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Lease agreement house: clause to the detriment of the tenant still valid

In rental law, tenants of dwellings are generally well protected. Even if a tenant has agreed to a clause in the general terms and conditions that is disadvantageous to him, there is a possibility by law to have this clause nullified afterwards if it is unreasonably onerous. In a recent judgment of the Court of Appeal of Arnhem-Leeuwarden, a clause that was to the detriment of the tenant was nevertheless accepted by the Court of Appeal.

Case study

The tenant in question, a lawyer, has agreed with his landlord on a rental agreement for one year with, among other things, the condition in the general provisions that interim termination is only possible with the intervention of the court.

“Unless the parties have agreed to this or otherwise, full or partial interim termination of the tenancy agreement and suspension of the obligations arising from the tenancy agreement shall only be possible with the intervention of the court”.

It soon turns out that the tenant is not satisfied with the rented accommodation. The most striking complaint is a faulty fire alarm system that goes off unnecessarily more than once and thus keeps the baby awake. After having complained a few times about the accommodation, the tenant announces that he wants to terminate the rental agreement extrajudicially. The landlord does not accept the dissolution and refers to the recorded clause. The tenant, on the other hand, states that this clause is unreasonably onerous.

Legislation

On the basis of Article 6:233 of the Dutch Civil Code, a clause in the general terms and conditions may be annulled:

– If the clause is unreasonably onerous for the other party (Section 6:233(a) of the Dutch Civil Code)

– If the other party has not had a reasonable opportunity to take note of the clause (Section 6:233(b) of the Dutch Civil Code)

In principle, a private tenant of a dwelling is regarded as a consumer. This is important now that the law with respect to consumers considers a number of clauses in general terms and conditions to be unreasonably onerous in advance. These are included in the so-called ‘black list’ (Section 6:236 of the Dutch Civil Code). For instance, Section 6:236 sub b of the DCC explicitly states that exclusion or limitation of the power of dissolution must be considered unreasonably onerous. So far, the legislation seems to point in the tenant’s favour.

Judgment of the Court of Appeal[1]

The Court of Appeal considered that in this case the tenant cannot be regarded as a consumer within the meaning of Section 6:236 of the Dutch Civil Code. However, the Court of Appeal ruled that in this case the clause can still be upheld because the clause does not exclude or limit an appeal for dissolution of the lease agreement. Therefore, it does not limit the possibility of dissolution, but only the manner in which it can be dissolved. In the opinion of the Court of Appeal such a restriction does not unreasonably burden the position of the consumer. According to the Court of Appeal, the contractual balance is maintained now that the lessor cannot dissolve the contract out of court either on the basis of the law (Section 7:231 of the Civil Code).

Comments

Although the Court of Appeal considers the fact that both parties cannot dissolve the agreement out of court does not lead to an infringement of the contractual balance, in our opinion there is something to be disputed. After all, the Court of Appeal seems to forget that it is generally assumed that consumers are the weaker party and that the legislation with, for example, Section 6:236 of the Dutch Civil Code tries to create a more balanced playing field.  If a lessor can subsequently set these regulations aside by means of a clause, there is no question of a contractual balance, but the consumer is still in the weaker position.

Perhaps the fact that the tenant was a lawyer played a role in this case. The lawyer, who was also specialised in private law, will probably not be considered a weaker party in advance. However, the Court of Appeal did not explicitly take this factor into account in its judgment. In our opinion there is certainly something to be said that this clause should have been considered unreasonably onerous.

Would you like to know more? Feel free to contact us.

Marius Rijntjes (rijntjes@m2advocaten.nl)

 

1] In a judgment of the District Court of Middelburg in 2009, the court arrived at a different judgment in the same type of case. In this judgment, the court ruled that on the basis of Section 6:267(1) of the Dutch Civil Code, the consumer in question is expressly entitled to an extrajudicial dissolution authority. A provision that actually excludes reliance on that article can therefore be regarded as a restriction within the meaning of Section 6:236(b) of the DCC and would therefore be unreasonably onerous.

Owners Association (VvE): Owner of crawl space by statute of limitations?

