Delivery of the rented property at the end of the rental agreement

Article 7:224 of the Dutch Civil Code stipulates that the tenant must return the leased property to the landlord at the end of the tenancy agreement. Since the lease of business premises often involves a long term, when the leased property is handed over at the end of the lease agreement, a difference of opinion can easily arise about the manner in which and the state in which the leased property must be returned to the lessor.

In this article I will briefly consider the statutory regulation and the way in which the parties can make supplementary agreements to prevent problems with the delivery of the leased property at the end of the lease.

With regard to the manner in which the rented object must make the rented object available to the lessor at the end of the lease, a distinction is made between the situation in which a description of the rented object has been drawn up at the start of the lease and the situation in which this has been omitted.
The description must describe the concrete actual condition of the rented property. The remark in the rental agreement that the rented property will be delivered “in good condition” is not sufficient. After all, it does not show what that good state actually means. If a description has been drawn up, the tenant is obliged to deliver the rented property at the end of the lease in the condition in which it was accepted according to the description at the start of the lease. For permitted changes and/or additions to the rented property that the tenant has made during the term of the rental agreement and that has been destroyed or damaged due to age, it is in principle allowed to deviate from the description.
If no description has been drawn up, the tenant is assumed to have received the rented property in the state as it is at the end of the rental agreement. It is then up to the landlord to demonstrate that the rented property has not been delivered as accepted at the start of the rental agreement.

Prior to the end of the rental agreement, a pre-inspection can be held during which a report is drawn up. During this inspection, the tenant and landlord walk around the rented property to either check whether the rented property meets the description drawn up at the start of the lease, or (in the absence of a description at the start of the lease) to describe the state in which the rented property is. after which the landlord can consider whether he accepts delivery in that condition or whether he believes that he can demonstrate that the rented property was made available to the tenant in a different or better condition.

When renting business space, it often happens that adjustments are required in the leased property for the purpose of conducting the business. For example, things such as office units, counters, lighting fixtures, etc. are often installed. All these items must in principle be removed at the end of the lease, which can entail considerable costs.
In the event of an incorrect delivery, the lessor is entitled to have the defect repaired himself. The landlord can then charge the ex-tenant for the costs he has to incur for this. In addition to the costs that the landlord must incur, loss or other damage, such as loss of rent if the rented property can only be rented out to a third party at a later date, can also be charged to the tenant.

It often happens that the landlord charges costs for repair work to the tenant that he has not (yet) actually incurred. In various judgments, subdistrict court judges have ruled that those costs must still be borne by the former tenant. The amount of the costs will be determined by the subdistrict court judges in reasonableness and fairness. In the judgment of the Supreme Court of 27 November 1997, NJ 1999, 380, (van de Meer/Beter Wonen), it was confirmed that the tenant is immediately in default if he does not return the rented property correctly at the end of the tenancy agreement. The landlord does not have to give the tenant notice of default for this because the delivery obligation by its nature can only be fulfilled at the time of termination of the lease. At that time, the tenant must return the rented property to the landlord in the correct condition.

If the parties have failed to include an arrangement regarding the delivery in the rental agreement or if one of the parties does not wish to do so, one of the parties may ask the court to order the other party to cooperate in a comparable delivery procedure at the end of the rental agreement.

It is very important to properly record the condition of the rented property, both at the start and at the end of the lease. When the rental agreement comes to an end, it is advisable to carry out inspections and to draw up a report. As a result, all parties are aware of what is expected of them, what the consequences and the specific state of delivery entails, and it can be prevented that discussions or proceedings have to be held afterwards about defects that can no longer be assessed and/or checked.

Ludwig & Van Dam franchise attorneys, franchise legal advice

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