Dentons Lee secures appellate victory for Korea Housing & Urban Guarantee Corporation in indemnity claim

Dentons Lee successfully represented Korea Housing & Urban Guarantee Corporation (HUG) in an appellate indemnity claim before the Seoul High Court. The Court overturned the first-instance judgment and ordered the defendant to pay KRW 248,263,977, together with delay damages.

The dispute arose after HUG paid a tenant's lease deposit under its guarantee obligations and subsequently sought recovery from the new owner who had acquired the property through a foreclosure auction. The first-instance court dismissed HUG's claim on the ground that the tenant's opposability was not established. Had that judgment been upheld, the purchaser who acquired the property at a low auction price on the premise that the lease deposit obligation remained outstanding would have retained the resulting economic benefit, while HUG would have borne the loss.

Accordingly, Dentons Lee argued on appeal that the purchaser had implicitly assumed the existing jeonse lease agreement and that the tenant's opposability remained effective through the leasehold registration. The Seoul High Court accepted these arguments and granted HUG's claim in full.

The decision is significant in confirming that, even where there is a gap between the transfer of ownership and the effective date of a tenant's opposability, liability for the return of a lease deposit may still be recognized based on the legal principle of implied assumption of contract. The ruling may also serve as a useful reference in similar lease deposit recovery and indemnity disputes.

The matter was handled by Heejun Choi, Chief Managing Attorney, Seul-Ah Kim, Attorney, and Na-Hyeon Jeon, Attorney.

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