Summary
Rights extinguished by the sale must be distinguished from burdens assumed by the purchaser so that the end of relief is not judged by the sale proceeds alone.
4.1The Standard by Which the Path Opens
The burden that has fallen to someone must not vanish within the statement that it was sold. The preceding section preserves the scope of automatic participation — mortgages and other rights registered before the statutory time — and the case law's allowance of proof of wage claims. Taking up that conclusion, what is now asked is whether distribution and assumption by the purchaser are the same thing, and what the threshold is for opening the channel of this relief. This question arises at a point where one asks at once who is qualified to participate in the procedure that divides the sale price, and who remains bearing the burden even after that sale.
The relevant provision is Article 91 of the Civil Execution Act. Article 91 (1) provides that the court shall not sell the real estate unless it causes the purchaser to assume the encumbrance of the real estate in respect of a claim that has priority over the claim of the attaching creditor, or unless it is acknowledged that the sale price is not insufficient to discharge that encumbrance. Paragraph (2) of the same Article provides that all mortgages on the real estate sold are extinguished by the sale; paragraph (3) provides that superficies, easements, Jeonse rights, and registered leasehold rights that are not opposable are extinguished by the sale; and paragraph (4) provides that superficies, easements, Jeonse rights, and registered leasehold rights other than those in the case of paragraph (3) are assumed by the purchaser, except that, among them, in the case of a Jeonse right, if the holder of the Jeonse right makes a demand for distribution pursuant to Article 88, the right is extinguished by the sale. The subject spoken of here is the kind of encumbrance the purchaser will have to deal with, and the act is to determine what becomes of that encumbrance at the point in time known as the sale.
The conclusion the author has drawn from reading this provision is as follows. Where one holds the status of statutory participation and the required demand for distribution, and files the action and documents that must follow the objection within the time limit, the entrance to this relief opens. The reason one must distinguish the threshold for the channel of participating in the distribution while maintaining the objection from the threshold as to whether the encumbrance ends with the sale or is taken over by the purchaser lies here. The former divides who stands inside the procedure that divides the sale price, and the latter divides to whom the encumbrance remains outside that procedure.
If the effects are divided by right, the simplicity of the transaction diminishes, and it feels unjust that a claim deserving protection is displaced merely because of the omission of a formal demand for distribution. This loss and inconvenience do not disappear. Even so, one cannot write that all encumbrances on real estate are extinguished by the sale. Insofar as the text separately provides for mortgages and rights that are not opposable and rights that are opposable, and provides that the purchaser bears the responsibility to discharge a lien, reading it as ending everything in one fashion erases the position of the person who bears the encumbrance remaining after the sale.
In the synthetic scene, Creditor A asserts a right to preferential payment, but no record remains as to whether a demand for distribution was made. Set against the foregoing conditions, this fact leaves none of the following confirmed: registration of the right; the deadline for the demand for distribution and the application; the distribution table; the objection; the filing of the action; and the stay documents. Since the status of automatic participation or the timing of the demand and submission cannot be confirmed, whether the channel of this relief has opened remains undetermined. If it is confirmed to be a right of automatic participation registered before the statutory time, exclusion is not established merely by the omission of a separate demand for distribution.
The conclusion this section permits is narrow. Where a creditor required to make a demand for distribution missed the deadline, or where, after the objection, the proof of the filing of the statutory action and the like was not submitted so that the objection is deemed withdrawn, the channel of this relief is closed. The circumstance that the material is insufficient does not at once mean that relief is impossible, and unverified items remain undetermined. What is not permitted is the categorical statement that all encumbrances on real estate are extinguished by the sale, and the conclusion that judges the end of relief by the sale price alone.
4.2The Conditions That Block Relief
While the sale procedure is in progress, the fate of the rights and obligations laid upon that real estate is not determined in one direction only. Without re-unfolding that argument, the question this essay aims at shifts slightly to the side from the foregoing nuance. Are distribution and assumption by the purchaser the same? What are the conditions under which relief is blocked? In a scene where Creditor A asserts a right to preferential payment but no record remains as to whether a demand for distribution was made, it asks whether one may regard the way of following the consequences of the disposal of a right as being completed entirely within the single sheet of a distribution table.
To answer this question, one first looks at the text of the provision. Article 91 of the Civil Execution Act provides in paragraph (1) that the court shall not sell the real estate unless it causes the purchaser to assume the encumbrance of the real estate in respect of a claim that has priority over the claim of the attaching creditor, or unless it is acknowledged that the sale price is not insufficient to discharge that encumbrance (Article 91 of the Civil Execution Act). What the text of this provision points to is a choice surrounding the "encumbrance." One path is assumption, in which the purchaser takes over that encumbrance; the other path is the acknowledgment that the sale price is sufficient to release that encumbrance. Here the subjects are the court that conducts the sale procedure and the purchaser, the acts are the carrying out of the sale and the designation of assumption of the encumbrance, and the condition is the acknowledgment of the possibility of discharge. It does not proceed to the other issues in the same paragraph.