Earlier we discussed the situation in which an apartment owner wants to excavate an existing crawl space in order to turn it into a fully-fledged basement, for example. But what if a previous owner has enlarged his basement by adding an existing crawl space and the Owners Association (OA, in Dutch “Vereniging van Eigenaren”, abbreviated: VvE) has failed to act against this for 25 years?  Can an apartment right be enlarged by statute of limitations? In this blog we describe a practical case in which this issue arose and then discuss the court’s verdict.

Case study

A buyer has bought an apartment with attached basement space. The previous owner has enlarged the basement space by creating a passage to the crawl space below. The crawl space originally belongs to the communal area of the VVE. According to the previous owner, for 25 years the VVE has never made a problem of using this crawl space as storage space. He is therefore convinced that this space has become his property because of the statute of limitations. The buyer, on the other hand, finds it better to write to the VVE and proposes to buy the space from the VVE. Enquiries with neighbours had taught him that in similar cases the VVE had sold common parts without problems.

However, the buyer doesn’t get the outcome that he expected. The VVE refuses to sell him the crawl space. In addition, he is asked to deliver the crawl space within two weeks in the original state. The buyer did not comply with the request of the VVE and then defended himself by stating that the crawl space in question had become part of his apartment right as a result of prescription.

Limitation period

Although there there are various opinions about this, a common part of the VVE can, in principle, be transferred to a private part of a separate apartment owner due to statute of limitations. This requires that the apartment owner actually behaves for a certain period of time as if he is the owner of the common part and the VVE is aware that the statute of limitations has begun to run. Furthermore, this period must be uninterrupted. How long this period should be before prescription depends on each case.

In the case above, in principle, two forms of prescription may apply; acquisitive prescription or liberating prescription. Acquisitive prescription is when a person has owned an immovable property in good faith for a continuous period of 10 years. You are only in good faith if you could not have known that the property in question was not your property. Because ownership of real estate in the Netherlands is recorded in the land register, this form of prescription is rare. If there is no good faith then a period of 20 years of uninterrupted possession is required before the person who has appropriated the property can legally call himself owner. Incidentally, this possession may be interrupted if the VvE gives notice in good time that it does not agree to the possession.

Court ruling

The court took into account that the VVE had not been informed about the crawl space being used by the previous owner. This owner created a passageway from his own basement space that could not be observed by the VVE. If there is no public ownership, the limitation period will only start to run when the VVE has been informed of the situation, according to the court. In this case there was no reason to assume that the VVE had become aware of the use of the crawl space earlier. The fact that a local resident was able to confirm that the previous owner had actually been using this passageway for 25 years does not alter the fact that the VVE was not necessarily aware of this. The District Court’s judgment is therefore that there is no question of prescription. The crawl space remains the property of the VVE.

Conclusion

Although it turned out differently in this case, it can be deduced from this judgment that the ownership of a common space can in principle be transferred to a separate apartment owner by statute of limitations.  It is therefore important for an VVE to respond in good time if it becomes aware of the occupation of a communal area. For an apartment owner who wishes to invoke prescription, it may be wise to have the new situation included in the deed of division in order to avoid discussions later. This case shows that sometimes it is better not to let a sleeping dog lie. It might bite if you do.

Do you have questions about prescription within the apartment law or are you looking for advice in a similar situation? If so, please feel free to contact M2 Advocaten.

Lawyer Marius Rijntjes (rijntjes@m2advocaten.nl)

 

Sale of property: cooling-off period for the seller

When you are selling a house, a private buyer is given a three-day cooling-off period under the law. It is increasingly common for sellers to stipulate a cooling-off period. Is this allowed? In this blog we look at the rules surrounding the cooling-off period and discuss a recent judgment of the District Court of Overijssel regarding the cooling-off period for the seller. Finally, we look at the consequences of this ruling.

Three days cooling-off period for private buyers

With the housing market under constant tension, there is usually a lot of pressure on potential buyers to quickly decide whether to buy or not. This can of course lead to hasty decisions. Fortunately, private buyers are somewhat protected by law. For example, private buyers are given a three-day cooling-off period after they have agreed to buy a house (Article 7:2 paragraph 2 of the Dutch Civil Code). Even when the papers have been signed, the private buyer still has three days to dissolve the purchase agreement without giving reasons.

Reflection period for sellers?

