Supreme Court: "Preparing Only a Lease Contract Without Brokerage Still Aids Loan Fraud"

Supreme Court in Seocho-gu, Seoul. Photo by Yonhap News Agency

Even if a real estate agent only prepared a lease contract without engaging in any brokerage activity, the agent can be held liable for aiding and abetting fraud if the document is subsequently used in a loan scam, according to a recent Supreme Court ruling.

On the 26th, legal sources reported that the First Division of the Supreme Court (Presiding Justice Seo Kyunghwan) recently overturned the lower court's ruling, which had found in favor of the defendant in a damages lawsuit filed by loan company A against real estate agent B, and remanded the case to the Ulsan District Court for further proceedings.

This case began with a lease loan fraud scheme involving fake tenants. C and others recruited renters and forged lease contracts to fraudulently obtain loan funds from financial institutions.

B, relying solely on C's statements, prepared and provided a lease contract without performing any real brokerage services. Company A, relying on this contract, executed a loan but was unable to recover the loan amount and subsequently filed a lawsuit against B for damages.

The central issue in the trial was whether B's act of preparing the contract without performing brokerage services constituted negligent facilitation of an unlawful act.

The courts of first and second instance had ruled in favor of the defendant, finding it difficult to conclude that B had been negligent and citing an insufficient causal link between B's actions and the damages suffered by A.

However, the Supreme Court did not accept these conclusions. The court stated, "A real estate agent's act of preparing and providing a lease contract without performing brokerage activities constitutes a breach of the duty of care prescribed by the Certified Real Estate Agents Act. This can be regarded as an act facilitating the fraudulent securing of loan funds by C and others."

The ruling added, "The lower court erred by misunderstanding the legal principles regarding the duty of care of real estate agents or negligent facilitation, or by failing to conduct the necessary review, when it concluded that there was insufficient evidence to establish B's negligence or a causal relationship between that negligence and the plaintiff's damages."

This content was produced with the assistance of AI translation services.