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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

 

Realtor statement. Client bound? Infringement of duty of care?

These questions were recently raised in a case before the Court of Appeal of Arnhem-Leeuwarden. The case was as follows.

The seller engages a real estate agent when selling his home. Next to the house is a building with a garden. In the garden is the remainder of a former house located (hereinafter: “the ruin”). According to the buyer, the broker would have ensured prior to the sale that there would not be any development on the site of the ruin. After the sale, it appeared that the owner of the neighboring plot has obtained a building permit for a new house to be built on the site of the ruin afterall. The buyer then holds the seller and the estate agent liable for the damages suffered by him.

With regard to the seller, the buyer takes the position that he has gone astray when entering into the purchase agreement. In other words: if the buyer had had a correct presentation of the building plans of the owner of the neighbouring plot of land, he would not have concluded the sale under the same conditions (i.e. he would have paid a lower purchase price). With respect to the estate agent, the buyer has taken the position that the estate agent acted unlawfully by announcing that the ruin site would not be built on, while it has turned out to be wrong.

The Court of Appeal first of all looked at the question whether the seller is bound by the statements of the broker. In this respect, the Court of Appeal pointed out that, in principle, an estate agent acts as the principal and not as a representative or authorised representative of the client. In order to bind the client, additional facts and circumstances are necessary, such as, for example, announcements by the broker about the content of the brokerage agreement and/or the conduct of the client. According to the Court, these additional facts and circumstances have not been stated or proven. This means that the communication of the broker about the ruin cannot be attributed to the seller. Therefore, the reliance on error is unfounded. The seller is therefore not liable.

Subsequently, the Court of Appeal assesses the question whether the broker has acted with sufficient care. In this respect, the Court of Appeal put first and foremost that, assuming that the real estate agent has made the relevant communication about the ruin, this communication does not concern a relevant property of the real estate itself, but an aspect in its vicinity. In that case, according to the Court of Appeal, a potential buyer may be expected to be a little more attentive than in the case of a communication from the real estate agent about the immovable property itself.

The Court does not share the view of the buyer that the estate agent’s statement should be regarded as a guarantee for the future. The Court of Appeal considers that it is a fact of common knowledge that zoning plans can change and that owners of adjoining plots can make changes to their plots. The Court of Appeal also took into account that the buyer did not rely on the mere communication from the real estate agent, but also investigated the question of whether there were any building plans in relation to the ruin prior to the sale and inquired with the municipality to that end.

With regard to the correctness of the notification of the real estate agent, the Court of Appeal considered that at the time of the notification there was a zoning plan on the basis of which only an annexe could be realized on the ruin site. Only later (read: after the sale) was exemption from the zoning plan granted for the construction of a dwelling on the ruin site. This means that the real estate agent’s notification was in accordance with the zoning plan. Moreover, prior to the purchase, the real estate agent inquired with the municipality, on which the municipality indicated that there were no building plans with regard to the garden of the neighboring plot. In short: the announcement of the real estate agent was correct. Therefore, the estate agent is not liable either.

It follows from the ruling that a real estate agent is not quickly seen as his client’s proxy. In addition, it follows from the ruling that an estate agent not only has a duty of care towards his client, but also towards third parties, and that the question of whether this duty of care has been violated is assessed on the basis of all the circumstances of the case.

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

Marius Rijntjes (rijntjes@m2advocaten.nl)

Shared housing: rented out according to the rules?

Attention! As of 1 January 2017, the municipality of Amsterdam has changed the rules for renting/renting out houses for multiple occupancy. An update will follow a.s.a.p. on our website.

Amsterdam has a shortage of houses in all categories, including starters. The wish is to live independently, but the reality for many is that this is not financially feasible. Let alone that it will ever be your turn for a social rental home. One solution is to share a house; together with others, you then rent a house in the private sector and share the (high) burden. Everyone is happy: starters have a place in the city they can call home, and landlords can ask a higher rent for their house (after all, three people with a job can pay more than one or two).

Not a problem, is it?

Maybe so, because there are actually rules about when a rental property may or may not be occupied by a number of adults. So when do you legally rent a house to a group of people?

The answer to this question is not as simple as it seems.

The municipality has also realised this through the results of the study ‘Woningdelen in Amsterdam’ (House sharing in Amsterdam) of February 2016. This study was commissioned by the municipality, in response to the memorandum ‘Room for house dividers’ of January 2014.

The municipality would like to facilitate as many different forms of housing in the city as possible, but of course without compromising the quality of life. In order to prevent excesses, rules have been drawn up that must be met in order for it to be allowed to share rental accommodation. On the one hand, these are rules for non-self-contained dwellings, such as student residences, in which a room is rented out. On the other hand, these are rules for independent residences that can be rented in various ways by a number of people.

