Is it possible to have a concurrence of a fixed-term lease and a lease with a diplomatic clause for the landlord?
Temporary lease ex art. 7:271 paragraph 1 of the Dutch Civil Code
As of July 1st, 2016, the 2015 Rental Market Transition Act came into effect, this in order to (among other things) increase flexibility in the rental market. From then on it is possible to enter into a temporary rental agreement of 2 years or shorter (in the case of independent properties), which ends by operation of law, provided the landlord notifies the tenant in time, being between 3 and 1 month before the end of the rental period, that the agreement ends. The landlord does not have to give grounds for the termination, which is required by law for a regular lease under penalty of nullity of the termination. If the tenant is not properly notified of the ending, the lease is automatically extended for an indefinite period. The tenant has no rent protection during the (maximum) two year contract-period, but is entitled to terminate the lease on a monthly basis. Thus, if the end of the lease has been correctly notified, it ends by the agreed end date and the tenant – if he does not leave by then – stays there without right or title.
Intermediate tenancy – diplomatic clause pursuant to Article 7:274 paragraph 1 sub b in conjunction with paragraph 2 of the Civil Code
It is also possible to enter into a temporary rental agreement with a diplomatic clause for the landlord, a so-called intermediate tenancy. This is a contract for a definite period with a special ground for termination already included in the lease, because the landlord wants to return to the house and the tenant must vacate the house at the end of the rental period. A fixed-term contract cannot be terminated prematurely, except if the parties both agree. This is often used if the landlord goes abroad temporarily and wants to live in the house again upon his return. The landlord must then invoke this grounds for termination and must also observe the statutory notice period. The tenant is entitled to rent protection and the rental agreement only ends when the tenant has agreed to the termination or the court has terminated the rental agreement. If the rent is not terminated in time, the lease will be extended for an indefinite period. In this type of rental agreement (intermediate tenancy) it is possible to enter into several successive intermediate tenancies. It is important that the extension is always explicitly agreed before the rental period has expired.
In practice it is often assumed that every lease of 2 years or less is a lease that ends by operation of law pursuant to Article 7:271 paragraph 1 in conjunction with Article 7:228 of the Dutch Civil Code (variant 1). But is this really the case? The legislator did not really pay attention to the concurrence of a lease of 2 years or shorter and a lease with a diplomatic clause for the landlord of 2 years or shorter.
Finally there is clarity.
The judge in Haarlem has made a ruling on this. It ruled that if the lease contains a rental period of 2 years and also a diplomatic clause, the text of the contract and the intention of the parties must be examined. In the case on which he had to rule it was clear from the lease that the parties had intended to conclude a temporary lease with a diplomatic clause. This followed from the fact that it had been explicitly stipulated that it was not a lease shorter than 2 years pursuant to Section 7:271 (1) of the Dutch Civil Code and that an interim ban on termination for the duration of the fixed term had been agreed upon for both the tenant and the landlord (a key clause).
Furthermore, the court considered:
“The question now is whether in the present case there is a concurrence between a lease based on a diplomatic clause (ex Article 7:274 paragraph 1 sub b jo paragraph 2 BW) and a lease for two years or shorter (ex Article 7:271 paragraph 1 BW). The relationship between the two statutory regulations was not discussed during the creation of the Rental Market Transition Act 2015 (cf. Bulletin of Acts and Decrees 2016,158), which introduced Section 7:271 (1) of the DCC, but it is clear that the purport of both regulations is different (cf. Parliamentary Papers II 2015/16, 34373, 3, pp. 12 and 17-18 and No. 216). It follows that it was not the intention to exclude the applicability of Section 7:274 (1) (b) in conjunction with Section 7:274 (2) of the Dutch Civil Code to fixed-term rental agreements of up to two and up to five years, respectively. After all, any other interpretation would lead to unacceptable situations, for example that tenants would be allowed to give notice in the event of a lease of up to two years and not in the event of a lease of two years or longer.”
This has finally made it clear that not all leases of two years or less in the case of independent properties fall within the scope of Section 7:271 (1) of the Dutch Civil Code. It is also possible to conclude a temporary lease of two years or less with a diplomatic clause for the landlord. In that case the parties would have to indicate very clearly that they do not intend to enter into an agreement pursuant to Article 7:274 paragraph 1 under b of the DCC. And that the lease is entered into for a definite period and that after the expiration of that period the tenant must vacate the leased property because the landlord has returned to it, and also a prohibition on early termination must be included in the lease.
If you wish to rent out your property temporarily and have the option to return, it is useful to be well informed about which of the two forms of temporary rental is best for you, as both variants have advantages and disadvantages. Brugrecht lawyers can help you with this and also draft the right lease for you.
If you have any questions or would like advice on fixed-term lease or diplomatic clause matters, please feel free to contact us.
For more information you can contact Brugrecht advocaten at +31 (0)70-326 328 1 or firstname.lastname@example.org
This article is current at the date of publication. Due to continuous developments in the law, its content may no longer be up to date at a later date.