One Law Partners, LLC represented the plaintiffs in a civil dispute concerning the payment of settlement amounts derived from rental income generated by jointly owned real estate and successfully overturned a first-instance judgment that had dismissed all claims, obtaining an appellate judgment ordering the defendant to pay principal and interest on settlement amounts of approximately KRW 122 million to each client.


1. Overview of the Case

The clients jointly owned a commercial property with family members and had distributed rental income generated from the property in accordance with an agreed allocation ratio among the co-owners. The rental income was deposited into an account held in the name of one of the co-owners, and the clients managed both the account and the rental proceeds while making settlement payments to each co-owner.

Subsequently, another co-owner assumed authority over the management of the property’s rental income and related account. However, that co-owner failed to make settlement payments to the clients in accordance with the existing distribution agreement, resulting in a dispute. The clients therefore initiated legal proceedings seeking payment of the unpaid settlement amounts attributable to the rental income.

The court of first instance dismissed all claims, reasoning that the rental income had been deposited into an account held in the name of a third party rather than the defendant, and that the defendant merely acted as the administrator of the account and did not hold ownership of the rental income.

One Law Partners, LLC determined that this conclusion failed to adequately reflect the legal effect of the co-owners’ distribution agreement and the settlement obligations of the individual managing the rental income, and therefore filed an appeal. In the appellate proceedings, the firm challenged the shortcomings of the first-instance judgment by focusing on the actual management and control of the rental income and the corresponding obligation to make settlement payments.


2. Key Issues

First, the primary issue was whether the manager of the rental income was obligated to make settlement payments.

The key question was whether a person who exercised actual control over an account and the rental income deposited therein could be obligated to make settlement payments pursuant to an agreement among co-owners, even where the account was held in the name of a third party. In particular, it was necessary to determine whether ownership of the rental income and the obligation to make settlement payments should be treated as separate legal issues.

Second, the dispute concerned the actual management and disposition of the rental income.

The issue was whether the defendant merely performed administrative account-management functions or had actually managed and controlled the rental income while separately retaining settlement amounts that should have been distributed to the clients. Accordingly, not only the account holder’s name but also the actual financial transactions and exercise of management authority became significant factors in the court’s assessment.

Third, the parties disputed the method of calculating the settlement amounts and the validity of the defendant’s set-off defense.

The issues included whether the unpaid settlement amounts could be calculated in accordance with the agreed standards for deductible expenses among the co-owners and whether the defendant’s assertions regarding additional expense deductions and set-off based on separate claims should be accepted. In particular, whether expenses not contemplated by the parties’ existing agreement could be further deducted from the rental income significantly affected the amount ultimately owed.


3. Key Response Strategy

One Law Partners, LLC emphasized that the first-instance court had focused excessively on the nominal ownership of the rental income and that the true issue in the case was whether an obligation existed to make settlement payments pursuant to the co-owners’ distribution agreement. The firm argued that regardless of the name of the account into which rental income was deposited, the person exercising actual control over the funds remained responsible for fulfilling the settlement obligations arising from the distribution agreement.

In particular, the firm conducted a detailed analysis of the co-owners’ income distribution agreement and historical settlement records and demonstrated that an agreement existed under which rental income was to be distributed according to predetermined percentages. The firm further argued that the defendant assumed the same settlement obligations after succeeding to the managerial authority over the rental income. In addition, the defendant’s continued withholding of settlement payments was presented as evidence supporting the existence of the settlement obligation.

The firm also produced financial transaction records and responses obtained from financial institutions showing that the defendant had separately withdrawn and retained the rental income. Through this evidence, the firm demonstrated that the defendant was not merely a nominal administrator but had in fact exercised control and authority over the rental proceeds, thereby refuting the defendant’s denial of liability.

Furthermore, relying on the parties’ historical settlement practices and agreed allocation standards, the firm established the proper scope of deductible expenses and challenged the defendant’s assertions regarding additional deductions and set-off on the grounds that they lacked sufficient legal and factual support. Through this approach, the firm specifically substantiated both the amount and calculation basis of the settlement amounts owed to the clients.

As a result, the appellate court determined that the defendant, as the manager of the rental income, was obligated to make settlement payments pursuant to the distribution agreement. The court also rejected the defendant’s arguments concerning additional expense deductions and set-off and reversed the first-instance judgment, ordering the defendant to pay each client KRW 121,724,196 together with delay damages. The court additionally ordered the defendant to bear the entirety of the litigation costs.


4. Significance of the Case

This case confirms that even where rental income from jointly owned real estate is deposited into an account held in the name of a third party, the person who actually manages and controls the rental income may be obligated to make settlement payments pursuant to an agreement among co-owners. The decision is particularly significant in recognizing that the nominal ownership of rental proceeds and the existence of an obligation to make settlement payments may constitute separate legal issues.

The case also demonstrates that disputes involving rental income generated from jointly owned property require a comprehensive review not only of agreements among co-owners but also of historical settlement practices, the circumstances surrounding the transfer of management authority, and actual financial transaction records. As such, it provides useful guidance for resolving similar disputes concerning the allocation of income derived from jointly owned real estate.

One Law Partners, LLC successfully redefined the core legal issues in a case that had been entirely unsuccessful at first instance and demonstrated the existence of the settlement obligation through a detailed analysis of the distribution agreement and financial transaction records. Based on these efforts, the firm secured an appellate judgment granting the substantial majority of the clients’ claims, thereby protecting the clients’ legitimate property interests and achieving a practical resolution of the dispute.


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Chang-Hwan Park, Attorney | chpark@onelawpartners.com
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Public Relations Team, One Law Partners, LLC | pr@onelawpartners.com