So when is a house a student house, and must those rules be met, and when is it a house rented by a group? And when are there ‘abuses’ that should be enforced? The study of February 2016 shows that for almost all parties, tenants, landlords and enforcers, this is not unequivocal.

An example:

  1. Three adults live in a house with three bedrooms and a living room, each using their own bedroom. They pay the rent per person to the landlord.
    b. Three adults live in a house with three bedrooms and a living room, they each use their own bedroom. They pay the rent from a joint account to the landlord.
    c. Three adults live in a house with three bedrooms and a living room, they each use their own bedroom. They pay the rent to one of the three housemates, who pays the full amount to the landlord.

Although they may seem the same, there are legal differences in these situations and they may all fall under a different category. They must comply with different rules on a case-by-case basis in order to be legally rented and let.

These three situations could be seen as follows:

  1. Can be seen as a roomwise rental in a dwelling for which a residence permit is required. For further information, see https://www.amsterdam.nl/wonen-leefomgeving/wonen/bijzondere-situaties/woningdelen/wonen-per-kamer/.
    b. Can be seen as a living group renting a house. For a legal situation, a number of other conditions must also be met in this case, which can be found at https://www.amsterdam.nl/wonen-leefomgeving/wonen/bijzondere-situaties/woningdelen/wonen-per-kamer/.
    c. Can be seen as residence, and is legal if certain rules are met, such as can be found at https://www.amsterdam.nl/wonen-leefomgeving/wonen/bijzondere-situaties/woningdelen/inwonen/.

The differences are small in these situations and therefore there is little support for maintaining a relationship, because the feeling of legal inequality is encouraged. It is therefore possible that for this reason the municipality sometimes does not take action. One effect of enforcement could be that the residents are evicted. Something that the municipality does not aspire to, since the offence is generally not intentionally committed by the residents, nor by the landlord.

The real excesses, in which there are more adult tenants than rooms or in which fire safety is at stake, will of course be the subject of enforcement action.

As a result of the findings in the study, the municipality has decided to adjust part of the policy and create more clarity. It is the intention that this amended policy will come into force at the end of 2016. (See also https://www.amsterdam.nl/wonen-leefomgeving/wonen/bijzondere-situaties/woningdelen/)

If you are a landlord or tenant, and you have doubts whether you are legally (re)renting, do not hesitate to contact us.

Alicia Schoo
schoo@m2advocaten.nl

Can a VvE ban AirBnB or Short Stay?

A previous blog has already extensively discussed the requirements to start a bed-and-breakfast (read this blog here).

A situation that also regularly occurs is that within an apartment building properties are used for AirBnB or short stay. Especially during short stays this can be a nuisance. A group of tourists spending a long weekend in Amsterdam can usually be a bit noisier than the average resident. For example, we are aware of cases where the common areas (corridors, elevator, stairwell) have been damaged.

The question is whether the VvE can prevent such use and how. Most split certificates (based on the model regulations) state that the owner may only use the apartment according to the purpose stated in the deed. If the apartment’s purpose is living, then the question is whether renting for AirBnB or Short Stay is contrary to that purpose.

Case law shows that especially with regular short stay rentals this is contrary to the purpose of living. In several judgments it has been determined that living is a matter of ‘permanent residence’ and that a short stay does not fit in with this. See, for example, this judgment.

For an VVE, it is advisable to explicitly include the ban on renting out for AirBnB or Short Stay in the demerger deed or the internal regulations (the latter is easier to achieve in practice than amending the demerger deed). In this way, there is clarity for all apartment owners. The VVE often also has the possibility to impose fines in case of violation of this prohibition, in order for an extra means of pressure to prevent unwanted rentals. These fines must also be recorded.

However, it is not always the case that a rental on the grounds of AirBnB or short stay is in conflict with the purpose of living. If, for example, an apartment owner is abroad once for 3 months and rents out once for that period, this does not have to detract from the sustainable use as a home. In that case, such an occasional rental does not conflict with the purpose of living. An example of this in this ruling.

It must therefore always be taken into consideration whether a rental for short stay or AirBnB purposes is prohibited. Usually, this rental will be in conflict with the living purpose, so that the VVE can prohibit this use and even impose fines. If it is an occasional rental, it may be different in some cases, but that is an exceptional situation.

Does this situation look familiar to you or would you like to discuss the situation in your home office? Feel free to contact us.

Lawyer Ginio Beij (beij@m2advocaten.nl)