vintage phote grocery store

Business space rental: Deviating terms for retail and catering premises

Tenants of medium-sized business premises (7:290 BW) enjoy more rent protection than tenants of other business premises such as offices (7:230a BW). The idea behind this is that a shop or food establishment usually attaches more value to the specific location, for example for public familiarity. In principle, the tenancy agreement cannot deviate from this rent protection either, unless a judge agrees with the deviating clause. This blog provides an overview of the legal framework surrounding the deviating clause and its durability in court.

Legal framework

The statutory provisions relating to 290 business premises (7:290 to 7:310 Dutch Civil Code) are of so-called semi-prescriptive law. This means that it is not allowed to deviate to the detriment of the tenant. In case it does happen, the deviating clause is in principle voidable. Nevertheless, there may be situations in which not only the lessor but also the lessee has an interest in deviating from what is permitted under the statutory provisions, for example to make a more flexible lease contract possible. Examples of possible deviations:

– Deviation from the statutory lease terms (usually 5+5 years).

– Deviation by agreeing that termination of the lease can take place without notice or judicial review.

– Deviation from the possibility to request a rent review (7:303 BW) after the end of the lease period.

In these cases it is permitted to deviate from the statutory provisions, but the clause will have to be approved by a judge (7:291 paragraph 2 of the Dutch Civil Code). Therefore, a tenant’s consent to deviate is not sufficient. This is to prevent that a tenant can be put under pressure by the landlord to agree to the clause.

The judge uses the following criteria for approval:

– The tenant’s rights are not materially affected by the deviating clause.

– The tenant’s social position is so strong compared to the landlord that he has no need for reasonable protection.

Exception

With regard to substitution (Section 7:307 of the Dutch Civil Code) no approval can be requested for a deviating clause. The possibility for a tenant to sell his business including the rental rights is considered so important that a deviating clause is not allowed. Therefore, the court cannot give its approval to a clause that excludes substitution.

Subsequent approval

In practice, it regularly happens that the parties agree on a deviating clause and do not ask the court for approval. The question is, of course, what happens when the parties later disagree on the derogating clause.  A judgment of the Supreme Court has shown that judicial approval can also be given retrospectively. The question is whether, in such a situation, the court would still be inclined to rule that the tenant’s rights have not been substantially affected now that the tenant sees reason at that moment to want to waive the deviating clause. After all, approval of the deviating clause usually takes place with the tenant’s consent. It seems that the risk for the lack of prior approval lies mainly with the landlord.

Limitation period for reliance on voidability

In spite of the above, there is still an advantage for the landlord if he enters into a deviating clause with his tenant without the approval of the court. Pursuant to Section 3:52 of the Dutch Civil Code, the right of the lessee to invoke the voidability of the stipulation lapses after a period of 3 years after the lessee has invoked this ground for nullification. Usually this will be 3 years after the rental agreement has been entered into with the deviating clause, but under certain circumstances this can also be another time (see this previous blog of M2 Advocaten).

Conclusion

Legal practice shows that court approval depends on many different factors. In a judicial assessment of the deviating clause, the most important thing is that the tenant’s interests are not too much harmed. The tenant’s position is also important. A deviating clause will be less likely to be approved if the lessee is an independent entrepreneur, while in case of an internationally operating chain there will be considerably more room for the lessor to include a deviating clause.

Are you looking for advice in drawing up a deviating clause or a petition for approval of the deviating clause?  Please feel free to contact M2 Advocaten.

Lawyer Ginio Beij (beij@m2advocaten.nl)

 

old dilapidated house

Watch out for the age clause in sale purchase agreements

More and more house sellers are including a so-called ‘age clause’ in their purchase contract. By doing this, the seller avoids being liable for hidden defects of the home that have arisen due to the age of the home. However, it may also be the case that defects that have a cause other than age are for the account of the buyer thanks to the age clause. Buyers should therefore be extra vigilant if they enter into a purchase agreement with an age clause.

The age clause

In the case of older houses, it is not always easy to detect possible defects (without spending too much money). Therefore, instead of having a thorough investigation and, if necessary, repairs carried out, an age clause offers a solution for a seller if he decides to sell his house. An age clause limits the seller’s liability in the event of (hidden) defects occurring after the sale. For the sake of clarity, this only concerns defects that were not known to the seller at the time of the sale. If a seller does not include an age clause in the sales contract, he is obliged by law to deliver a house that is suitable for normal use. In short, if serious defects occur after the sale in the form ofa rotten foundation or serious leaks, for example, the seller may be faced with a substantial claim for damages.