That text is now connected with the conclusion of this stage. Distribution is the procedure of dividing the sale price, and assumption is the state in which the purchaser receives ownership while embracing the encumbrance. The reason these two must be distinguished is that the end of one cannot be taken as the end of the other. Even for a claim that did not make it onto the distribution table, there remain positions where an encumbrance other than a mortgage is left with the purchaser, as in paragraphs (4) and (5) of Article 91. Article 91 (4) states that the purchaser assumes superficies, easements, Jeonse rights, and registered leasehold rights other than those in the case of paragraph (3), while adding the proviso that, among them, in the case of a Jeonse right, if the holder of the Jeonse right makes a demand for distribution pursuant to Article 88, the right is extinguished by the sale (Article 91 of the Civil Execution Act). Paragraph (2), however, declares that all mortgages on the real estate sold are extinguished by the sale, and paragraph (3) provides that even non-opposable superficies, easements, Jeonse rights, and registered leasehold rights are extinguished by the sale (Article 91 of the Civil Execution Act). Accordingly, there arise cases in which the end of relief cannot be judged by the sale price alone, depending on whether the right stands in the place of extinction or in the place of assumption. One must not speak of distribution as though it were the only channel.
The claim that resists most strongly lies elsewhere. If effects are divided by right, the simplicity of the transaction diminishes, and it is difficult for the purchaser to know in advance what he is taking on. The complaint that it is unjust for a claim one has striven to protect to be displaced simply because one formal demand for distribution was missed springs from the same root. This counterargument worries about transaction costs and predictability, and that loss should not be treated lightly. Yet notwithstanding the inconvenience this claim targets, one cannot write that all encumbrances on real estate are extinguished by the sale. Subsequent procedures diverge depending on whether an encumbrance is a right that ends with the sale or one the purchaser takes over, and that distinction already sits in the text within this legal system. At the same time, one also maintains the qualification that where a creditor required to make a demand for distribution missed the deadline, or where, after the objection, the proof of the filing of the statutory action and the like was not submitted so that the objection is deemed withdrawn, the channel of relief is closed if even one of the statutory requirements is not met.
This scene is now set against these conditions. Creditor A asserts a right to preferential payment, but no record remains as to whether he made a demand for distribution. Judged by the standard under which the registration of the right; the deadline for the demand for distribution and the application; the distribution table; the objection; the filing of the action; and the stay documents become the material of decision, this scene alone cannot establish the status of automatic participation or the timing of the demand and submission. The mere fact that there is no confirming record cannot at once be asserted as making relief impossible, nor is it easy to say that it leans toward either judgment. Yet if it is confirmed to be a right of automatic participation registered before the statutory time, exclusion is not established merely by the omission of a separate demand for distribution. The parts the scene does not illuminate remain undetermined.
I set down the boundary between the conclusions this essay permits and those it does not. What is permitted is the judgment that distribution and assumption by the purchaser cannot be treated as one thing, and that subsequent procedures diverge according to the effects attaching to each right. What is not permitted is the declaration, on the basis of the omission of a formal demand for distribution or a defect in the documents for maintaining the objection, that all encumbrances on real estate are extinguished by the sale. The conclusion that the channel of relief is closed if even one statutory requirement is not in place is maintained, but that threshold is read only within the bounds where editorial criteria of judgment do not transmute into statutory duties.
4.3The Boundary That Remains When There Is No Data
Behind the question whether distribution and assumption by the purchaser are the same lies the question of a boundary that now cannot be adjudicated for want of material. In the preceding section, it was held that this relief is blocked where a creditor required to make a demand for distribution missed the deadline, or where, after the objection, the proof of the filing of the statutory action and the like was not submitted so that the objection is deemed withdrawn. Yet one must not conflate the case where that relief is blocked with the case where, for want of material, it cannot be adjudicated even whether it is blocked. In such circumstances, deferring adjudication and establishing exclusion are different things.
Article 91 of the Civil Execution Act determines the attribution of encumbrances on real estate item by item. Its paragraph (1) provides that the court shall not sell the real estate unless it causes the purchaser to assume the encumbrance of the real estate in respect of a claim that has priority over the claim of the attaching creditor, or unless it is acknowledged that the sale price is sufficient to discharge that encumbrance. Paragraph (2) declares: "All mortgages on the real estate sold are extinguished by the sale." Paragraph (3) treats superficies, easements, Jeonse rights, and registered leasehold rights that are not opposable to mortgages, attaching claims, or claims subject to provisional attachment as extinguished by the sale, and paragraph (4) divides the remaining cases as being assumed by the purchaser. This text does not unify the effect of the sale in a single line; it divides them according to the kind of right and the relations of opposability.
If this text is ignored, the two judgments distinguished earlier collapse at once. Assumption, in which the purchaser takes over the encumbrance, and extinction, which ends with the sale, are a matter separate from whether the channel of participation in the distribution, discussed in the preceding section, has opened. Where the status of automatic participation or the timing of the demand and submission cannot be confirmed, adjudication is left undetermined, and this is distinguished from the case where relief is blocked. The circumstance that there is no material is not a determination that the channel is closed, nor does it mean that the channel is open. Only by distinguishing rights extinguished by the sale from encumbrances assumed by the purchaser does one avoid judging the end of relief by the sale price alone.
The loss targeted by the counterargument that dividing the effects by right diminishes the simplicity of the transaction is plain. For the purchaser facing the sale and for the existing interested parties, the more one presumes a single attribution of the encumbrance, the easier the calculation becomes, and judging separately by right increases the cost of verification and litigation. The concern that a claim deserving protection is displaced by the omission of a formal demand for distribution likewise comes from the same direction. Insofar as the above text has separated assumption from extinction, that distinction cannot be erased by the value of simplicity, and converting an unadjudicable circumstance into an established exclusion is all the more impermissible.
