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  • Real Estate
  • 16-03-2018

On 16 February last, the Dutch Supreme Court rendered a judgment concerning the scope of the removal and furnishing expenses within the meaning of article 297(1) of Book 7 of the Dutch Civil Code (‘DCC’). At a lessor’s request, the court can terminate a lease for commercial premises within the meaning of article 290 of Book 7 DCC. That regime covers shops, restaurants, hotels and other commercial premises. Article 297 of Book 7 DCC provides that in its judgment granting the lessor’s claim to terminate the lease, the court may specify an amount payable by the lessor to the lessee as a contribution towards the lessee’s removal and furnishing expenses.

A large volume of case law of the lower courts exists concerning the question of what cost items fall within the scope of the contribution pursuant to article 297 of Book 7 DCC and what percentage of the costs must be paid. Nevertheless, a lot of uncertainty still exists, as the rulings in the court cases vary. Often, lessees mistakenly think that they are entitled to full compensation of the costs.

In its judgment of 16 February, the Supreme Court clearly answered the question of whether goodwill, payable by the lessee in connection with new premises, falls within the scope of article 297 of Book 7 DCC. The Supreme Court upheld the court of appeal’s judgment:

"The text of article 297(1) of Book 7 DCC does not provide any indication that "removal and furnishing expenses" also include consideration for goodwill payable in connection with new premises. After all, the wording of the provision concerns the actual occupation of new commercial business premises (and the associated costs), while consideration for goodwill concerns, in short, the earnings projections of the business to be carried out in the new commercial premises."

The foregoing means that the lessee is not entitled to compensation for goodwill it has to pay. This payment of goodwill by the lessee must not be confused with the compensation for goodwill laid down in article 308 of Book 7 DCC, as the latter is compensation that the lessee is paid for the benefit that the lessor enjoys as a consequence of the fact that the leased premises are used for operating a business similar to that conducted by the former lessee.

It had already been established in case law of lower courts that an amount payable by a lessee for fixtures, fittings and/or equipment left behind in the new premises or other costs payable by a lessee to empty new commercial premises do not fall within the scope of the contribution towards removal and furnishing expenses.

Now that this Supreme Court judgment has been rendered, many lessees can cross yet another cost item of their lists. 

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