Dutch lease law is changing. In this article a few interesting developments are identified.

Greater flexibility in the cancelation process: leases can be canceled by email

In April 2014, an interesting judgment was rendered by the District Court of Rotterdam (reference ECLI:NL:RBROT:2014:3333), in which the sub-district court judge approved the cancelation of a lease by email, despite the lease explicitly stating that cancelation was possible only by bailiff’s notification or by registered letter and not by email.

In good order

The tenant purported to cancel the lease by email, an email which the landlord had received in good order. The landlord nevertheless relied on the substance of the lease, arguing that the lease had not been canceled in accordance with its own provisions.

Applying the standards of reasonableness and fairness, the court rejected the landlord’s argument, stating that the formal requirement is no longer observed in practice. In addition the law does not explicitly prescribe that failure to comply with this requirement renders the cancelation void.

Flexibility

This judgment means that parties cannot ignore notices of cancelation sent by email, even if they are not followed up with a formal cancelation letter (i.e. a registered letter or a bailiff’s notification). This judgment opens up the possibility to cancel a lease by email at the last minute where doing so by registered post or by bailiff’s notification is no longer possible. In order to do so, the party canceling the lease must be able to demonstrate that the email was in fact received by the other party.

In short, this judgment offers more flexibility for giving notice to landlords which represents a significant improvement for tenants in the Netherlands.

Non-standard clauses in leases: must the court approve them?

There is a visible trend in the Dutch retail market of an increasing number of international operators establishing themselves in the Netherlands. They are such large tenants that they do not really need the protection offered under Dutch landlord and tenant law and are often willing to come to commercial arrangements with their landlords that are contrary to legislation. The question is whether the law permits this.

It is possible to agree on ‘non-standard clauses’, so long as these clauses are approved by the sub-district court. If the clauses are not approved by the court, the tenant may nullify them, rendering them useless to the landlord.

When can the court approve the clauses?

Non-standard clauses can only be approved if they do not seriously jeopardize the tenant’s rights or if the tenant’s societal position in relation to the landlord is such that it does not need the protection.

Providing proper information is key

In short, the law does allow for the possibility for parties to reach more commercial arrangements under which the tenant enjoys less protection. However, it is essential that the tenant be properly informed, that the arrangements are described clearly and that the parties’ intentions are evident from the lease. Clauses that fulfill these conditions stand the best chance of being approved by the court.

Guarantees under landlord and tenant law: Is a change underway?

Following the Aukema/Uni-Invest judgment (Supreme Court judgment of 14 January 2011, ECLI:NL:HR:2011: BO3534) it seemed as though it was no longer possible for landlords to hold banks or third parties liable for future loss of rental income resulting from a tenant’s bankruptcy. The Supreme Court had ruled that a tenant’s bankruptcy is a legitimate form of termination, which means that a landlord is not entitled to damages (consisting of future loss of rental income until such time as the lease would normally have terminated). Practitioners also assumed that future rent could no longer be claimed under bank guarantees and corporate guarantees.

In the more recent Romania judgment (Supreme Court judgment of 15 November 2013, ECLI:NL:HR:2013:1244) the Supreme Court seems to have clarified the impact of Aukema/ Uni-Invest for landlords and tenants. The Supreme Court ruled that, generally speaking, a tenant’s bankruptcy does not change a guarantor’s obligations. This means that a landlord may hold a bank or a guarantor liable for damages resulting from vacancy and that said party is also obliged to pay out the guarantee. However, given that this may not worsen the position of the bankrupt company (i.e. the estate), the bank or third party may not take recourse against the estate. It would seem that the bank and/or the third party will be the victims rather than the landlord.

Naturally, the question is whether the Supreme Court also intended for banks (which often have “strong” counter-guarantees) to remain the victims. That will have to be decided in the future when proceedings are conducted between an estate on the one hand and a bank on the other.

In the recent case of Hansteen/Verwiel on this point, the Amsterdam District Court upheld the Supreme Court’s decision in the Romania case. However, the Court of Appeal has referred only to Aukema/Uni-Invest and decided that the landlord cannot claim under the bank guarantee for the future loss of rental income. It is unclear whether the parties in this matter will go to the Supreme Court.