What can be confirmed in this scene is only his assertion and the absence of a record; even whether he missed the deadline for the demand, or whether there was any timing of demand and submission, is undetermined. By contrast, where the demand was required and the deadline was missed, or where the action and documents that must follow the objection were not filed within the time limit so that the objection is deemed withdrawn, the relief is adjudged to be blocked. The fact that the absence of a record itself yields neither conclusion is the core of this distinction.
The conclusion this section permits is this: that the insufficiency of material is left as the unverified status of automatic participation or of the timing of the demand and submission, and that this unverified state is treated as a dimension different from the case where relief is blocked. Here, the circumstance that there is no material does not at once lead to the impossibility of relief, and must be regarded as remaining undetermined. Conversely, this section does not permit reading the undetermined state as a confirmation that the channel is open.
4.4The Records Needed for Determination
The fact that the owner of the real property changes as a result of a sale does not mean that the rights and burdens encumbering that property are wiped out all at once; one must separate the question of who takes over the remaining burdens from the question of whether they end with the sale. Are distribution and assumption by the purchaser the same thing? This question, after distinguishing the effects by right, proceeds to the narrower problem of what must remain in the records when judging whether a given stage has been reached. Accordingly, the present discussion does not stop at asking which rights remain and who bears those burdens, but also addresses the task of fixing the list of materials available for use in judgment.
Article 91 of the Civil Execution Act divides the burdens on real property according to the outcome of the sale. The same Article provides that the court shall have the purchaser assume the burdens on the real property arising from claims that take precedence over the claim of the seizing creditor, or shall not sell the real property unless it is recognized that the sale price is not insufficient to satisfy those burdens (Article 91 of the Civil Execution Act); it then states that all mortgages are extinguished by the sale, and distinguishes the case of superficies, easements, jeonse rights, and registered leaseholds that cannot be asserted, which are extinguished by the sale, from other rights, which the purchaser assumes (Article 91 of the Civil Execution Act). Here the parties are the purchaser and the creditors holding the burdens, the act is the choice between sale and assumption, and the condition depends on whether the burden takes precedence over the claim of the seizing creditor. This language alone does not jointly determine the scope of the parties to whom the burdens are transferred.
The foregoing language places assumption and extinction as different outcomes, and that distinction connects with the criteria for judgment explained earlier. Whereas distribution is the procedure of dividing and satisfying claims out of the sale price according to priority, assumption is the state in which the purchaser takes over the burden that remains without being extinguished, and one cannot be reduced to the other. In this scene, the stage is judged solely on the materials recorded in the registration of rights, the deadline for filing a claim for distribution and applications, the distribution schedule, objections, and documents for filing suit and for stay. What right was registered at what point in time, whether an application was received within the deadline for filing a claim for distribution, and what was entered in the distribution schedule are precisely those materials. Stage judgment is made only on the established records and does not fill gaps in the records by surmise; accordingly, for a claim as to which the existence of a demand for distribution is uncertain, whether it participates cannot be confirmed.
The counterargument that dividing the effects by right makes the transaction more complex and increases the burdens the purchaser must verify points to a real inconvenience. The observation that it is unjust for claims deserving protection to be pushed aside for a formal omission of a demand for distribution likewise stems from concern that a creditor in possession of the substance of a right might be excluded from distribution on account of a single document. Yet the conclusion cannot be moved in the direction this counterargument leads. That is because one cannot state that all burdens on real property are extinguished by the sale. Where Creditor A asserts a right to preferential payment but no record of a demand for distribution remains, one can neither deny that right in advance, nor conversely confirm that the right to preferential payment necessarily led to participation in the distribution. Only the established records are the material of judgment, and a gap in the records merely suspends judgment without being filled by other facts.
In the synthetic scene, the facts corresponding to this question are only Creditor A's assertion of a right to preferential payment and the absence of any record of a demand for distribution. When A completed what registration, when the deadline for filing a claim for distribution fell and whether an application was made within it, and how it was entered in the distribution schedule and whether objections were raised are not set in this scene. Accordingly, whether it is a burden the purchaser assumes or a right extinguished by the sale cannot be determined from this scene alone. One contrast, however, is possible. Conversely, where the automatic participation status or the timing of the demand or submission cannot be confirmed, the stage remains undetermined and is not fixed earlier by surmise.
What this section permits is the judgment of a stage solely on the materials contained in the records as established earlier; what it does not permit is filling the gaps in the records with assertions of priority or general propositions so as to determine participation in advance. The distinction between assumption and extinction is not confirmed by whether the sale price is paid but is a question of which burdens remain with the purchaser, so one must not judge the end of relief by the sale price alone. Matters as to which no records yet exist and which cannot be asserted with certainty merely remain undetermined, and this is not to be read as meaning that the path of relief is closed. It has been determined what records are needed for the next judgment, and what remains is to read the stage on the basis of those records.
4.5Circumstances That Change the Decision
Before this section, it carries over in a single sentence only the scope of automatic participation for mortgages and the like registered before the statutory point in time, and the possibility of proof of wage claims under precedent. On that foundation, the question whether distribution and assumption by the purchaser are the same is now taken up again. Even within the same section, one does not simply inherit the preceding stage judgment as it stands; instead, one must separately ask what change would reverse that judgment. In such a scene, the issue here is whether existing findings of blocking or of effectiveness remain in force as they are, or whether they must be judged anew.