 

 

Risks for the buyer sometimes greater than expected

In view of the above, the advantages of an age clause for the seller are clear, but are the risks for the buyer always clear? In practice, this often turns out not to be the case. Yes, buyers are usually aware of the fact that an older house comes with more defects and therefore run a greater risk if they have signed a sales contract with an age clause. However, what many buyers are not aware of is that defects that are not a direct consequence of age can also be at their expense on the basis of the age clause.

A practical example

As an example, we look at the following age clause from a case before the Court of Appeal of Den Bosch (see also Court of North Holland):

“The buyer declares to be familiar with the fact that the object sold is more than 70 years old, which means that the requirements that may be set for the building quality are considerably lower than for new houses. Unless the seller has guaranteed the quality, he is not responsible for the foundations, floors, pipes, electricity, water and gas and sewerage (…). Architectural quality defects shall be deemed not to hamper the residential use described in (…) the deed of purchase’.

In the judge’s opinion, it did not appear explicitly from the above text that it only relates to defects that are a consequence of the age of the house. In other words, even if, for example, the foundation is considerably less old than the dwelling itself, a defect thereof still falls within the scope of this ‘age clause’ and the buyer himself bears the costs. The fact that it is called an ‘age clause’ (which the buyer thought would only cover the old parts of the house) does not make this any different. The court also considered it important that the parties did not negotiate any further about the clause, so that in this case the text of the age clause was looked at purely as mentioned above.

Prevention is (more concrete) negotiation

In short, what can a buyer do to avoid paying for more recent defects?  In any case, it is important as a buyer to make it explicitly clear during the negotiations for which defects he is prepared to bear the risk. It is best, therefore, to state this as specifically as possible in the sales contract in order to avoid any doubt. In addition, but this is more general advice, it is certainly wise in the case of an older home to have a structural inspection carried out to prevent you from being faced with unpleasant surprises. If these surprises do occur, make sure that the liability is clearly stated in the purchase contract.

If you need help in drawing up an age clause or if you would like to have one assessed, please do not hesitate to contact M2 Advocaten.

Lawyer Ginio Beij (beij@m2advocaten.nl)

 

Roof terrace

Owner’s Association (VvE): Amend the deed of division when constructing a roof terrace or basement?

Space is scarce in the Netherlands, and people are often looking for ways to expand their current apartment, for example by building a terrace on the roof or converting the crawl space into a fully-fledged basement. However, such renovations will probably require permission from the VVE and possibly even modification of the deed of division. When should you and when shouldn’t you do this?

Permission from the VvE

In principle, a person is free to make changes within the limits of his private area as long as these changes do not put others’ private area or the common space at a disadvantage (5:119 BW). Nevertheless, the model regulations state that any way of alteration, without permission from the VVE is prohibited. In more recent model regulations, the prohibition of additional construction has also been added. In addition, most unbundling regulations stipulate that no changes may be made to the building that alter its architectural appearance or construction. In short, for the vast majority of apartment owners, even in the case of a private section, permission will have to be requested from the VVE for the construction of, for example, a roof terrace or a basement. This may be different if model regulations are not used or if deviating provisions are included. Of course, permission must always be obtained for changes to common areas. Incidentally, it should be noted that an environmental permit (formerly a building permit) will often first have to be applied for from the municipality before the VVE want to grant its permission.

Amendment of splitting deed

As soon as permission has been obtained for the conversion, the next question is whether an amendment to the deed of division is required. The main rule is that if the conversion is within the boundaries of the private area, no amendment of the deed of division is required. If, on the other hand, construction takes place outside the boundaries of the private section, the deed of division does in principle have to be amended. It is important here to realise that normally all parts of an apartment complex that are not precisely defined in the demerger deed as being a private part belong to the common area. The following will describe how these rules work out in practice when constructing a roof terrace or basement.

Roof terrace placement

If an apartment owner is allowed to include the roof on his apartment in his private area, the deed of division will not have to be changed at the moment he wishes to place a roof terrace on that roof. However, even in the case that this roof belongs (partly) to the common parts, an amendment of the demerger deed is not necessarily required. The Supreme Court has ruled that if an amendment lends itself to restoration, an amendment of the demerger deed is not necessarily required. When a roof terrace is installed, it is generally assumed that this situation can be reversed fairly easily.

The bottom line therefore is, that the construction of a roof terrace does not quickly require a modification of the demerger deed. Nevertheless, it may be wise to include the construction of the roof terrace in the demerger deed. In this way, the builder can obtain a transferable exclusive right of use, while it can also be arranged that the VVE is no longer jointly responsible for the maintenance of the roof terrace.

