Tenancy law

Under Dutch law, a rental agreement is an agreement whereby one party makes something available (for example, a business premise or a car) to another in return for a remuneration; payment of the (rental) price. The lease agreement often entails immovable property such as commercial real estate or a residence. Dutch tenancy law most of the relevant issues. In this respect predominantly the tenant of a personal residence and retail space are provided with a range of protective rules. The lease agreement will cover deviations from or additions to the statutory requirements, for example issues such as: rental price, rental period, provisions, notice of termination, bankruptcy, eviction and subletting.

Board of the Association of Owners (VVE)

When a building is divided into apartments that can be owned and mortgaged separately, it is obligatory under Dutch real estate law to establish a Building Association, also called Association of Owners (in Dutch: VVE). Purchasers of apartments automatically become members of the VVE, which membership cannot be renounced and continues as long as the apartment is in the possession of the purchaser.

The apartment ownership right grants the member with a right to the exclusive use of that apartment as well as a joint entitlement to the communal spaces of the building. This right is transferable and may be secured by a mortgage. The building association is the Dutch legal entity that actually owns the building. It represents the interests of the apartment owners and manages the common areas within the building, such as the stairways and the elevator. Similar to the ordinary association under Dutch law, the VVE is run by a board of directors. For large VVE’s, the board often consists of a professional external property manager. With smaller VVE’s, it are often the apartment owners themselves who constitute the board. The board legally represents the VVE and it is mainly responsible for the finances and maintenance. The VVE should also be aware that its board members are subject to directors’ and officers’ liability under Dutch law. The board members are appointed and dismissed by the association meetings.

Sale and purchase of Real Estate in the Netherlands

In practice, the purchase or sale of a business premise, shop or residence (or a portfolio) in the Netherlands often occurs by the same pattern. After selection, there is an offer, which at first may be indicative. In the Netherlands, an offer is generally made subject to a number of preconditions. These are also called conditions for dissolution, such as a building construction survey clause or a financing arrangement clause. From a corporate perspective, the principle agreement is often laid down in a Letter of Intent or a Term Sheet. Thereafter the technical, financial, legal due diligence and tax due diligence will take place. In general, then the Dutch law sale and purchase agreement is drawn up and the bank financing and securities are being arranged. Once the purchase agreement has been evaluated, agreed and signed, the building(s) will be transferred and the payment and establishment of the securities will be executed through the Dutch civil-law notary.

Real Estate contracts

The purchase and sale of real estate, the financing of real estate, mortgage rights and the rental of property know its own particular contract according to Dutch law. Notably the rental or lease of office space is legally regulated differently compared to the rental or lease of residence or a retail space. The rental agreements therefore differ on subjects such as the options for temporary rental, price increases, termination and the possibility of eviction.

Dutch Real Estate specialists

Penrose has lawyers specialised in real estate matters who are pleased to advise and assist you. Please do not hesitate to contact us.