The provision corresponding to this question is Article 91 of the Civil Execution Act. Paragraph (2) of the same Article states that all mortgages on the real property to be sold are extinguished by the sale, and paragraph (3) provides that superficies, easements, jeonse rights, and registered leaseholds that cannot be asserted against the purchaser are extinguished by the sale. The party indicated by this language is the purchaser, the act is the assumption of the burden, and the condition is the priority relationship vis-à-vis the claim of the seizing creditor and the sufficiency of satisfaction. In the case of mortgages and registered real rights lacking the power to oppose third parties, the matter ends with the sale, but other burdens are taken over by the purchaser.
When this language is connected to the conclusions of this section, the distinction of effects by right comes into view. The case where a mortgage is extinguished by the sale and the case where superficies and the like are assumed by the purchaser occupy different stages of judgment as to whether the burden is finished off with the sale price or transferred to the purchaser. The former is resolved as extinction, the latter as succession. If these two stages are mixed together and bundled as all ending with the sale, the direction in which the burden flows disappears. Precisely because of that distinction it is settled that, where a right is confirmed to be one of automatic participation registered before the statutory point in time, exclusion is not confirmed merely by a separate omission of a demand for distribution.
The strongest counterargument aims at the point that dividing the effects by right reduces the simplicity of the transaction. If a single sale does not settle everything, some burdens are extinguished, others are assumed, and some claims must separately attend to a demand for distribution, the procedure becomes complicated and unpredictable for both purchaser and creditors. The observation that it is unjust for claims deserving protection to be pushed aside for a formal omission of a demand for distribution is also appended here. Nevertheless, one cannot state that all burdens on real property are extinguished by the sale. Because the rights ending with the sale and the burdens the purchaser takes over in fact operate separately, merging the two into a single outcome for the sake of simplicity erases the distinction the provision sets. The inconvenience the counterargument points out remains, but that inconvenience cannot eliminate the distinction itself.
Taking out only the facts of the synthetic scene relevant to this question, Creditor A asserts a right to preferential payment while no record of a demand for distribution remains. What remains among the registration of rights, the deadline for filing a claim for distribution and applications, the distribution schedule, objections, and documents for filing suit and for stay is the object of the confirming records. From this scene alone it cannot be confirmed whether Creditor A's right falls within the scope of automatic participation registered before the statutory point in time, or is a claim requiring a demand for distribution. Once that fact is confirmed, the condition assumed as its contrary operates: where it is confirmed to be a right of automatic participation registered before the statutory point in time, exclusion is not confirmed merely by a separate omission of a demand for distribution. Yet if the confirming records are ultimately absent, one remains unable to know the automatic participation status or the timing of the demand or submission; this is undetermined and does not immediately amount to inability to obtain relief. The part that cannot be judged from the scene is left undetermined as it is.
The conclusion permitted by this section is narrow. Where it is confirmed to be a right of automatic participation registered before the statutory point in time, exclusion is not confirmed merely by a separate omission of a demand for distribution; and where the specified change is confirmed, existing findings of blocking and effectiveness are discarded and judgment is redone from the stage onward. Effectiveness here is tied to the channel of participating in auction distribution and maintaining an objection, and opens only where one holds the statutory participation status and the required demand for distribution and has filed, within the time limit, the suit and documents matching the objection. It is blocked where a creditor required to make a demand for distribution missed the deadline, or where, failing to submit proof of the statutory filing of suit after the objection, the objection is deemed withdrawn. Conversely, this section does not permit writing that all burdens on real property are extinguished by the sale, or that insufficient records immediately lead to a losing judgment.
4.6The Strongest Counterargument and the Answer
As to whether distribution and assumption by the purchaser are the same problem, a part remains unfinished. What is asked here in this scene is not how much dividing the effects by right reduces the simplicity of the transaction, but whether it is at least permissible to bundle the effects divided by right together and write that all burdens on real property end with the sale.
The basis for answering this question is laid down in Article 91 of the Civil Execution Act. Here 'burden' denotes a debt the purchaser may take over, and 'assumption' denotes the case in which, after the sale, the burden remains with the purchaser; the provision states that a sale is permitted only where at least one of the two is established.
The same provision records separately, paragraph by paragraph, the rights extinguished by the sale and the burdens assumed by the purchaser. Paragraph (2) provides that all mortgages on the real property to be sold are extinguished by the sale, and paragraph (4) provides that, except in the case of paragraph (3), superficies, easements, jeonse rights, and registered leaseholds are assumed by the purchaser, adding a proviso only for jeonse rights that where the jeonse holder makes a demand for distribution pursuant to Article 88, they are extinguished by the sale (Article 91 of the Civil Execution Act). So long as this distinction exists, the cases where the sale completes its effect and the cases where the burden continues to the purchaser diverge according to the kind of burden, and distribution and assumption are not the same stage.
Dividing the effects by right does not simplify the transaction, since the purchaser must verify one by one what he bears and what has disappeared. For the purchaser it is difficult to judge at once from the register alone whether a burden subsists, and as a creditor one may fear the disadvantage of claims deserving protection being pushed aside for a formal omission of a demand for distribution. Even so, the author's conclusion does not change. Writing in a single sentence, merging the burdens remaining through assumption and the rights ending with the sale, that all burdens on real property are extinguished by the sale is not permitted, and that inconvenience is not something to be removed by simplification but the price of the distinction set by the provision.