Excavated crawl space/cellar

What if an apartment owner on the ground floor decides to dig out the crawl space under his apartment and turns it into a fully-fledged basement? Crawl spaces are usually not included in the deed of division. This new cellar therefore falls outside the private boundaries and this means that it belongs to the common parts. The construction of a new space such as a cellar can also be regarded as a structural change of a non-temporary nature. Therefore, if this apartment owner wishes to obtain the exclusive right of use of the cellar, the deed of division will have to be amended. In the situation that an apartment owner wishes to deepen his existing basement, in principle no amendment to the deed of division will be required provided that the original basement was already included in the deed of division as his private part.

Conclusion

If a model regulation is used, permission from the VVE is almost always required for the construction or substructure of a roof terrace or basement. Whether or not it is necessary to amend the deed of division depends on whether the boundaries of the private area are violated. If so, the next question is whether the change is of a structural nature. If this is not the case, no amendment of the deed of division will be required. Nevertheless, there may be good reasons for both the apartment owner concerned and the VVE to want to include the change in the demerger deed, but this does not constitute an obligation in that case.

 

Are you still in doubt as to whether an amendment to the deed of division is required, or do you have other questions in connection with this article? Please do not hesitate to contact us.

 

Lawyer Ginio Beij (beij@m2advocaten.nl)

 

breakfast in bed

Licensing requirement for Bed & Breakfasts in Amsterdam

The battle that the municipality of Amsterdam is waging against the unbridled growth in the supply of private holiday accommodation continues unabated. After it was announced earlier this year that holiday rentals via sites such as AirBnB and Booking.com will be reduced to a maximum of 30 days, the Bed & Breakfasts are now also being tackled. The intention is to introduce a licensing requirement for Bed & Breakfasts as of 1 January 2019. What are the consequences?

Wild growth of Bed & Breakfasts

It was to be expected. Since the city of Amsterdam has imposed increasingly strict regulations on vacation rentals on sites like Airbnb, Wimdu, and Booking.com, several vacation rentals have resorted to setting up B&Bs. While a B&B owner is only allowed to make a maximum of 40% of his property available, the owner is not limited to only 60 (and next year 30) rental days per year as in the case of regular vacation rentals. In short, if a holiday home owner runs a B&B, he can receive guests throughout the year. The fact that more and more holiday home owners are therefore using a B&B construction is a thorn in the side of the municipality now that its policy was precisely aimed at curbing holiday rentals.

Licensing obligation

In order to cope with the proliferation of B&Bs, the municipality now intends to make this permit compulsory. Until now, it was only necessary to apply with the intention of starting a B&B where it was checked whether they complied with the rules. If the obligation to obtain a permit becomes effective, this will change and the municipality has the possibility to refuse an applicant a permit. The municipality has announced that it will check the number of B&Bs already present in the area when the licence is granted. The municipality will set a maximum number of B&Bs for each area. If that number has already been reached, the permit will be refused. It is therefore expected that it will be very difficult to start another B&B in the centre of Amsterdam after 1 January 2019.

Consequences for existing Bed & Breakfasts

The municipality has announced that there will be a transitional arrangement for existing B&Bs, but the content of this transitional arrangement is not yet known. Operators of existing B&Bs will also have to apply for a permit, but it is possible that they will not be bound by the maximum permitted number per area. It is also possible that the municipality will base the maximum number of B&Bs per area for the city centre and surrounding areas on the current number. This has the advantage that no distinction needs to be made between the permits granted. However, it would limit the possibilities of reducing the current number of B&Bs if the municipality so wishes.

In either case, the obligation to obtain a permit would give the municipality an important weapon in the event that a B&B does not comply with the rules. After all, in addition to the fines that the municipality already regularly imposes in this sector, it will also have the opportunity to revoke the licence, which would then lead to the closure of the B&B. In short, the possible consequences for breaking the rules become even greater with the advent of the permit requirement.

Do you run your own Bed & Breakfast, or do you have a tenant who does, and do you have any questions? Please feel free to contact us.

 

Lawyer Ginio Beij (beij@m2advocaten.nl)

 

30 km zone

INTRODUCTION OF 30-DAY RULE HOLIDAY RENTAL AMSTERDAM

It is a done deal, the board in Amsterdam has decided to reduce the maximum period for holiday rentals from 2019 to 30 days instead of 60 days as currently permitted. Amstelveen had already preceded Amsterdam in this respect, and has announced to tighten the rule to a maximum of 30 days this year. Apart from the fact that the political support for this rule change had grown considerably lately, some Amsterdam parties even argued for a complete ban on holiday rentals, alderman Laurens Ivens (Living) also felt strengthened by a recent ruling of the District Court of Amsterdam. Time to review this ruling.

Originally, the Amsterdam Municipal Executive wanted to limit the rental period to a maximum of 30 days per year by the end of 2016, but then saw too many legal objections to make the measure possible. However, a ruling on 5 December 2017 by the District Court of Amsterdam would have given the Municipal Executive sufficient confidence to implement the measure after all.

