 365 Korean <Civil Act>, the mortgagee is compelled to suffer the diminution or even the loss of the security at his own risk.
Meeting the requirement, saving the mortgagee from this disadvantage, including the case, where a third party owns the building, it is indispensable to loosen the rigid condition of an auction in <Civil Act> and to extend its application over the foreseeability of the legislature of <Civil Act>.
The solution can also be found in the positive law, Art. 5 <Regislation of Real Estate Act>, which regulates the priority order of registered rights on real estate, combined with Art. 98 <Civil Execution Act> on a blanket auction. Once a registered right is created, it is prior to every kinds of rights, which follow it. As a result, the owner of a building, constructed after a mortgage is created on the land, on which the building now stands, shall not enjoy the legal protection; he cannot claim the validity of his right as it is inferior to the existing registered right, mortgage. It means in such case that his right is treated as nothing once a sale of the land is requested. That is why the mortgagee may demand the sale of the land together with the building independent of its ownership. A blanket auction is possible either ex officio or upon request of the interested parties.