This statutory cooling-off period only applies to private buyers. As long as the sales contract has not been signed, the (private) seller has the possibility to renounce the sale, but as soon as it has been signed he is in principle bound by the sale. However, a seller does have the possibility to include a clause in the sales contract that says that the seller also gets a cooling-off period. An obvious reason for the seller to include such a clause is that in the current housing market the seller regularly receives a higher bid later. As long as the buyer agrees to such a clause, it is allowed.

Case

Earlier this year, the District Court of Overijssel ruled on a case in which the seller had stipulated a three-day cooling-off period equal to the protection for buyers. In the end, the seller used this period to go into business with a third party and thus dissolved the purchase agreement with the first buyer. The buyer claimed that the seller had abused the clause. According to the buyer, this clause only served to protect the seller against a hasty decision, and not as an instrument to obtain a higher bid from a third party. However, the court ruled that the parties had agreed that the seller could renounce the sale just like the buyer without giving reasons. Although the court questions whether negotiating with a third party after the conclusion of a sales contract is decent, it does not see sufficient reason to hold the seller to the sales contract in this case. This would have been different if the seller had used the offer of a new potential buyer to make the first buyer pay a higher purchase price.

Conclusion

The outcome of the ruling is that selling parties can certainly try to negotiate a cooling-off period for themselves now that this will increase the chance of obtaining the highest possible price. For buyers, on the other hand, this possibility obviously entails the risk that the house can be sold to someone else at the last minute, so that the cooling-off period can mean a number of nerve-wracking days. A buyer is usually wise not to agree to such a clause. Nevertheless, the housing market in some regions in the Netherlands is still so tense that buyers may feel compelled to agree to such a clause. In that case, it may be wise to try to draw up additional dissolution conditions in order to limit the risks to some extent.

Do you have questions about the cooling-off period or are you looking for advice on drawing up a sales contract or additional conditions? If so, please feel free to contact M2 Advocaten.

Lawyer Marius Rijntjes (rijntjes@m2advocaten.nl)

 

Penalty clauses in housing rental contract

In 2013, a ruling of the European Court of Justice revealed that many penalty clauses in leases with private tenants are not valid because they are considered unreasonable under European law. However, the District Court of Amsterdam recently issued a nuanced judgment, ruling that if the landlord is also a private individual, there is not necessarily a disrupted balance of power, as a result of which the landlord can still claim the fine.  

ROZ model and penalty provisions

When a house is rented out, usually a written rental agreement is drawn up. Often landlords use a standard Council for Real Estate Affairs (Raad voor Onroerende zaken, abbreviated: ROZ) model drawn up by specialists. Not surprisingly, many landlords assume that they have established a solid contract with this document. The ROZ-model also includes various penalty provisions to ensure that the tenant meets his obligations. But it was precisely these penalty provisions that proved to be far from ideal.

Unfair terms directive

In 2013, the European Court of Justice issued a judgment[1] which showed that the Unfair Terms Directive applied to rental contracts for residential premises. According to the Court, the aim of the Unfair Terms Directive is to provide consumers with effective protection against abuse by a commercial party of its dominant position.

Penalty clauses such as those in the ROZ-model were often found to be unfair according to this standard. An important consequence of this was also that the penalty clause turned out to be completely invalid, which meant that moderation was no longer an option. In short, the user of the ROZ-model could suddenly no longer claim a fine, even though the tenant in question was clearly at fault.

Judgment of the District Court of Amsterdam

The Directive thus aims to protect consumers against abuse by companies that are their landlord. But what if the landlord is a private individual? Until recently, this situation was uncertain, but recently the Court of Amsterdam ruled on this matter.[2] In this particular case, the landlord had only one property available for letting and it was apparently the first time that the landlord rented out housing. The court ruled that under these circumstances the lessor was entitled to claim the fine because there was no question of a disrupted balance of power.

Although the judgment as described above can be interpreted as a relaxation with regard to penalty clauses, our opinion is that in this case there were very special circumstances. We consider the scope for a broader application to be small.  For the majority of landlords, it is therefore particularly important to ensure that the penalty clauses comply with what is considered reasonable. For example, the penalty amount should not be unreasonably high, should be capped and should preferably be agreed in the lease itself and not in the general provisions[3].

Incidentally, the Council for Real Estate Affairs has meanwhile adopted a new ROZ-model for home rentals that has been adapted with due observance of current case law. If you would like a tailor-made rental agreement and/or would like to have checked whether your penalty provisions are valid, please contact M2 Advocaten.