 

The case

A family rents out their home to tourists during the periods they stay abroad via the well-known AirBnB website. The members of the family are registered in the basic registration system of Amsterdam. In addition, during a check in the house, in addition to several tourists, various personal belongings of the family are found. There is therefore no doubt that the family actually has its main residence in the house in question and that the house is not systematically used only for holiday rentals.

However, what goes wrong in this case is that, at the time the inspection takes place, the house appears to have been rented out to more than four tourists. This despite the fact that holiday rentals is only allowed up to four persons, the strict maximum allowed according to the Amsterdam housing ordinance. This therefore gives rise to the imposition of a hefty fine of €13,500.00 for withdrawing the house from its residential use without a permit. But is this actually a case of eviction now that the family mainly stayed in the house themselves?

Withdrawal in the event of occasional letting as well

According to Article 21 of the Housing Act, it is in principle forbidden to use housing for anything other than housing. Giving a dwelling a purpose other than living in it is also referred to as housing withdrawal. A common example of housing withdrawal nowadays is holiday rentals. A defense that is often put forward is that the withdrawal has only taken place incidentally and should therefore not be included under the heading of withdrawal. The family in question also indicated that they only occasionally rented out the house to tourists.

The Amsterdam District Court does not accept this argument and considers the following:

“Case law of the Administrative Jurisdiction Division of the Council of State shows that it follows from the rental of a dwelling to and the use of a dwelling by tourists that it is not available for habitation and has therefore been withdrawn from its purpose of habitation, even in the case of incidental rentals”.

In short, the Amsterdam District Court follows two decisions of the Council of State[1] from which it can be deduced that:

  1. Letting to tourists in itself results in housing withdrawal, now that the house is not available for sustainable habitation at that time;
  2. The fact that this happens only incidentally, or even once only, does not change the above.

It may be clear that the Council of State uses a very strict interpretation of Article 21 of the Housing Act.

Housing withdrawal in case of occasional rental of main residence as well?

However, when we look at the underlying facts from the two judgments of the Council of State, one clear difference with the family case in question stands out. In the cases before the Council of State, there was in fact a landlord who did not actually have his main residence in the house. This is relevant as those parties had undoubtedly given the dwelling a purpose other than residence for a certain period of time. The Council of State considered this in its decision of 6 September 2017:

“All these observations indicate that the tenant did not live in the dwelling and that it was not available for habitation and was therefore withdrawn from the purpose of habitation”.

The Council of State seems to take into account that the (re)tenant in question did not live in the dwelling himself for at least some time, but only used the dwelling for holiday rentals during this period. It could be concluded from this that as long as the person who rents out the house to tourists continues to keep his main residence in the house, there is no question of housing withdrawal. In this view, an actual house does not essentially get a different destination by (occasionally) renting it out as a holiday home.

However, the Amsterdam court ruled differently. The aforementioned rulings lead the court to conclude that at the moment of (short-term) vacation rentals of a house there is always a change of function of the use and therefore a withdrawal of the house. The fact that the landlord keeps his main residence in the house does not change this:

“The court deduces from these judgments that – also in the case of permanent residence – during the periods that the house is let, there is talk of withdrawal of residence from the destination for habitation. After all, renting out the house to tourists constitutes a change in the function of the use. The dwelling could not be used for habitation during the rental period to tourists”.

The interpretation of the Court can be followed now that the Council of State in its judgments does not seem to offer room for a form of holiday rental of dwellings that does not fall within the scope of housing withdrawal. The fact that a dwelling is hardly ever used as a residence is an aggravating circumstance rather than the fact that the dwelling is mainly still lived in permanently is an attenuating circumstance.

 

30-day rule or prohibition?

Back to the intention of the Amsterdam Municipal Executive to reduce the number of permitted days of holiday rentals to 30. Now that the Amsterdam District Court is mainly basing its judgment on existing judgments of the Council of State, the value of the judgment as a novelty seems small. The only extra step that the Amsterdam court seems to make in this respect is the conclusion that even if the house is normally permanently occupied, there is still a case of withdrawal at the moment the house is made available for (short-term) holiday rentals.

Apparently there was still uncertainty in the Amsterdam municipality as to whether holiday rentals always fall under Article 21 of the Housing Act, the article that prohibits withdrawal in principle. With this last statement, it definitely has become even clearer. The other question that arises is therefore whether this has not opened the door to a total ban on holiday home rentals? After all, if holiday rentals of a dwelling can by definition be regarded as house withdrawals, the ban on house withdrawals in the Housing Act seems to offer an opportunity to do so.

