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)

 

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)

 

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)

 

maarten van den heuvel

From the practice of M2 Advocaten: VvE law

It sometimes happens that a new owner presents himself within a HOA who has certain plans and requests permission for this. This was also the case in a case in which M2 Advocaten was involved.

This case involved a hotel owner who had bought a residential apartment on the first floor and wanted to add this floor to his adjacent hotel and exploit four hotel rooms. The HOA did not think this was a good plan and did not give permission to change the purpose of the apartment from “living” to “hotel/lodging”.

The owner did not agree and requested a replacement authorization from the Subdistrict Court to operate a hotel in the apartment. One of the arguments put forward by the owner was that it was unfair that another owner had been given (conditional) permission to rent out his salvage through Airbnb, while operation as a hotel was not allowed. The Subdistrict Court saw this differently and judged that operation as a hotel was not comparable to renting through Airbnb. The replacement authorization was not granted.

The owner did not give up and appealed. On behalf of the HOA, M2 Advocaten argued, among other things, that there are risks to a commercial party in the building and that – by extension – depreciation of the apartments would be possible. The Court of Appeal agreed. Another implication to a commercial operation is that the hotel may be transferred or changed in concept at any time. According to the Court of Appeal, this makes the apartments less attractive when they are sold – compared to apartments to which this uncertainty does not apply.

It was also argued on behalf of the HOA that the operation of four hotel rooms on the first floor cannot be equated with the rental of a storage room via Airbnb. Hotel operation is a permanent situation, in which the public-law destination is also converted into “hotel/lodging”, while rental through Airbnb is a temporary situation, which can be discontinued at any time by the HOA and in which the public-law destination remains “living”. This was also upheld by the Court. The replacement authorization was not granted.

It is good to know for HOA that a replacement authorisation can be granted if a requested authorisation has been refused without reasonable grounds. In this case, the HOA’s grounds for refusing a hotel were reasonable. In the case of a change of purpose, it is good to know that literature suggests that a change of purpose should only be possible if the change is 1) personal, 2) temporary and 3) recoverable. In this case, this was not the case for the desired hotel destination.

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

Marius Rijntjes (rijntjes@m2advocaten.nl)