[1] HvJ EU 30 mei 2013, EECLI:EU:C:2013:341

[2] Rb. Amsterdam 22 januari 2020, ECLI:NL:RBAMS:2020:291

[3] Hof Den Bosch 24 september 2013, ECLI:NL:GHSHE:2013:4346

 

Service costs for liberalised rent: more freedom of contract for landlord of living space

Earlier we published a blog about a landlord of a free sector property, who had to repay €16,500 to her tenant because she had charged far too much for furnishing and because she had not specified Owner’s Association costs. In the meantime, it seems that a turnaround in case law has taken place and that lessors of houses in the free sector are being given more freedom to make agreements at their own discretion. 

Determination of service costs

In short, service costs are the costs of the property that the landlord charges on top of the basic rent for supplies and services. Landlords are required by law to provide their tenants with an annual overview in which all service costs charged are being specified, including the method of calculation (Section 7:259(2) of the Dutch Civil Code). In practice, landlords of privately owned dwellings do not always use an exact approach when determining the service costs. They have simply included an amount in the tenancy agreement for the service costs which they believe adequately cover their efforts.

Old situation

Determining the service costs by estimation could sometimes be expensive for the landlord in the past. When the tenant challenged the level of the service costs, it was not uncommon for the landlord subsequently to have to pick up the tab because it could not be demonstrated that the service costs charged were related to actual costs. The Amsterdam Court of Appeal ruled on this in 2017:

“The Court of Appeal deems (…) if the parties have agreed an amount for service costs, that amount must be reasonable, in the sense that it must be in reasonable proportion to the value of what is offered for it”.

In other words, the service costs charged by the lessor should be based on actual costs. Therefore, if the tenant could make it clear that the service costs were not based on actual costs, the lessor had to reimburse the service costs that were overcharged.

Current state of affairs

Remarkably enough, the Court of Appeal of Amsterdam has come to an entirely different conclusion on the basis of the legislator’s explanation of Section 7:259 of the Dutch Civil Code and is of the opinion that only when no or incomplete agreements have been made about the service costs, it should be determind that the service costs should be considered to be at least. For the rest, however, the Court of Appeal reasoned as follows:

“In the case of liberalized dwellings (…) contractual freedom with regard to (the level of) service costs (…) is the starting point, just as this freedom in principle also applies to the determination of the rent. (…) There is no need for a relation to the actual costs’.

In short, according to the last judgment of the Amsterdam Court of Appeal, in case of a liberalized dwelling the parties are free to agree on a compensation for service costs at their discretion without necessarily having to make a connection with the actual costs. In short, a landlord may charge €350 per month for the rent of a couch of €300, – provided the tenant has agreed to this.

Note

One may wonder whether the verdict of the court of appeal actually makes much of a difference. After all, even before this ruling it was possible for the landlord of a liberalized dwelling, if he was of the opinion that he was insufficiently compensated for the service offered, to increase the (bare) rent at will, provided the tenant only agreed to the higher rent. This ruling, on the other hand, forms a safety net for those landlords who, in the subdivision between bare rent and service charges, had wrongly included too much of the rent in the service charges.

However, with this ruling one may wonder what the function of the mandatory overview (Section 7:259 (2) of the Dutch Civil Code) still is, with the exception of the service charges part where the final amount is determined afterwards, as is the case for the use of utilities. There was already no statutory sanction for failure to provide an overview, and with this ruling landlords of liberalized dwellings seem to have even less reason to actually provide it, which does not improve transparency towards tenants.

Questions about service costs? Feel free to contact M2 Advocaten.

Lawyer Marius Rijntjes rijntjes@m2advocaten.nl

 

picture of a fence

Easement: withdrawal for lack of interest

In the event of a waiver of easement due to lack of interest, the interests of the owner of the serving inheritance do not play a role. In this blog we take a brief look at what these concepts mean and what this means in practice.

Servitude

If an inheritance is entrusted with a right of way, there is an easement for the benefit of another inheritance. This other inheritance is also referred to as the ‘prevailing inheritance’, while the inheritance entrusted with this right is referred to as the ‘serving inheritance’. It comes down to the fact that the owner of the serving estate must allow the owner of the prevailing estate to make use of the serving estate in a certain way. The right of way is by far the most common form of easement, but other forms are also possible.

