(Czech Supreme Court Resolution No. 29 NSCR 31/2013 of 30th  April 2015)

The applicant for an appellate review turned to the Supreme Court with the question of whether a secured creditor is entitled to rent obtained during insolvency proceedings from the leasing of mortgaged real estate.

The Supreme Court responded by stating that where no other agreement preceding the commencement of the insolvency proceedings against the assets of the mortgager exists between the mortgagee and mortgager, then rent acquired by leasing property mortgaged under a mortgage agreement executed pursuant to the provision of § 152 et seq. of Act No. 40/1964 Coll., the Civil Code, in the period from the inception of the mortgage to the liquidation of the mortgaged property, does not belong to the mortgagee (in the same way that the mortgagee would not be entitled to rent from the mortgaged property had insolvency proceedings not been started). Moreover, while insolvency proceedings against the assets of the mortgager are ongoing, rent does not constitute a part of the proceeds from the liquidation of collateral, which in a bankruptcy conducted pursuant to Act No. 182/2006 Coll. on bankruptcy and settlement (the Insolvency Act), should be issued to the mortgagee as set out in § 298 of the Insolvency Act (the right of the mortgagee to satisfaction of its receivable from the proceeds of the liquidation of collateral).

In our view, the foregoing conclusion may be applied to rent from movable or immovable things that have been pledged or mortgaged pursuant to Act No. 89/2012 Coll., the Civil Code. As was the case with the prior legislation, it cannot be deduced from the currently valid provisions of the Civil Code that rent should belong to the mortgagee, where not otherwise agreed by the contracting parties.