Some are of the opinion that a complete ban on holiday rentals would violate property rights too much. AirBnB itself is of the opinion that the limitation of 60 to 30 days is already too much infringement of property rights. However, the government is in principle allowed to take measures that restrict an owner’s right of ownership. However, the government will have to demonstrate that it has a sufficient interest in doing so, whereby the interests of the owner must also be taken into account. In addition, the measure must be proportionate. Nevertheless, it is conceivable that if the problems surrounding holiday rentals increase, the municipality of Amsterdam will then have a more plausible interest in restricting these holiday rentals.

In view of the consensus in the Amsterdam municipal council (almost all parties are at least in favour of a restriction to 30 days) on the problems surrounding holiday rentals, there seems to be a realistic basis for the assumption that the holiday rentals in Amsterdam are problematic. It therefore seems not unlikely that the 30-day rule will stand up in court. In our opinion, a complete ban seems to be a step too far for the time being.

Ginio Beij

 

Do you have further questions about the 30-day rule, holiday rentals via AirBnB, for example, or have you been fined? Please feel free to contact us.

Lawyer Ginio Beij (beij@m2advocaten.nl)

 

1] ABRvS 14 October 2015, ECLI:NL:RVS:2015:3154 and ABRvS 6 September 2017, ECLI:NL:RVS:2017:2407

reserve fund

LEGISLATIVE IMPROVEMENT OF FUNCTIONS OF THE OWNERS ASSOCIATION (VvE) effective 1 January 2018

On 1 January 2018, the Improvement of the Functioning of Owners’ Associations Act came into force. OA’s (in Dutch “VvE”) do not save enough for maintenance and can hardly borrow money for such maintenance. As the name of the Act indicates, the purpose of the Act is to improve the functioning of associations of owners and to increase the possibilities for the necessary maintenance. We have listed the most important consequences of this law for you.

A mandatory minimum reservation

As of 1 May 2008, it was already mandatory for VVEs to hold a reserve fund, but there was subsequently no minimum amount to be held in cash. At the time, the legislator was of the opinion that there were sufficient incentives for VVEs to maintain a sufficiently high reserve fund, but in practice this turned out to be different. According to research, it still appears that 51% of the VVEs have no or insufficient resources to carry out the necessary maintenance.

Therefore, as of 1 January 2018, a minimum annual reservation of at least 0.5% of the rebuilding value of the building will apply to VVEs. For the time being, this obligation only applies to apartment owners of a building intended for residential use, but also in the event that the building is only partially used for residential purposes, this obligation will apply.

Should the VVEs believe that this will lead to an excessive reservation, they are free to make reservations based on an MYMP (multi-year maintenance plan) in the future, whereby a lower annual reservation than 0.5% can also be chosen, provided that the maintenance plan meets the requirements that are set for it.

It is important to mention that the VVEs have up to three years after the entry into force of this Act at the latest to comply with the new legal requirements.

Enforcement

Incidentally, compliance with this statutory regulation will not be monitored by the government and therefore no enforcement will take place. The government is (once again) counting on the independence of the VVEs. Nevertheless, this standard does make it easier for individual owners to legally enforce the minimum reservation. For example, failing to make sufficient reservations may lead to improper management and directors’ and officers’ liability.

Incidentally, according to a ruling under the old law, an VVEs could also become obliged to increase the reserve fund in order to be able to meet the expected maintenance, but the new law makes it a lot easier to prove that an VVEs does not meet its obligations.

VVEs now authorised to get a loan

On the basis of the model regulations up to 2006, there was previously a great deal of uncertainty as to whether VVEs could get loans for maintenance. Even among lawyers, there were different views on this matter. The main reason for this was that banks were reluctant to grant loans to the VVEs for fear of nullity or annulment of the loan. The new law puts an end to this lack of clarity and stipulates that the VVEs may take out loans for management purposes. Moreover, it can still be stated in the demerger regulations that the relevant entity is not competent to do so.

No joint and several liability for loans

As just mentioned, under the old circumstances, banks were reluctant to lend to VVEs. When they did, they usually did so on a joint and several liability basis. In other words, each member of the VVE could be held individually liable by the bank for the entire loan. It will now need little explanation that in practice only few VVEs members were prepared to do so, so loans were rarely granted. The new law solves this problem by treating the loan from the VvEs as a severable debt. This means that an individual member can only be held liable for his or her share in the community. Incidentally, this severable debt cannot be deviated from contractually.

In addition, the new law contains a provision stating that debts contracted by the VVEs are transferred upon sale to the new owner. The new owner must, of course, be informed of this debt. Incidentally, loans already existing prior to the entry into force of the new law on 1 January 2018 will not automatically be transferred to the new buyer. In that case, the lender of the loan will have to give its consent.

Ginio Beij

 

Does your VVEs have to deal with overdue maintenance or are you looking for more information about the new legislation? M2 lawyers is specialised in UvE cases and can advise you on this.