Servitude may arise through establishment, but also through prescription. In the case of settlement, the owners of the heirs make an appointment for certain use and then have it notarized. In the case of prescription, if someone uses someone else’s property in a certain way for 10 or 20 years, a servitude may arise.

Cancellation of easement

If a yard is in charge of an easement, this sometimes affects the value of the yard or the way in which the owner of the yard experiences his property. It is for this reason that it often happens that the owner of a serving estate tries to have the easement waived. This is possible, for example, if the interest in exercising the easement has lapsed. For example, it may be that the owner of the prevailing courtyard now has a different route over his own courtyard at his disposal.

But suppose the owner of the serving estate also has an interest in waiving the easement? For example, because a new owner of a (serving) farmyard has project development in mind. Do these interests play a role in case of dissolution due to lack of interest? No, the Supreme Court ruled in 2014 that the interests of the owner of the serving estate (except for misuse of powers) do not play a role. It merely concerns the interest of the prevailing inheritance in the exercise of the servitude of the inheritance.

Case study

On top of that, the importance of the prevailing inheritance is assumed fairly quickly. This was also the case in a recent Supreme Court judgment. The owner of the prevailing estate had established a road easement, which means that he may use his neighbour’s plot of land to reach the public road. Originally, the owner of the dominant estate did not have his own way out to the public road, but in the meantime the situation had changed and he had. However, to reach this new road he had to make a considerable detour. This fact was of sufficient weight for the Supreme Court to assume that he (still) had a reasonable interest in exercising the easement. Now it has to be said that in this case the owner of the prevailing estate had to make a detour of several kilometres. It would be interesting to see to what extent the Supreme Court sees it differerently if the distance is considerably shorter.

Are you the owner of a serving courtyard and would you like to have a servitude abolished or would you like to establish a servitude? Please feel free to contact M2 Advocaten.

Lawyer Marius Rijntjes (rijntjes@m2advocaten.nl)

 

picture of contract breach

Termination of rental agreement due to urgent own use

Tenants of residential property generally enjoy considerable rent protection. Therefore, a landlord cannot terminate the tenancy agreement without a reason stated in the law. One of these reasons is termination due to urgent personal use, including renovation, for example. But can there also be urgent personal use if the property is made available to someone other than the landlord? This blog looks at a recent judgment of the District Court of Amsterdam in which urgent personal use was assumed despite the fact that the house would be made available to someone else.

Case study

The landlord owns a four-storey building, of which the first floor and the third floor (storage space) are rented to a tenant. In addition, the second floor (31m²) is rented to the landlord’s son who lives there with his girlfriend. At some point, the landlord wants to thoroughly renovate the entire property. According to her, the property no longer meets today’s requirements and is in urgent need of renovation. She points out, among other things, the noise, the crooked floors and the lack of an escape route.

However, she is unable to finance this renovation without her son, who in turn only wants to do so if he can continue to live in the building. Something that, according to the son, is not possible if he, his girlfriend and future children, only have 31 square metres at their disposal. The landlord’s plan is therefore to merge the three upper floors into a single dwelling for her son. She therefore wishes to terminate the tenant’s rent on the first floor due to urgent personal use so that the house can be renovated.

However, the tenant does not agree with the termination of the lease. The tenant states that this is not personal use, but that the termination of the lease is mainly done so that the son will have access to extra floors. Simply put, according to the tenant it is not the landlord’s own use, but use by a third party.

Judgement of the court

First of all, the court ruled that the landlord has made it sufficiently clear that the house is actually in need of renovation. Next, it must be assessed whether this renovation

the landlord’s own interest, and whether this interest exceeds the tenant’s interest in continuing to live in the dwelling. According to the court, there can indeed be ‘personal use’ if the house is to be used by someone else, such as, in this case, the son. Such use can be considered personal use if the landlord’s own interest is served.

In this case, if the son would not have access to the other floors, he would use his limited financial resources to purchase (larger) living space elsewhere. As a result, he would no longer be able to co-invest in the necessary renovation of his mother’s premises. Without this investment, she would not have been able to meet the maintenance obligations as lessor, which would have forced her to sell the property. Therefore, the Court is of the opinion that the renovation does serve the lessor’s own interests and that the lessor therefore has a legitimate ground for termination.

