In the dynamic landscape of real estate, the leasing of rooftops for the installation of solar panels represents a noteworthy trend. This approach not only furnishes property owners with additional rental revenue but also furthers the adoption of renewable energy resources. However, the fate of such solar panel installations and their lease agreements becomes a focal point when the involved properties are subjected to auction.
 
As outlined in sections 866-1 and 866-2 of the Taiwanese Civil Code, after the creation of a mortgage, the owner of a real property may, on the same real property, create superficies or other proprietary rights (rights in rem) for the purpose of benefiting from their use, or establish a lease relationship, but the mortgage will not be affected thereby. When a mortgagee's enforcement of a mortgage is affected by circumstances described in the preceding paragraph, a court may remove such rights or terminate such lease relationships and thereafter auction the property. The concept of " affecting the enforcement of a mortgage" refers to situations where, due to burdens placed upon the property post-mortgage, the satisfaction of the debt secured by the mortgage is rendered impossible.
 
A recent legal proceeding involving the auction of a building with its rooftop leased for solar panel installations has shed light on this matter. The court posited that the mere leasing of the rooftop did not seem to impede the potential buyers' utilization of the building's interior spaces. Instead, it offered the advantage of generating rental income. Therefore, it was deemed unreasonable to attribute the property's failure to attract buyers in prior auctions solely to the existence of the lease agreement. Consequently, creditors' demands for the removal of the lease agreement, under the pretext that it affected their exercise of mortgage rights, were found to be baseless.
 
This case harmonizes the legal framework governing real estate leasing and mortgage rights, especially in scenarios involving renewable energy installations. For entities that lease rooftops to install solar panels, this represents a positive development. Despite the potential auction of the building, the continuation of solar panel installations is feasible, promoting the sustained use and development of renewable energy.
 
[This article provides a generalized overview of the discussed topic and does not constitute legal advice or conclusions, nor does it necessarily reflect the stance of our firm or our clients.]