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  • Real Estate
  • September 28, 2018

A recent ruling by the Arnhem-Leeuwarden Court of Appeal underlined the importance of written consent from the lessor in the event of a contract being taken over.

The facts were as follows. A lease agreement was concluded in 1995 under which the partners of a general partnership (a “VOF”) leased business premises. A few years later, the general partnership’s business was incorporated into a private limited liability company (a “BV”) and one of the partners became the managing director of that company. The BV paid the rent to the lessor and also used the leased premises. Again some years later, the BV became insolvent and a dispute arose regarding the arrears of rent. Who should the lessor collect the money from? The (original) lessee considered that the lessor shouldn’t come knocking on his door, arguing that the lease agreement had been taken over by the BV.

In the opinion of the Arnhem-Leeuwarden Court of Appeal, however, there was no question of the BV having taken over the agreement, and the original lessee would have to pay.

What is a contract takeover?

With a contract takeover [contractsoverneming], one of the contracting parties to an agreement (in this case the lease agreement) can transfer its legal relationship with the other party (in this case the lessor) to a third party.

By means of the contract takeover, all the rights and obligations are transferred to the third party.

The law prescribes that a deed must be drawn up between the party that transfers its legal relationship (in this case the original lessee) and the party that acquires that relationship (the BV). In addition, so as to protect the other party (the lessor) – which now suddenly has to accept a new contracting party – the law stipulates that that other party must cooperate with the transfer. That cooperation may take any form.

In the case concerned, the partners could not demonstrate that the lessor cooperated. There was no indication of “BV” or “VOF” on the rent invoices, and the VOF and BV had virtually the same name. Moreover, the managing director of the BV, who had also been one of the partners in the VOF, sometimes personally brought the rent to the landlord. There was scope for finding that the lessor was not in fact aware of the use of the premises by the BV and had not implicitly cooperated in the takeover of the contract.

The outcome might well have been different if the rent payments had clearly been made by another party and the property had actually and visibly been used by another party.

In order to avoid the need to “read in” the cooperation of the third party into the facts and circumstances of the case, it is preferable to have the contract takeover – for which a deed must be drawn up anyway – co-signed by all the parties involved. Better safe than sorry.

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