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)

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