<Case Summary>

The Supreme Court of Korea held that a real estate broker cannot be relieved of liability merely by mentioning that priority leasehold interests ‘exist,’ where the risks were/are foreseeable and quantifiable.

The case concerned a multi-unit detached house (dagagu housing), where all tenants share priority against the same property in foreclosure, unlike condominium-style ownership.

The tenant entered into a lease with a deposit of approximately KRW 110 million and completed resident registration.

At the time of the lease:

The property was already subject to a large mortgage, and

Significant senior lease deposits from other tenants existed, exceeding the property’s likely foreclosure value.


The broker informed the tenant only that:

The landlord had refused to provide documentation, and

Multiple senior/priority tenants existed.

No further explanation of the realistic recovery risk was provided.


Following foreclosure, the tenant recovered none of the deposit and sued the broker’s indemnity association.

The appellate court found no broker negligence, reasoning that the tenant knowingly proceeded despite awareness of senior interests.

The Supreme Court reversed, holding that:

Even without cooperation from the landlord, a broker can reasonably estimate the scale of senior deposits based on the building’s size and surrounding market prices.

The broker has an affirmative duty to explain the concrete risk of non-recovery, not merely disclose the existence of priority interests.


The Court emphasized that a broker’s duty of care includes active risk explanation, particularly where the structure of the property makes loss foreseeable.

The case was remanded for further proceedings on liability and damages.



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Key Takeaway

> Disclosure is not explanation.
Real estate brokers must translate structural risk into understandable consequences for tenants.

Article: https://www.lawtimes.co.kr/Case-curation/214899