The facts that can be confirmed in this scene are only that Creditor A asserted a right to preferential payment, and that the presence or absence of the record of the application for a demand for distribution does not remain. There is no material for judging whether the deadline for filing a claim for distribution and the application, the distribution schedule, objections, and documents for filing suit and for stay remain. Where it is confirmed to be a right of automatic participation registered before the statutory point in time, exclusion from distribution is not confirmed merely by a separate omission of a demand for distribution; but this condition applies only once the automatic participation status or the timing of the application is confirmed, so on the present scene the question of exclusion cannot be confirmed.
The conclusion permitted in this section goes no further than reading separately the case where the burden disappears with the sale and the case where it remains with the purchaser, and does not advance to confirmation of Creditor A's right to preferential payment or of whether exclusion from distribution occurred. Earlier, defining assumption and extinction as the case where the purchaser takes over the burden and the case where matters end with the sale proceeded on the premise of this distinction, and a summary that erases the distinction does not accord with this conclusion.
4.7The Link to the Application and the Dispositive Part
Are distribution and assumption by the purchaser the same? Taking up the premise from the preceding section that one cannot state that all burdens on real property are extinguished by the sale, it regards the two effects produced by the sale procedure as different. One is the case where the right ends with the sale; the other is the case where the purchaser takes over the burden as it stands. If these two are bundled into one, the remaining harm or the existence of continuing liability is missed even after receiving the sale price. The present question is whether relief ends with distribution alone, or whether burdens continuing through assumption remain separately.
The provision corresponding to this question is Article 91 of the Civil Execution Act. Paragraph (2) of the same Article provides that all mortgages on the real property to be sold are extinguished by the sale, and paragraph (4) provides that, except in the case of paragraph (3), superficies, easements, jeonse rights, and registered leaseholds are assumed by the purchaser. As worded, the objects of extinction and the objects of assumption are divided paragraph by paragraph.
Separating the parties and acts indicated by this language, mortgages are on the side extinguished by the sale, and superficies, easements, jeonse rights, and registered leaseholds that cannot be asserted against the purchaser are likewise placed on the side of extinction. Conversely, the remaining superficies, easements, jeonse rights, and registered leaseholds are assumed by the purchaser, and with respect to claims secured by a right of retention, the purchaser bears responsibility for payment (Article 91 of the Civil Execution Act). Even for burdens on the same real property, what is settled with the sale price alone and what remains with the purchaser diverge according to which side they are placed on.
Accepting that distinction makes the transaction more complex, and it may appear unjust that claims deserving protection are pushed aside merely for a formal omission of a demand for distribution. Since the effects must be read separately by right, the purchaser too must reckon in advance what he assumes, and that inconvenience is not easily erased. Still, the extinction of mortgages and the assumption under paragraph (4) are placed together in the provision on the premise of different outcomes. Therefore one cannot state that all burdens on real property are extinguished by the sale, nor can burdens continuing through assumption be regarded as concluded by the distribution of the sale price. The reduction in simplicity the counterargument points out is acknowledged, but for that reason the two effects cannot be folded away to one side.
From this scene alone it is not determined whether Creditor A's right falls within the scope of automatic participation, or is a claim requiring a demand for distribution. If the registration of rights, the deadline for filing a claim for distribution and applications, the distribution schedule, objections, and documents for filing suit and for stay are confirmed, one can test against the condition whether the channel of participating in auction distribution and maintaining an objection has opened. However, as the timing of the demand or submission is not now confirmed, the success or failure of participation in distribution cannot be confirmed from this scene.
The conclusion permitted by this section is that rights extinguished by the sale and burdens assumed by the purchaser must be distinguished. The allocation of amounts entered on the distribution schedule and the liability the purchaser takes over cannot be merged into a single line of the same ledger, and the end of relief cannot be asserted on the sale price alone. What is not permitted is the generalization that all burdens on real property are extinguished by the sale. Beyond that, leaving the status of a creditor lacking in materials undetermined and yet recording it as itself unable to obtain relief also lies outside the conclusion of this section. Assumption and extinction mean the case where the purchaser takes over the burden and the case where matters end with the sale, and the two are read as different effects.
4.8The Scope This Section Undertakes
Earlier, the question was raised whether distribution and the purchaser's assumption are the same matter; here, what remains at issue is what limits that distinction draws upon the outcome of distribution. Concretely, creditor A asserts that it holds a right to preferential payment, but no records remain as to whether a demand for distribution was made. In this situation, it asks whether distribution is guaranteed by the mere assertion of a right to preferential payment, and whether a right pushed aside in distribution may carry over as an encumbrance that remains even after the sale. In short, what are the cases in which, notwithstanding a right to preferential payment, no distribution is received?
The provision that answers this question is Article 91 of the Civil Execution Act (Civil Execution Act, Article 91). Article 91 (1) provides that unless it is recognized that the purchaser will assume the encumbrances on the real estate in respect of claims having priority over the claim of the seizing creditor, or that the sale proceeds are sufficient to discharge such encumbrances, the real estate shall not be sold. The subject referred to here is the purchaser; the act is the assumption of the encumbrance; and the condition concerns an encumbrance having priority over the claim of the seizing creditor. This text addresses the condition as to whether the sale itself may proceed, and it does not directly prescribe the qualification to take part in distribution or the requirements for a demand for distribution.