Attorney at law Ginio Beij (beij@m2advocaten.nl)

 

service costs

Living space service costs: Can the OA (VvE) contribution be charged on to the tenant?

It regularly happens that a landlord passes on the Owners Association (OA, in Dutch “VvE”) contribution to his tenant as part of the service costs, but is this actually allowed? For example, in a recent judgment of the Amsterdam Subdistrict Court it was ruled that a landlord had wrongly charged the VVE contribution of 200 euros per month to its tenant as service costs. As a result, the landlord had to repay no less than €5500 in undue VVE contributions to the tenant. However, this does not mean that a VVE contribution can never be passed on to a tenant. When can the VVE contribution be passed on to the tenant and when can it not be?

Not charging VVE costs one-to-one

In the case as described above, the landlord had included in the lease that the tenant was due a monthly fee in respect of the ‘service costs VVE. However, the court ruled that VVE costs cannot be passed on to a tenant on a one-to-one basis. VVE costs may only be passed on to a tenant to the extent that they are directly related to the use of the property.

A landlord is therefore better advised to specify these VVE costs in more detail in order to make it clear that they are indeed user costs. It does not suffice to simply include a cost item ‘service costs VVE, since service costs for the VVE will normally not consist entirely of user costs. Incidentally, it should be noted that in this court case, the lessor could not subsequently prove that these were operating costs.

In some cases, it will not be immediately clear to the landlord what specific amounts the monthly remittance to the VVE consists of. In that case, a more detailed cost specification will have to be requested from the VVE in order to find out which parts of it can be passed on to the tenant. The tenant is therefore also entitled to such a cost specification.

 

Which costs within the VVE contribution can a lessor pass on?

Examples of costs that can be passed on to the tenant are:

– Heating costs

– Glass cleaning of windows that the occupant cannot reach without risk.

– Electricity consumption of communal areas

– Cleaning costs of common areas

– Sweeping of chimneys and drains

What costs within the VVE contribution can a landlord not charge to his tenants?

Examples of costs that cannot be passed on to the tenant are:

– Required maintenance costs for the complex (e.g. maintenance of the lift and/or existing lighting installations).

– Repairs to the building

 

How do you charge these costs to the tenant?

If a landlord wishes to pass on certain VVE costs to the tenant, these costs must first be specified and agreed in the tenancy agreement. Subsequently, the landlord is legally obliged to provide the tenant annually with a specified(!) overview of these service costs (article 7:259 paragraph 2). The tenant may require the lessor to substantiate the costs with statements of account. The lessor is not permitted to make a profit on recharged costs. Therefore, a lessor may not charge more for user costs than it has actually incurred.

The annual service costs overview must be provided within six months after the end of the calendar year at the latest. In short, before July 1st, the lessor must have provided the lessee with an overview of the costs for the previous calendar year. In addition, the provision of a service charge overview is necessary if a lessor wishes to increase the advance payment amount (Article 7:261).

In short, if user costs are included in your VVE payment, these costs may be passed on to your tenant provided this has been agreed in the lease agreement. Subsequently, provide a clear and specified service costs overview on time and annually. If the tenant does not agree with the service costs, the rent commission and otherwise the subdistrict court may be requested to rule on the service costs.

 

Ginio Beij

 

Do you have further questions about charging service costs or other questions?

Please feel free to contact M2 Advocaten.

contract

Pitfalls in case of a temporary rental contract

the introduction of the “Wet Doorstroming Huurmarkt”, it has become more attractive for landlords to enter into temporary rental contracts now that there is no longer a legal ground for termination. Nevertheless, there are still a number of other strict requirements that must be met. In practice, landlords in particular tend to go sideways on compulsory notice. What should you pay attention to?

Since the introduction of the “Wet Doorstroming Huurmarkt”, it has become possible for landlords and tenants to enter into a temporary rental contract that ends without notice. Previously, a legal ground for termination was also required in the case of a temporary lease. This means that the landlord could only terminate the tenancy agreement for a reason defined by law. Such a reason is no longer necessary to terminate a temporary lease.

Restrictions on temporary leases

Despite the fact that it has now become a lot easier to terminate a temporary lease, there are still restrictions that have to be taken into account. A fixed-term lease may only be concluded once with the same tenant. After all, if it were possible to conclude several temporary leases in succession with the same tenant, the rent protection could be circumvented.

Furthermore, a temporary rental contract may be concluded for a maximum of two years for self-contained accommodation, while a temporary rental period of a maximum of five years may be agreed for non-self-contained accommodation. If the tenancy agreement continues after this maximum rental period, the tenancy agreement will be converted into a tenancy agreement for an indefinite period.

