Article 1(Purpose) #
The purpose of this Act is to equitably protect the interests of mortgagees, mortgagers, and owners and to make secured financing easier by providing for matters concerning mortgages on movables subject to compulsory registration, such as construction machinery, ships to which the Ship Registry Act is not applicable, automobiles, and aircraft.
Article 2(Definitions) #
The definitions of the terms used in this Act shall be as follows: <Amended on May 18, 2015>
1. The term "specific movables" means construction machinery, small ships, automobiles, aircraft and light aircraft subject to compulsory registration;
2. The term "registration office" means a government office responsible for the registration of creation, alteration, transfer, and cancellation of mortgages on specific movables.
Article 3(Subject matters of mortgage) #
The following movables may be the subject matter of a mortgage: <Amended on May 18, 2015; Mar. 29, 2016; Jun. 10, 2022>
1. Construction machinery registered pursuant to the Construction Machinery Management Act;
2. The following ships, to which the Ship Registry Act is not applicable (hereinafter referred to as "small ships"):
(a) Small ships under Article 1-2 (2) of the Ship Act, excluding those specified in the subparagraphs of Article 26 of the aforesaid Act;
(b) Fishing boats with a gross tonnage of less than 20 tons among fishing vessels specified in the items of subparagraph 1 of Article 2 of the Fishing Vessels Act;
(c) Power-driven water leisure crafts registered in accordance with Article 6 of the Act on Registration and Inspection of Water Leisure Craft;
3. Automobiles registered pursuant to the Motor Vehicle Management Act;
4. Aircraft and light aircraft registered pursuant to the Aviation Safety Act.
Article 4(Nature of mortgage) #
Any mortgagee shall have a priority over any other creditor in the satisfaction of claims for the specific movable that an obligor or a third party has provided as security without necessarily transferring the possession thereof.
Article 5(Effects of registration of mortgage) #
(1) Any alteration in connection with the acquisition or forfeiture of a mortgage shall become effective only when such change is registered in the register relevant to the mortgaged property as specified below: <Amended on May 18, 2015; Mar. 29, 2016; Jun. 10, 2022>
1. The original construction machinery register under the Construction Machinery Management Act;
2. The original ship register under the Ship Act;
3. The original fishing vessel register under the Fishing Vessels Act;
4. The water leisure craft register under the Act on Registration and Inspection of Water Leisure Craft;
5. The original automobile register under the Motor Vehicle Management Act;
6. The original aircraft register under Article 11 (1) of the Aviation Safety Act (including the cases to which the said provision shall apply mutatis mutandis pursuant to Article 121 (1) of the same Act).
(2) The registration of a mortgage on a specific movable shall be classified into registration of creation, registration of alteration, registration of transfer, and registration of cancellation.
(3) Necessary matters concerning the procedure and method for the registration of a mortgage on a specific movable shall be prescribed by Presidential Decree.
Article 6(Notification of cancellation of registration) #
A registration office shall, if a specific movable on which a mortgage was created falls under any of the following categories, notify the mortgagee in advance of its intention to cancel the registration; provided, this shall not apply if the mortgagee has consented to the cancellation of the registration for the specific movable: <Amended on May 18, 2015; Mar. 29, 2016; Jun. 10, 2022>
1. Construction machinery: If it intends to cancel the registration pursuant to Article 6 (1) of the Construction Machinery Management Act;
2. Small ships: If it intends to cancel the registration in accordance with Article 22 of the Ship Act, Article 19 of the Fishing Vessels Act, or Article 10 of the Act on Registration and Inspection of Water Leisure Craft;
3. Automobiles: If it intends to cancel the registration pursuant to Article 13 of the Motor Vehicle Management Act;
4. Aircraft and light aircraft:
(a) Where it accepts an application for the registration of cancellation because the case falls under Article 15 (1) 3 of the Aviation Safety Act (including the cases to which the said provision shall apply mutatis mutandis pursuant to Article 121 (1) of the same Act);
(b) Where it intends to cancel the registration ex officio because the owner of an aircraft or a light aircraft fails to file an application for the registration of cancellation within a prescribed period even after a peremptory notice was issued under Article 15 (2) of the Aviation Safety Act (including the cases to which the said provision shall apply mutatis mutandis pursuant to Article 121 (1) of the same Act).
Article 7(Exercise of mortgage options) #
(1) Any mortgagee may exercise his or her options to the specific movable mortgaged immediately after the receipt of a notice under Article 6.
(2) Any mortgagee who intends to exercise his or her mortgage options in accordance with paragraph (1) shall commence proceedings for the exercise of mortgage options by the deadline set for each category in the following subparagraphs from the date on which a notice under Article 6 is delivered: <Amended on May 18, 2015>
1. Automobiles: One month;
2. Small ships: Two months;
3. Construction machinery: Three months;
4. Aircraft and light aircraft: Three months.
(3) A registration office may, if proceedings for the exercise of mortgage options are not commenced within the deadline set for the commencement of the exercise of mortgage options under paragraph (2), register cancellation for the specific movable involved; provided, if a mortgagee has commenced such proceedings by the deadline, the cancellation shall not be registered until such proceedings are concluded.
(4) No registration office shall register cancellation for any specific movable, if a successful bidder at the auction held for the mortgagee's exercise of mortgage options acquires the ownership of the specific movable.
(5) In cases where a decision on permission for sale becomes final and conclusive, it is deemed that no application for the cancellation of registration under Article 6 (1) of the Construction Machinery Management Act has ever been filed, if the subject matter is a construction machine; or that no cause or event under Article 15 (1) 3 of the Aviation Safety Act (including the cases to which the said provision shall apply mutatis mutandis pursuant to Article 121 (1) of the same Act) has ever occurred, if the subject matter is an aircraft or a light aircraft. <Amended on May 18, 2015; Mar. 29, 2016>
Article 8(Special cases concerning means of realization following transfer order) #
(1) A court may, if it is deemed reasonable in connection with auction proceedings for the satisfaction of a mortgage on a movable (excluding aircraft and light aircraft; the same shall apply hereafter in this Article), liquidate the movable by issuing a transfer order that permits the sale of the mortgaged and seized movable to the mortgagee, upon receiving an application for purchase from the mortgagee. <Amended on May 18, 2015>
(2) Necessary matters concerning the procedures for the transfer order under paragraph (1) shall be prescribed by Rule of the Supreme Court.
Article 9(Ban on creation of pledge right) #
Specific movables shall not be subject to a pledge right.
Article 10(Delivery of documents for registration of cancellation of mortgage) #
If cancellation or transfer of a mortgage on a specific movable needs to be registered because all obligations have been performed or obligations arising from the mortgage have been discharged on any other ground, the mortgagee shall deliver without delay the documents required for such registration to the holder of the right to the registration.
Article 11(Fees) #
(1) Any person who desires to have a mortgage registered shall pay a fee to the competent registration office, as prescribed by Presidential Decree.
(2) Necessary matters regarding the criteria for the imposition of and exemption from fees under paragraph (1) shall be prescribed by Presidential Decree.
Article 12(Provisions applicable mutatis mutandis) #
Except as otherwise provided for in this Act, the provisions governing mortgages in the Civil Act shall apply mutatis mutandis to mortgages on specific movables.