Article 91 divides the effects of the sale into two branches within a single provision. Paragraph (2) provides that all mortgages on the sold real estate are extinguished by the sale, binding the fate of the mortgage to the effects of the sale. Paragraph (4) provides that, other than in the cases of paragraph (3), superficies, easements, jeonse rights and registered leasehold rights are assumed by the purchaser, and adds that in the case of a jeonse right among them, if the holder of the jeonse right makes a demand for distribution pursuant to Article 88, the right is extinguished by the sale. The reason for dividing rights that are extinguished from encumbrances that are assumed is that the former is wound up through the one-time asset of the sale proceeds, whereas the latter continues to be borne by the purchaser: their courses differ. If the two courses are mixed, what has ended with the sale proceeds cannot be distinguished from what has not.
The strongest of the counterarguments is that this distinction impairs the simplicity of transactions. If the effects are made to differ from right to right, the purchaser must examine one by one which encumbrances it takes on and which disappear, and the sale procedure also becomes more complex. This reduces the purchaser's predictability and the attractiveness of the sale, and conflicts with the demand that claims which fell behind through failure to make a formal demand for distribution be protected as well. This inconvenience is acknowledged, yet one cannot write that all encumbrances on real estate are extinguished by the sale. Article 91 (4) separately provides that certain rights, unlike mortgages, are assumed by the purchaser, and a jeonse right is divided as to whether it is extinguished depending on the attached condition of a demand for distribution. One moves in the direction of reducing the costs the counterargument identifies, but does not generalize by erasing the distinction drawn by the text.
The only fact appearing in this scene is that creditor A asserted a right to preferential payment while there are no records as to whether a demand for distribution was made. The assertion of a right to preferential payment serves as the starting point of the review as to whether it constitutes the 'encumbrances on the real estate in respect of claims having priority over the claim of the seizing creditor' required by Article 91 (1), but by itself it does not confirm the status of participation in distribution or the establishment of a demand for distribution. However, since this scene has not fixed the time of registration of the automatic participation right or the deadline for a demand for distribution and the fact of application, whether distribution can be received, and whether that encumbrance remains as one assumed by the purchaser, remain unverified.
The conclusions this section permits are limited. It cannot be categorically asserted that distribution is guaranteed by the mere assertion of a right to preferential payment; conversely, it cannot be said that the right is definitively excluded merely because there are no records of a demand for distribution. Taking as a premise the extinction and assumption divided by Article 91, even where one is pushed aside in distribution, whether the encumbrance ended with the sale or passed to the purchaser is a matter to be judged separately, and the end of relief must not be judged by the standard of the sale proceeds alone. Yet on the basis of this scene alone it cannot be determined which of the two applies. The next discussion moves on to the demand for distribution in a disposition for tax delinquency.
4.9Application of the Text of the Provisions and the Holdings of Precedents
Following the preceding question of whether distribution and the purchaser's assumption are the same, this time it asks how the wording of the relevant source text applies to the route for participating in auction distribution and maintaining an objection. What is to be fixed is the scope and limits of application of that wording; without drawing in the reasoning of the judgment or items not addressed, the wording alone is taken as the basis.
The relevant source text, Article 91 of the Civil Execution Act, prescribes different effects for rights upon the sold real estate. The provision states: "Superficies, easements, jeonse rights and registered leasehold rights other than in the cases of paragraph (3) shall be assumed by the purchaser; provided, that among them, in the case of a jeonse right, if the holder of the jeonse right makes a demand for distribution pursuant to Article 88, such right shall be extinguished by the sale." Here, the subject indicated by the wording is the holder of the jeonse right; the act is a demand for distribution pursuant to Article 88; and the condition is that the jeonse right is one not falling within the cases of paragraph (3).
The reason the effects of a jeonse right diverge according to these conditions is that assumption and extinction must be distinguished. Assumption is the case in which the purchaser takes over the encumbrance, while extinction means the case in which the encumbrance ends with the sale. If the holder of the jeonse right makes a demand for distribution, the right is extinguished by the sale; if the holder does not, the purchaser assumes it. This distinction operates as it is when judging the route for participating in distribution and maintaining an objection. The wording takes a specific act, namely a demand for distribution, as the reference point that determines the fate of the right.
Even so, dividing the effects right by right reduces the simplicity of transactions, and a counterargument arises to the effect that it is unjust for claims deserving protection to be pushed aside through omission of a formal demand for distribution. This is directed at the detriment that a right-holder loses its substantive position for having missed the formalities of the procedure. Yet one cannot write that all encumbrances on real estate are extinguished by the sale. The provision generalizes that only mortgages are extinguished by the sale, while superficies, easements, jeonse rights and registered leasehold rights other than in the cases of paragraph (3) are, in principle, premised upon assumption.
In this situation, unless the registration of the right, the deadline for a demand for distribution and the application, the distribution table, the objection, and the documents for filing of an action and stay are confirmed, the status of automatic participation or the time of submission of the demand remains undetermined.
Accordingly, what is permitted in this section is to take the wording of the relevant source text alone as the basis for adjudging the route for participating in auction distribution and maintaining an objection. Extensions beyond the subject, act, and condition set by the wording, or reliance upon the reasoning of the judgment, are not permitted. So long as the distinction between assumption and extinction is preserved, the end of relief cannot be categorically determined by the sale proceeds alone.