Conclusion

In order to be able to terminate a lease on a property, a landlord needs a reason as described by law. One of those reasons is if the landlord urgently needs the rented property for his own use, which is the case with a large-scale renovation. This renovation must then be in the landlord’s own interest, and in principle this is not the case if the landlord wants to make the rented property available to friends or family. However, in this case, the landlord could not retain the property if her son did not co-invest in the renovation, and that included her own interest to terminate the rent. The fact that the house would then be used by her son is therefore irrelevant.

It is striking that in this case the tenant did not dispute the fact that the landlord would have insufficient means at her disposal. Therefore, it was not investigated whether the landlord had other possibilities to pay for the renovation, other than through her son. It is true that the lessor did not have sufficient resources, but it is possible that another investor or a loan would also have made the necessary renovation possible without jeopardising the tenant’s rental position on the first floor. Incidentally, in the event of eviction or relocation due to renovation, a tenant is always entitled to a relocation allowance.

Do you want to terminate a rental agreement due to urgent personal use or are you renting correctly and your landlord wants to terminate the rental agreement without legitimate reason? In that case please feel free to contact M2 Advocaten.

Lawyer Marius Rijntjes (rijntjes@m2advocaten.nl)

 

warning sign mind your neighbors thank you

Apartment law: Nuisance caused by room rental

Unfortunately, neighbors and nuisance often turn out to be a recurring combination. Not in the least when the adjacent house has been made available for room rental to students. In a case handled at the District Court of Amsterdam, the neighbour of the floor below appealed to the deed of division, which states that the apartment may only be used as a dwelling. The question is whether room rental does or does not fall under the term ‘dwelling’.

An apartment owner rents out separate rooms of his house to four students. As a result, the sub-neighbour experiences quite a lot of noise nuisance. The neighbour states that the students play loud music and receive a lot of visitors in the evening hours, causing noise in the apartment and stairwell late at night. These complaints are substantiated with an expert report and statements from the ground floors.

Are you fighting with a deed of division?

The neighbour states that the apartment owner does not comply with the deed of division which states that the apartment must be used as living space. According to the neighbour, the term ‘living space’ in this case means an ‘independent living space’ (just like in the administrative housing act) and room rental is therefore not allowed. If room letting is prohibited according to the demerger deed, the neighbour can take this as an opportunity to apply for a ban. In this case, however, such a ban on room rental was not directly included in the demerger deed or the demerger regulations. The definition in the Housing Act simply does not apply in this case, according to the District Court.

What the District Court can do is to examine whether it can be ruled according to objective standards that the parties have agreed that renting rooms is not permitted. This objectivity is an important condition because third parties must also be able to rely on the contents of the deed of division when inspecting it. In this case, the District Court did not find any leads in the deed of division and the demerger regulations that would show that it was once intended to prohibit room letting. In short, the neighbour could not demonstrate that the apartment owner with room rental was in violation of the demerger deed.

Unlawful nuisance?

Fortunately for the neighbour, he had also held the apartment owner responsible for unlawful nuisance (Article 5:37 of the Civil Code & Article 6:162 of the Civil Code). According to established case law of the Supreme Court, in order to determine whether unlawful annoyance actually occurred, the nature, seriousness and duration of the annoyance and the damage caused by it in connection with the further circumstances of the case are taken into account. According to the District Court, neighbours in an apartment complex will experience nuisance more quickly because they share several walls and floors with different neighbours. This requires, on the one hand, that one should take more account of each other, but, on the other hand, that one should also tolerate some nuisance from each other.

In this case, however, the apartment owner failed to take adequate measures against the nuisance despite knowing about it. The nuisance has also been substantiated by an expert report and is also confirmed by other neighbours. The District Court therefore ruled that there was unlawful nuisance caused by noise. The apartment owner will therefore have to take measures to prevent future nuisance.

If owners of the OA are in agreement, it is safest to include a ban on room rental in the demerger deed in order to prevent a lawsuit such as this.

Are you also struggling with nuisance from neighbours or would you like to rent out your apartment room by room and are you looking for advice? Please feel free to contact M2 Advocaten.

Lawyer Marius Rijntjes (rijntjes@m2advocaten.nl)

 

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)