The Real Estate Council of the Netherlands (the “ROZ”) published a new model bank guarantee on 4 June 2018. It can be downloaded (together with instructions) from the ROZ website.
In the light of the rulings by the Dutch Supreme Court on 14 January 2011 (Aukema q.q./Uni-invest), 15 November 2013 (Romania) and 17 February 2017 (Bouwgros), banks are in general no longer prepared to issue guarantees on the basis of the old ROZ model. They consider the risk too great that in the event of compensation for loss/harm suffered by the lessor as a result of the lessee’s insolvency (i.e. “loss owing to vacancy” [leegstandschade]), no recourse will be possible against the counter-guarantee and they will then be left to foot the bill. Each bank has therefore started to use its own model, which provides for “excluded claims”.
In practice, this is problematical. Agreements regularly refer to the (old) ROZ model bank guarantee, without a lessee being aware that he cannot comply with it. That this can have major consequences for a lessee is clear from a judgment by the Court of Appeal in The Hague dated 16 January 2018. In that case, the lessee was required to provide a bank guarantee based on the (old) ROZ model, but instead the bank issued a bank guarantee with “excluded claims”. The lessor in question refused to accept this and demanded a bank guarantee in accordance with the agreed model. After more than six months, the lessee succeeded in having a bank guarantee issued by a different bank. Over the intervening period, however, the lessee had to pay the lessor a penalty amounting to a total of EUR 24,750. This will cease to be a problem for lessees when the new ROZ model becomes the standard bank guarantee within the market.
For lessors, the use of “excluded claims” is a disadvantage. However, in cases where a bank guarantee is required for an amount equal to the payment obligation for a period of 3 months – which is usually the case – that disadvantage is only limited. The amount of the bank guarantee is generally already “used up” before it can be applied to cover loss owing to vacancy. The new ROZ model therefore includes a provision for “excluded claims” in line with the banks’ own current models. It provides as follows:
“If the lease is terminated by notice of termination being given on the basis of one of those clauses, the following claims shall be excluded from this bank guarantee:
a. the claims for damages for loss of rent which would be due after termination of the lease by notice of termination pursuant to Section 39, Section 238 or Section 305 of the (Dutch) Bankruptcy Act [Faillissementswet], and
b. the (loss/harm) compensation claims agreed between lessee and lessor relating to loss of rent as referred to in a.”
The intention is for the new ROZ model to preclude disagreement as to which model is to be used. This does, however, require banks and lessors to actually use this new ROZ model. Unfortunately, the ROZ did not succeed in creating the new bank guarantee in consultation with the Dutch Banking Association (the “NVB”). According to the instructions for the new model, the ROZ and the NVB failed to agree on the wording of the lessor’s request for payment and on the NVB’s wish to give the bank guarantee a finite character. Those two points, incidentally, are not related to the recent rulings by the Supreme Court. Moreover, the ROZ did make some concessions with regard to the request for payment. The lessor’s request for payment will only be valid if it also comprises a written statement by the lessor or its successor(s) in title to the effect that the request does not relate to the claims as referred to under a. and b. above.
Where day-to-day leasing is concerned, it is to be hoped that the Dutch banks and lessors will endorse the new ROZ model bank guarantee, so that disagreement as to the text of the guarantee will soon be a thing of the past.