Another important requirement is that although notice of termination is no longer required, the landlord is obliged to send a timely notice if he wishes to terminate the lease. This must be done no later than one month before the end of the tenancy agreement. If the landlord fails to do so on time, the temporary lease will be converted into a contract for an indefinite period.

Notice sent one day late

The fact that the deadline for a notification must be interpreted strictly was also evident from a ruling earlier this year by the District Court of Central Netherlands. In this case, the landlord had apparently miscalculated and it turned out that he was one day late in sending the notification. According to the District Court, the landlord had thereby given the tenant confidence that he wished to continue the lease for an indefinite period of time and apparently did not wish to make use of the option to terminate the lease by operation of law. The lessor was therefore bound by a contract for an indefinite period of time.

Notification not received by tenant

In addition to the fact that the notification must be sent on time, it is also important that the lessor, if it comes to a procedure, can prove that he has actually sent this notification to the lessee. In a recent judgment of the District Court of Midden-Nederland, the landlord had sent the notification by e-mail. However, the tenant claimed not to have received the e-mail, and the landlord was unable to provide any further facts or circumstances to the contrary. The court therefore ruled that the lessee had not been informed in time of the intention to terminate the lease.

Conclusion

With the Act on the flow of the rental market, the landlord no longer needs to give a reason why he no longer wants to continue the temporary rental agreement when it expires.  However, this does not alter the fact that the landlord is still bound to inform the tenant in good time of the fact that he does not wish to continue the lease. In addition, it is advisable to send this notification at least by registered mail or by bailiff’s writ, so that the tenant cannot easily claim not to have received the notification.

 

Lawyer Ginio Beij

If you are looking for advice on drawing up temporary rental contracts or if you are renting yourself temporarily and are wondering what exactly your rights are, please do not hesitate to contact M2Advocaten.

old canal houses in Amsterdam

Prince Bernhard can get hefty fines

Recently, reports have appeared in the media (see here) that the Housing Act, among other things, is being violated when renting premises owned by Prince Bernhard of Orange. Bernhard states that he no idea and pledges to be not guilty. He claims to have outsourced the management to a professional property manager. But is this the end of the matter, or are owners really running risks if they outsource the management of their property(s) to a property manager?

For many owners, the main reason for appointing a manager for their property is to have as few worries about the property as possible. It is therefore a nasty surprise if not only does this appointed manager turns out to be breaking the rules, but also if they, as the owner, are subsequently held jointly responsible for offences committed. This also means that owners run the risk of being fined up to €20,500 per violation in Amsterdam, without having the intention to evade the law.

Not the offender, but responsible after all

The starting point is that the person who commits the offence is also the one who is held responsible for it. In case a manager has been appointed, the violation itself will often be committed by the manager or tenant and not the owner. However, this does not alter the fact that the owner can also be held responsible for the offence. According to existing jurisprudence (see here), the owner may be required to inform himself to a certain extent about the use made of the leased property. An owner is therefore required to take measures himself to prevent or terminate violations. If an owner fails to do so, he is co-responsible.

Just like the prince, most owners include a provision in their management agreement stating that the lease must be made without violating legal regulations. Although such agreements can contribute to the redress against a caretaker, this still does not mean that you cannot be held responsible as an owner.

The reason why this responsibility is also placed with the owner can only be guessed. Real estate owners could otherwise easily make use of so-called ‘straw men’, managers who act on the instructions of the owner, whereby the owner would simply be left out of the picture in the event of malicious intent.

When not responsible?

Yet case law does not go as far as to hold an owner responsible by definition for conflicting use of his premises. Jurisprudence also states that an owner cannot be held responsible if he did not know or could not have known that an infringement had taken place. The fact that the owner is responsible if he could have known indicates a certain effort requirement.

In practice, this means that an owner can never completely relinquish control if he wants to avoid being responsible for violations without his knowledge. It is therefore advisable to maintain regular contact with the manager in order to keep abreast of the ins and outs.

Changes on the horizon?

On 23 October 2017, the Amsterdam Subdistrict Court issued a remarkable judgment (see here) that may be of importance to building owners. In this case, a landlord had urged the tenant to carry out an inspection of the leased property. In this way, the lessor wanted to prevent it from later being objected that it knew or could have known that the property was being used unlawfully. However, the tenant did not want to cooperate with the inspection and the Subdistrict Court subsequently considered this:

“Now that, outside emergencies, she does not have the authority to enter the dwelling without the tenant’s permission, it cannot be held that, in that case, she knew or could have known that the dwelling was being used unlawfully”.

Although it now goes too far to say that this consideration removes the responsibility of owners, it does show that there is a need for tightening up the limits of this responsibility.

For the time being, however, Prince Bernhard is still running considerable risks by completely relinquishing management. And with €20,500 per violation and no less than 349 properties in Amsterdam, the fines that he may have to pay can mount up considerably.

