Dutch Commercial property leases are regulated by statute law. Different regimes apply to each category of property lease. As a general rule, the primary use of the premises determines the applicable legal regime.
Retail Business Premises
This category of premises mainly consists of shops, hotels, bars and restaurants. The rule of thumb being that the premises is open to the public. Rental agreements for this category must either be concluded for less than two years, or for at least five years. For lease agreements of less than two years duration no further mandatory rules apply. For agreements of longer duration, the lessee has the option to prolong the agreement to at least ten years. These Retail Business rental agreements do not terminate automatically upon lapse of their duration, but must be terminated by giving notice. Notice is subject to strict formalities:
- at least one year’s notice by registered letter or bailiff’s writ
- if given by lessor, the grounds for the notice must be specified in the notice.
If notice is given by the lessor, and the lessee does not agree with the termination, the lessor must apply to the court for a termination order. Notice by lessor after the first five year term is only legally possible in case of misconduct of the lessee or an urgent need, on the part of lessor, to use the premises himself for retail business purposes. In case of notice by the lessor after the ten year term (or at a later moment), the court must balance the parties’ interests, but must allow action for termination if one or more of a limited number of grounds is present. When the matter is brought before the court, the agreement only ends after the court has given its final judgment.
The law provides that the lessee who transfers his business to another party, may ask the court to substitute the new owner in his place as a lessee. The lessor is not able to prevent this from happening, as long as the new lessee is financially capable of fulfilling their obligations under the lease.
Termination of Retail Business leases
Retail Business leases can be terminated either by agreement, judicial dissolution (in cases of default), the lessee’s decision to give notice, or a court decision after the lessor’s notice based on one of the (limited) grounds listed in the Dutch Civil Code.
Offices and other Business Premises
In case of offices, factories and other buildings not covered by specific rules, the parties are free to agree on the terms of the contract. For termination of the lease by the lessor, it is necessary that the lessor summons the lessee to vacate the premises, by registered letter with receipt, or by bailiff’s writ. Thereafter, the lessee enjoys a two-month protection period during which it may decide to submit a request for prolongation of the lease to the cantonal court. The court will base its decision on an assessment of the interests of both parties. In accordance with the legislation the court can grant the request for prolongation for a maximum of three one-year periods.
Termination of Office leases
Office leases end automatically. If the lessee does not use the described protective prolongation period to extend the lease, the lessor may commence eviction proceedings.
General
The Dutch Civil Code contains a number of provisions generally applicable to rental agreements, of which the most important are:
- The Lessor is responsible for damage resulting from visible or hidden defects in property.
- The lessee may sublet in whole or in part, if reasonable objections of the lessor are not anticipated.
- Major maintenance and repairs are for the account of the lessor.
- Minor repairs and day-to-day maintenance are for the account of the lessee.
The general provisions mentioned above do not form part of compulsory law, and are frequently set aside in individual contracts. Lessors often make use of general conditions, which deviate from the Dutch Civil Code. It is therefore advisable to seek advice on the contract and the applicable general conditions from one of our lawyers before taking action.
Further information
For additional information please feel free to contact Daniël van Genderen.