4.10Fine Distinctions Within the Stage
Since the preceding stage preserved the scope of automatic participation, such as mortgages registered before the statutory point in time, and the possibility of proof of wage claims under precedent, what remains is to determine which parts are to be separately adjudged again within the route for participating in auction distribution and maintaining an objection. In such a scene, the detailed distinctions within the stage define that part, limited to the conditions of cases where they operate, cases where they are blocked, and cases that are undetermined.
The relevant wording, Article 91 of the Civil Execution Act, allocates the attribution of encumbrances after the sale item by item. The same provision stipulates that all mortgages on the sold real estate are extinguished by the sale, while separately providing that non-opposable superficies, easements, jeonse rights and registered leasehold rights are extinguished and that in other cases the purchaser assumes them. It further attaches the proviso that a jeonse right is extinguished by the sale if the holder of the jeonse right makes a demand for distribution pursuant to Article 88, and provides that, as to claims secured by a lien, the purchaser bears responsibility for payment. The subjects spoken of here are the creditors in the distribution procedure who receive the sale proceeds and the purchaser; the act is the presence or absence of a demand for distribution; and the condition lies in the opposability of the right and in whether that right is of a kind requiring a demand for distribution.
Connecting this wording with the conclusions fixed above, it becomes clear that distribution and the purchaser's assumption are two courses that branch off side by side within the same procedure. The author distinguishes assumption and extinction as the case in which the purchaser takes over the encumbrance and the case in which it ends with the sale. The reason for dividing these two is that, as premised in the preceding section, only by distinguishing rights extinguished by the sale from encumbrances assumed by the purchaser can one avoid judging the end of relief by the sale proceeds alone. An extinguished encumbrance is wound up within the distribution procedure through the sale proceeds, whereas an assumed encumbrance remains with the purchaser; therefore, if the two courses are combined and written as a single outcome, one loses sight of the fact that the extinction of the mortgage and the purchaser's responsibility for payment of the lien lie in different places. This distinction, however, merely takes the kinds of rights and the conditions set by the provision as its standard and adds no new requirement or exception.
The strongest of the counterarguments is that dividing the effects right by right reduces the simplicity of transactions. This counterargument targets the loss that, if the purchaser must examine for each right which encumbrances it takes over, the sale procedure is lengthened and an inconvenience arises in that the range wound up by the sale cannot be written in a single line. The concern that claims deserving protection are pushed aside through omission of a formal demand for distribution arises from the same context. Nevertheless, the author answers that one cannot write that all encumbrances on real estate are extinguished by the sale. Since the provision separately sets the extinction of mortgages and the assumption of superficies and the like other than in the cases of paragraph (3), and attaches a demand for distribution as the condition of extinction of a jeonse right, the distinction cannot be erased on grounds of simplicity. The unjust crowding-out identified by the counterargument is a matter to be prevented by separately assessing the status of automatic participation and the requirements for a demand for distribution, not a matter to be prevented by merging the two courses.
In this scene, the only facts belonging to this question are that creditor A asserted a right to preferential payment and that no records of a demand for distribution remain. Setting that fact against the conditions of the provision, if A's right is confirmed as an automatic participation right registered before the statutory point in time, exclusion is not confirmed by the mere omission of a separate demand for distribution. Conversely, in the case of a claim that required a demand for distribution where the claimant missed the deadline, or, failing to submit proof of filing of the statutory action and the like after the objection, the objection is deemed withdrawn, the route of the cases where the provision operates is closed. Where the registration of the right, the deadline for a demand for distribution and the application, the distribution table, the objection, and the documents for filing of an action and stay do not remain, so that the status of automatic participation or the demand and the time of submission cannot be confirmed, the matter remains undetermined. Since the year, amount, and commencement date of the period do not appear in the scene, they are not fixed.
The conclusion this section permits is to limit the detailed distinctions within the stage to the conditions of cases where they operate, cases where they are blocked, and cases that are undetermined, and to adjudicate in accordance with those expressly stated conditions. The conclusions it does not permit are the direction of confirming exclusion of a creditor whose status of automatic participation has not been confirmed by the mere omission of a formal demand for distribution, and the direction of combining and writing all encumbrances on real estate as extinguished by the sale. Reading a state of insufficient data straightaway as inability to obtain relief also falls outside the scope of this section. A determination that the legal route has been opened must not be treated as the same as the actual results of payment, delivery, or recovery.
4.11Synthesis of Effectiveness, Blockage, and Undetermination
Under what conditions is the route for participating in auction distribution and maintaining an objection opened, under what conditions is it blocked, and in what cases is confirmation deferred? Starting from the preceding section's question of whether distribution and the purchaser's assumption are the same, it follows the places where the effects diverge right by right. Now one must examine separately whether that divergence leads to the opportunity for actual participation and maintenance of an objection.
Article 91 of the Civil Execution Act provides in paragraph (2) that "all mortgages on the sold real estate are extinguished by the sale," and in paragraph (3) records that non-opposable superficies, easements, jeonse rights and registered leasehold rights are likewise extinguished by the sale. The subject fixed by this wording is the right-holder who bears the effects of the sale; the act is the sale itself; and the condition is the kind of right and the presence or absence of opposability. Paragraph (4) has the purchaser assume superficies, easements, jeonse rights and registered leasehold rights other than those, while attaching the proviso that if the holder of the jeonse right makes a demand for distribution pursuant to Article 88, the right is extinguished by the sale. This paragraph requires a separate act, namely a demand for distribution.