Ginio Beij

Have you been fined as a building owner while using a property manager? Or are you looking for other legal advice, please contact M2 Advocaten.

Source photo (http://aliceschr.zoom.nl/fotos/index.html)

Multiple door bells in an apartment building

Dissatisfied with Owners Association (VvE)-manager? There is something you can do.

In my practice, I come across it regularly. Complaints about VVE managers. The complaints vary, but there are a number of recognisable elements, such as poor communication, slow reaction to complaints and inefficient use of financial resources.

Although there is a lot of dissatisfaction lurking, it is not (yet) common for real action to be taken. As a result, the VVE manager remains and continues working the same way, while the service provision leaves much to be desired.

That is why it ss special that I recently had the opportunity to deal with a case in which a number of VVE residents no longer accepted it, which eventually led to proceedings. It is interesting how the judge has assessed the manager’s actions.

Quality procedure of VVE-Manager

What on earth was going on? In a VVE in Amsterdam of approx. 280 apartments, a housing corporation owns the majority. A party affiliated with the housing corporation has been appointed as manager.

In practice, however, there are many complaints about the conduct of the manager. A selection of the complaints:

– Slow response to repair requests from residents: There were cases known of residents who literally had fungal problems for years because of leaks, without any actions being taken;

– Insufficient check on suppliers’ invoices: Typical example of this is that an order was given to mop up some dirt on one of the stairs in the stairwell. € 800,- was invoiced for this, according to the specification 10 man-hours and 10 hours of parking. Not only was this out of proportion, it was also free parking that day so this was not correct either. Nevertheless, the manager paid for it without asking questions;

– Lack interest with procurement: A new building insurance was taken out, where the premium went over five times, from ca € 10.000,- to € 50.000,-. Upon enquiry it appeared that the manager had not asked for more than one offer.

Another factor was that the manager was not independent of the housing corporation. For this reason, there was too little opposition to plans of the housing corporation that were not in the interest of other members. For example, a neighbourhood manager was appointed at the expense of the VVE for € 18,000 per year, who was employed by the housing corporation but had little added value for the VVE.

A number of VVE members were distressed by these developments and collected the various complaints and also discussed them with the manager. After no improvement was made, a meeting of the VVE was proposed to terminate the management agreement. This was blocked by the majority vote of the housing corporation.

Subsequently, the VVE members submitted this decision to the Subdistrict Court. On the initiative of the Subdistrict Court, a committee was even set up to examine the actions of the manager. The majority of this committee advised negatively on the continuation of the management relationship,

In the end it weighed heavily on the Subdistrict Court that there were many different complaints about the manager, this in combination with the non-independent position. The court therefore annulled the decision that the manager could remain and ruled that the board was authorised to terminate the management agreement.[1] In the meantime, the management agreement has indeed been terminated and a new manager is ready to take over his place.

5 steps in the event of under-qualified management by the VVE

The lessons learned from this are the following:

  1. Collect the complaints and substantiate them with documentation: It is of course important if there is dissatisfaction about the manager that you underpin your complaints. Just “not being satisfied” without clarifying the why will not change the situation. It is therefore essential to provide good insight into what is going wrong.
  2. Firstly, start a conversation with the manager: It is important that the manager gets a chance to improve first. Use the documentation to make clear what complaints there are and make measurable agreements to improve management. If this goes well, then the problem is solved. Otherwise it is time for the next step.
  3. Check the cancellation options in the management agreement and prepare a good alternative: If the VVE already wants to appoint a new administrator, it must be clear by what deadline this can be done. It is also important to have selected a good alternative, or preferably more than one, so that it is possible to switch to a new administrator immediately.
  4. Ensure support within the VVE: The possible transfer to a new administrator is a major decision. That is why it is important to inform and keep the VVE members informed as much as possible. In practice, there are always members of the VVE who hardly ever concern themselves with VVE matters, but at the same time want good management. It is also necessary to keep them well informed so that they know what is going on.
  5. Submit the termination of the management agreement and the appointment of a new administrator to the VVE meeting: Based on the documentation and possibly the (unsuccessful) improvement process, the reasons for proposing a new administrator can be explained in the VVE meeting. In order to be able to proceed quickly, it is a good idea to vote on the alternative in the same meeting, or in a meeting shortly afterwards.

In case a member of the VVE blocks the decision-making with a majority vote because of links with the administrator or for any other reason, it is possible to submit this to the subdistrict court within 1 month after the VVE meeting.

Would you like to know more?

Contact Ginio Beij (beij@m2advocaten.nl).

1] Subdistrict Court of Amsterdam 28 June 2017 Case no. 5453726 v. EA-VERZ 16-1264 (unpublished)