[Success Case] Unblocking a Public Sale: Overturning a Disposal Injunction on Trust Property

In the high-stakes environment of real estate Project Finance (PF), a "Prohibition of Disposal Injunction" (부동산처분금지가처분) can be a fatal roadblock. Today, we share a significant success case where Law Firm Hoam defended a trust company by successfully filing an objection to an injunction (가처분이의), allowing a paralyzed public sale to proceed and protecting the lender’s collateral.

The client, a leading trust company, was managing a development project with several financial institutions as primary beneficiaries. When the developer defaulted, the trust company initiated a public sale (공매) of the property to recover funds for the lenders.

Suddenly, the former owners (the previous sellers) of the land filed for a "Prohibition of Disposal Injunction." They claimed that the trust agreement should be terminated and that they had a subrogated right to demand the return of the property. This legal maneuver brought the entire public sale to a grinding halt, threatening the lenders' multi-billion won recovery process.

The core of the dispute was whether the "right to be preserved" claimed by the former owners was legally valid. Law Firm Hoam executed a two-pronged counter-strategy:

• Refuting the Grounds for Termination: We demonstrated that the conditions for terminating the trust agreement were never met. The developer was in arrears on its payments to the primary beneficiaries, and no valid termination request had been made. We used specific contractual clauses to prove that the former owners had no right to act on behalf of the developer.
• Clarifying the Purpose of Disposal: The former owners relied on Article 98, Item 1 of the Trust Act (termination by achievement of purpose). We countered by proving that the sale was not a result of "trust termination," but rather a "disposal by request of the primary beneficiary" under Article 17 of the agreement. We argued that in such a structure, the primary beneficiary’s right to recover funds through a sale overrides any demand for the property's return.

The court accepted Law Firm Hoam’s sophisticated arguments. The judge ruled that the former owners failed to substantiate their claims and ordered the total cancellation of the previous injunction.

As a result:

• The halted public sale was immediately resumed.
• The path for the financial institutions (primary beneficiaries) to recover their debt was cleared.
• The court ordered the former owners to bear all litigation costs.

Disputes involving real estate collateral trusts are among the most complex in civil law. They require a deep understanding of the Trust Act, contractual nuances, and the law of subrogation. A surface-level defense is often insufficient to overcome strategically filed injunctions.

At Law Firm Hoam, we specialize in the "Architecture of Trust Law." We identify the exact legal mechanisms necessary to protect trust assets and ensure that recovery procedures move forward without delay. If your public sale or trust project is blocked by an injunction, consult with the experts who know how to break the deadlock.

Law Firm Hoam | Specialized in Trust Litigation, Injunction Objections & Public Sale Normalization