100 Selected Civil Law Cases I [9th Edition] No.43
Acquisition of Leasehold Rights by Prescription
(Supreme Court, June 5, 1987)
This time, we will talk about "Acquisition of Leasehold Rights by Prescription".
Article 163: Acquisition by Prescription of Property Rights Other Than Ownership.
Does this include "Leasehold Rights"?
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Can a leasehold right be acquired by prescription?
(Acquisition by prescription of property rights other than ownership)Article 163: A person who exercises a property right other than ownership peacefully and openly with the intention of doing so for himself acquires that right after twenty or ten years have passed, according to the distinction in the previous article.
Even if it is called a "property right other than ownership," the acquisition by prescription of a claim is denied. This is because a claim is usually satisfied and extinguished by a single performance.
For "property rights other than ownership," rights that are recognized as being acquired by prescription include, for example, usufruct rights such as surface rights, emphysema rights, and easements. (Real rights with the right of continuous use) This point seems to be a good point that is compatible with acquisition by prescription.
So, what about "leasehold rights"? Under the current Civil Code, "leasehold rights" are claims, and prescriptive acquisition is likely to be denied.
(Lease)
Article 601: A lease comes into effect when one party promises to allow the other party to use and profit from a certain thing, and the other party promises to pay rent for it.
However, the right of "continuous use" is the same as usufructuary rights. In particular, real estate leasehold rights are often the foundation of life and business, and are often "realized" due to their important social significance (Article 605).
(Perfect power of real estate leases)
Article 605: When a real estate lease is registered, it takes effect against any person who subsequently acquires real rights in that real estate.
In this case, it can be considered the same as a usufruct right, right?
As such, a "leasehold right" is also recognized as a "property right other than ownership" under Article 163, and like a usufruct right, it is recognized that it can be acquired by prescription.
Requirements for the acquisition of an easement by prescription
The question is, "What are the requirements for the prescription of a leasehold right to be recognized?"
A useful reference is Article 283, which stipulates the prescription of easements.
(Prescription of easements)
Article 283: An easement may be acquired by prescription only if it is exercised continuously and can be recognized externally.
Article 283 states that the requirements for acquiring an easement by prescription are as follows:
A. Continuous exercise
B. External recognizability
"Two requirements" are listed.
Requirement A, "continuous exercise" can be said to be a basic requirement for recognizing prescription acquisition.
In other words, acquisitive prescription is nothing more than "a system that aims to elevate the factual state of permanently occupying the property to a relationship of rights in certain cases" (Supreme Court, July 21, 1967). Its purpose is to respect the permanent factual state. Indeed, the requirement of "continuous exercise" can be said to be a basic requirement required by the purpose of the acquisitive prescription system.
Requirement A can be said to be "a requirement necessary for a person who acquires by prescription to receive the benefits of the prescription acquisition system."
Requirement B, "external recognizability"
In contrast, requirement B, "external recognizability" can be said to be "a requirement to protect the true owner of the property who will be disadvantaged as a result of the prescription acquisition."
In other words, the requirement is that "the property must be in a state that is externally recognizable (i.e., for the owner)" so that the completion of the prescription is not a surprise for the true owner and so that the true owner has an opportunity to interrupt the prescription. (The Supreme Court of December 15, 1987, referred to the owner's "possibility of knowing.")
Let's take a look at this case while referring to this article.
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Case
There were many heirs and it was a complicated case, but to simplify it...
There was the true owner of the land, X, and three people, A, B, and Y.
A sold the land to B, saying, "There is a slight problem with the ownership, but if anything happens, I will take responsibility."
In other words, Party B was negligent regarding Party A's lack of rights.
After that, Party B rented the land to Y, who built a building and lived there.
Under these circumstances, 20 years after Y began occupying the land, the land's true owner, X, filed a lawsuit against Y, demanding that Y remove the building and vacate the land.
At the trial, Y expressed its intention to invoke the prescription, stating that "20 years have passed since I began occupying the land in question, and I have acquired the leasehold rights to the land by prescription."
This is the case.
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Judgment
It is the precedent of our court that when there is the external fact of "continuous use of another person's land" and "it is objectively expressed that the use is based on the intention to lease," the leasehold of the land should be interpreted as being acquired by prescription pursuant to Article 163 of the Civil Code.
When a tenant peacefully and openly "continuously uses the land" and "continues to pay rent" based on a lease contract concluded between a person who claims to be the owner of another person's land, the above requirements are met, and it is reasonable to interpret that the tenant acquires the leasehold of the land by prescription in relation to the landowner after the expiration of the prescription period set forth in Article 163 of the Civil Code.
After making this ruling, the court found that Y (who appears to have been negligent) had acquired the leasehold rights to the land in question by prescription due to the expiration of the 20-year statute of limitations.