The reason the provision divides extinction and assumption is that encumbrances that can be ended with the limited resource of the sale proceeds differ from encumbrances that the purchaser must continue to take over. Rights that end with the sale are wound up within the sale proceeds through the distribution table, whereas assumed encumbrances remain on the real estate even after the sale. Accordingly, if these two are bundled together as the same, one may wrongly judge that relief has ended with the sale proceeds alone. The distinction the author presents is not merely a division of terminology but a criterion that determines through which course each right is wound up.
If this distinction is accepted as a matter of dividing rights, the simplicity of transactions decreases, and the burden arises that creditors who missed a formal demand for distribution are pushed aside. It is an unfavorable reality that a practitioner cannot handle all encumbrances on real estate in a single table but must check the course for each right, and that claims that missed a statutory period may be excluded regardless of priority. Yet for the convenience of transactions one cannot write that all encumbrances on real estate are extinguished by the sale. Since, as seen above, the wording of Article 91 divides mortgages and non-opposable rights from assumed encumbrances, simplification can only be established by crossing the boundary drawn by the wording.
In a synthetic scene where creditor A asserts a right to preferential payment but whether a demand for distribution was made does not remain in the records, whether records of the registration of the right and of the deadline and application for a demand for distribution remain becomes the axis of judgment. If it is confirmed that the statutory status for participation and the necessary demand for distribution were in place and that the corresponding action and documents were submitted within the period after the objection, the route is open. If the creditor who needed to make a demand for distribution missed the deadline, or, failing to submit proof of filing of the statutory action and the like after the objection, the objection appears to be deemed withdrawn, the route is blocked. However, since the status of automatic participation and the times of the demand and submission cannot be fixed from the scene alone, that point remains undetermined.
What this section permits is to judge the conditions for participation in distribution and maintenance of an objection by dividing them into effective, blocked, and undetermined; what it does not permit is a judgment that automatically pushes aside a claim holding priority by the mere omission of a formal demand for distribution. A state in which the status of automatic participation and the times of the demand and submission cannot be confirmed must be left as undetermined rather than as inability to obtain relief, and judgment is rendered only within the scope of the confirmed records.
4.12Conclusion Carried Over to the Next Section
The point that a burden passed on to someone must not disappear from the statement that it was sold off is no more than a single sentence carrying forward what was confirmed in the preceding section. On the premise that rights extinguished by a sale must be distinguished from burdens assumed by the purchaser, this section now begins from the point that distribution and assumption by the purchaser are not the same thing. If the end of relief is judged by the sale price alone, one loses sight of the fate of the assumed burdens, and one cannot know to whom the loss remaining there falls. Distribution and assumption must therefore be examined separately.
A basis for confirming this distinction in the text is found in Article 91 of the Civil Execution Act. The provision first provides that, as to encumbrances on the real estate that secure claims having priority over the claim of the seizing creditor, the purchaser shall be made to assume them, and that unless it is recognized that the sale price is not insufficient for payment, no sale may be made. It then declares that "all mortgages on the real estate sold are extinguished by the sale," and classifies as also extinguished by the sale superficies, easements, jeonse rights, and registered leasehold rights that cannot be asserted against third parties. This text states the objects of extinction in terms limited to mortgages and rights lacking effect against third parties.
The same provision continues by providing that the remaining superficies, easements, jeonse rights, and registered leasehold rights are assumed by the purchaser, and attaches the proviso, only as to jeonse rights, that if a demand for distribution is made, they are extinguished by the sale. As to a lien, it provides that the purchaser bears responsibility for payment of the secured claim. This structure reveals that extinction and assumption are not two expressions of one and the same case, but a stage at which the effects of a sale diverge from right to right. Although the simplicity of the transaction is reduced as the price of dividing them by right, one cannot write that all encumbrances on real estate are extinguished by the sale.
The strongest counterargument is directed at the point that, if the effects are divided by right, the scope of the burden the purchaser will bear is difficult to gauge before the transaction, and that a creditor deserving protection is displaced merely by the omission of a formal demand for distribution. This loss touches upon the values of the stability of actual transactions and the protection of creditors. Yet, since the text examined above has drawn a line between burdens assumed and rights extinguished, the way to relieve the inconvenience the counterargument points out is not to lump the two together. Rather than merging the conditions into one, clarifying which right is placed on which side reduces the places where burdens vanish.
This fact alone cannot determine whether that right falls within the scope of automatic participation or is a claim for which a demand for distribution is required. Whether the condition is met that, if the right is confirmed as an automatic-participation right registered before the statutory time, exclusion is not determined solely by the omission of a separate demand for distribution, can be judged only by cross-checking the registration date of the right and the deadline for demands for distribution against the application, distribution chart, objections, filing of the action, and stay documents. As that material is not at hand here, this point remains undetermined.
Accordingly, the conclusion this section permits is limited to the scope that distribution and assumption by the purchaser are not the same thing, and that rights extinguished by the sale and burdens assumed must be examined separately. Whether any creditor may contest the distribution of any other creditor is not determined here, and the remaining doubt is not asserted as certain beyond the preceding judgment. May anyone contest the distribution of other creditors?