“Lease Goes before Sale”: How Far Does Dutch Law Protect the Tenant?
By Joost Donkersloot, TeekensKarstens advocaten notarissen
In Dutch rental legislation, there is an adage: “lease goes before sale”. In short, this means that a lease agreement does not end if the rented space is sold and changes ownership. In practice, however, it is sometimes assumed too easily that the tenant does not suffer from a transfer of
ownership of the rented property.
The principle of “lease goes before sale” is enshrined in Dutch law in Section 7: 226 of the Dutch Civil Code. Although this article is of a mandatory legal nature, this rule contains two important limitations: 1) Only the rights and obligations are transferred that become due and payable after the transfer, and 2) the lessor is only bound to those stipulations that are immediately related to having the right of use and the rent to pay.
A stipulation that, according to the judges in the Netherlands (usually) does not pass, is a pre-emptive right of purchase of the rented property, usually because it has also been judged that the pre-emptive right of purchase does pass to the new landlord if the intention to purchase is expressly involved in setting the level of the rent.
Also, a clause, in which the tenant in a shopping mall was protected against the location of another store in his branch, did not pass to the new owner, according to the judge in Breda. The judge did, however, help this tenant. Because the new landlord did not implement the stipulation, the tenant could claim adjustment of the lease on this point on the basis of the doctrine of “unforeseen circumstances”. Explaining that could be subject of a separate article
Joost DonkerslootTeekensKarstens advocaten notarissen, Leiden, Alphen aan den Rijn, Amsterdam, The Netherlands
T: +31 71 535 80 00
TeekensKarstens advocaten notarissen (TK) is the largest legal-services provider in the area called “Rijnland”, centrally located between Amsterdam, The Hague and Utrecht. From its offices in Leiden, Amsterdam and Alphen aan den Rijn, over 50 lawyers and notaries operate and provide full service to mainly large and medium enterprises, (semi-) public sector and individuals.
Joost Donkersloot works at TK in Leiden as a senior attorney specialising in real estate. He is also a member of the GGI Real Estate Practice Group. Within real estate, he focuses on rent law and apartment rights. In addition, he specialises in the leisure business. He is also a member of TK DACH, the firm’s German desk.
Published: Real Estate, No. 09, Spring 2019 l Photo: Uwe Rieder