Let's take a look at this step by step.
First, the claim by X, the owner of the land in question, against Y for the removal of the buildings and eviction of the land is a claim for eviction as a real right return claim based on land ownership.
In response, Y claims occupancy rights over the land and wants to refuse the eviction.
However, the lease agreement for the land between Party B and Y is a third-party lease agreement for land owned by X, and although such agreements are validly established (Articles 560 and 559), only a creditor-like relationship arises between Party B and Y. Party B does not have ownership rights to the land or any other right to lease the land, so in principle Y does not acquire a leasehold right (which has been converted into a real right) that has countervailing powers.
Therefore, Y could argue that after 20 years have passed, it has "acquired the leasehold right to the land by prescription."
As for the question of "whether or not a lease right can be acquired by prescription," as mentioned above, under the current Civil Code, a lease right is a claim (Article 601), and in principle, the acquisition of a claim by prescription is denied. However, since lease rights have the right of continuous use, and real estate lease rights in particular are often the foundation of life and business, and therefore have important social significance, they can be recognized as "property rights other than ownership" under Article 163 and can be acquired by prescription.
So, what are the requirements for acquiring a lease right by prescription?
Requirements for acquiring a lease right by prescription
(Prescription for Acquisition of Ownership)
Article 162: A person who has peacefully and openly possessed another's property for twenty years with the intention of owning it acquires ownership of it.
2: A person who has peacefully and openly possessed another's property for ten years with the intention of owning it acquires ownership of it if he acted in good faith and without negligence at the time when the possession began.
(Prescription for Acquisition of Property Rights Other Than Ownership)
Article 163: A person who exercises a property right other than ownership peacefully and openly with the intention of doing so for himself acquires that right after the passage of twenty or ten years, according to the distinction in the previous article.
(Invocation of Prescription)
Article 145: Unless the parties invoke prescription, the court cannot make a judgment based on prescription.
According to Articles 163 and 162, the requirements for the acquisition of a leasehold right are
1. "10 or 20 years"
2. "The leasehold right"
3. "With the intention of doing it for oneself"
4. "Peacefully" and "openly"
5. "To exercise".
In the case of a 10-year acquisition of a leasehold right,
6. "In good faith" and "without negligence" at the time of the commencement of the exercise of the leasehold right.
And, to receive the benefit of the prescription,
7. "Invocation of the prescription" is necessary.
In this case, the long 20-year statute of limitations is an issue, and requirements 1, 2, 3, 4, and 7 are upheld.
The issue is requirement 5, "exercising the leasehold rights."
On this point, the judgment specifically lists "two requirements" as requirements for the statute of limitations for leasehold rights.
We believe that these two indicate the meaning of "exercising the leasehold rights."
In other words,
A. The continued use of the land
B. An objective expression of the intent to rent
I think it is fair to say that these are the same as the "two requirements" listed in Article 283.
Article 283 lists two requirements for the prescription of an easement: A. continuous exercise, and B. external recognizability.
The requirement of A, "continuous use of the land," in the judgment can be said to be a "basic requirement required by the purpose of the acquisitive prescription system (respect for the permanent factual state)," as listed in Article 283.
The requirement of B, "objective expression of intent to rent," in the judgment can be said to be "a requirement for the true owner to be able to recognize the completion of acquisitive prescription so that the true owner is not taken by surprise and has an opportunity to interrupt the prescription." It can be said to be "a requirement to protect the true owner who is disadvantaged as a result of prescription."
The judgment lists "continued payment of rent" as a specific example of the objective expression of intent to rent.
In this case, Y is also found to have acquired requirement 5 (continuous use of the land and continued rent payments).
Therefore, Y meets the requirements for acquisition by prescription, and is found to have acquired the lease of the land by prescription in relation to the land's owner, X.
As a result, a lease contract for the land is concluded between X and Y. (In this case, it is considered that the other person's lessor B withdraws from the lease contract relationship due to impossibility of performance.)
Y can assert the right to lease the land against X and refuse the request for removal of the building and eviction of the land.
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Summary
The following are cases where the "prescription acquisition of real estate lease rights" becomes an issue.
1. Boundary dispute type: A case where the party occupied the disputed boundary area and continued to pay rent.
2. Sublease without permission type: A case where a subtenant of land without permission claimed the sublease right had been acquired by prescription.
3. Invalid cause type: A case where the lease agreement was invalid.
4. Rental of property by another person type: A case where a lease agreement was concluded with a person (unauthorized person) who claimed to be the owner of someone else's land.
This case falls into this category.
5. Transfer without permission type: A case where the transferee claimed the lease right had been acquired by prescription when the land lease right was transferred without permission.
In all of these cases, case law has recognized the possibility of acquiring lease rights by prescription.
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That's all for now.
This concludes the general provisions of the Civil Code.