To solve problems caused by the 37.5% arable rent contracts, the Agricultural Development Act was amended and promulgated by the central government on January 26, 2000. It is stipulated that the 37.5% Arable Rent Reduction Act shall not apply to the land lease contracts signed on or after January 28, 2000. Nevertheless, those contracts signed on or before January 27, 2000 are still regulated by the 37.5% Arable Rent Reduction Act. To terminate the land lease contract, the leaser and the lessee may now choose either monetary compensation or land division.
In 1949, more than 50% of the population in Taiwan was farmers, among whom about 70% were as tenants. To reduce the economic burden on tenants, the central government instituted the 37.5% Arable Rent Reduction system at that time. However, social and economic changes in Taiwan have marginalized the agriculture sector, which is not a primary industry in Taiwan any more, and the former tenancy protection system has also turned out to be a root of social strife. The central government has thus amended the Agricultural Development Act, whose subparagraph 5, paragraph 1, Article 16 stipulates that the land governed by the 37.5% Arable Land Rental Reduction Act may be divided and owned separately by the leaser and the lessee, provided both parties agree to terminate the lease agreement through land division.
In the past, those land lease contracts signed on or before January 27, 2000 in accordance with the 37.5% Arable Land Rental Reduction Act could be terminated only when the leaser gave the lessee a substantial amount of money as compensation. Now, both parties can solve their dispute according to subparagraph 5, paragraph 1, Article 16 of the Agricultural Development Act. In other words, the leaser and the lessee can now choose either monetary compensation or land division as a way to terminate the lease agreement. The size of the arable land divided according to this provision shall not be restricted by the lower limit for land division but the number of subdivided lands shall not exceed the total number of leasers and lessees.
Thus, the leaser can recover part of the land for farming while the lessee can have his/her own farming land. This is a win-win situation for both parties.