Litigation over settling investments and cancelling a mortgage after a joint real estate investment ended

Co-investors agreed to acquire real estate, build a budget room-rental building (gosiwon) on it and share the sale proceeds, but a dispute arose during the project over funding shortfalls and unpaid construction costs.

One of the joint venturers sold the property, which was at risk of a compulsory auction, to a third party, and civil litigation followed over the end of the partnership, the settlement of the investments and the mortgage registered on the property.

Attorney Jaehoon Lee represented the joint venturer who had sold the property on appeal in the main claim and counterclaim concerning cancellation of the mortgage.

The main issue was how to assess the objective value of the property in calculating the settlement amount on the end of the partnership.

In particular, the parties disputed whether the appraisal made in the auction proceedings sufficiently reflected practical factors such as restrictions on changing the building's use, fire safety standards and additional construction costs, and whether the actual sale price or the appraised value should be used to calculate the settlement amount.

The separate agreement among the co-investors, and the circumstances and validity of the mortgage registration, were also at issue.

Attorney Lee analyzed how the joint investment agreement was signed and how the project proceeded, the sale of the property and the investment settlement records, and challenged whether the settlement amount on the end of the partnership had been properly calculated.

In particular, he reviewed the requirements for changing the building's use under the Building Act, the fire safety standards for multi-use businesses and the restrictions relating to land transaction permits, and argued that the existing appraisal did not sufficiently reflect the property's real value.

He also analyzed the interior demolition and reconstruction costs actually spent by the buyer through construction contracts and accounting records, and requested evidentiary measures including a fact inquiry to the appraiser and an additional appraisal.

He further reviewed the circumstances in which the separate agreement among the co-investors was drawn up and the purpose of the mortgage, and used the results of witness examinations in the related criminal case and the circumstances of the withdrawal of the compulsory auction to support the client's position on the sale of the property and the settlement of the investments.