Leasehold lawyer & legal expert

Leasehold

Leasehold grants the right to use real estate (a house, land) owned by another. The lessor receives a periodic fee for leasing out their property (the ground rent). In many cases, the lessor is the municipality. The municipal leasehold system is increasingly being abandoned, causing plots of land to become available for sale. Do you have any questions about leasehold?

We have the knowledge and expertise to assume diverse roles: from advice to dispute resolution. We have an experienced team of lawyers and legal experts in the field of leasehold. Contact us to discuss the possibilities.

Hereditary lease within property law

Erfpacht is one of the limited real rights recognized by Dutch property law. The right is regulated in Article 5:85 of the Dutch Civil Code and grants the leaseholder the authority to hold and use the immovable property of another. Unlike tenancy or lease, it concerns a property right: it is transferable, can be encumbered by a mortgage, and is effective against third parties. To properly understand the position of erfpacht, one should place it alongside related rights within Property Law, such as the right of superficies and the easement. Whether you are an international group with a land portfolio or the baker on the corner whose business premises stand on leasehold land: our lawyers and in-house counsel know the intricacies.

The canon and canon revision

The ground rent is the periodic payment that the leaseholder pays to the landowner for the use of the land (Article 5:85, paragraph 2 of the Dutch Civil Code). The amount of the ground rent and the method of revision are set out in the deed of establishment and the applicable general leasehold conditions. In the case of continuous or perpetual leasehold, the ground rent is revised periodically, often linked to the land value (WOZ) or an interest rate index. Disputes regularly arise regarding the interpretation of the revision provisions or regarding a rise in the ground rent perceived as unreasonable. We assess whether the revision is legally valid and whether a clause is voidable under the rules regarding general terms and conditions.

Amendment of the leasehold conditions

Once established, leasehold conditions remain in effect until both parties agree to an amendment. The landowner cannot unilaterally impose new conditions, except within the limits set by the deed and the law. Pursuant to Article 5:97 of the Dutch Civil Code, after a period of twenty-five years, the court may order the amendment or termination of the leasehold due to unforeseen circumstances. In its case law (including 31 October 2014, ECLI:NL:HR:2014:3071), the Supreme Court has ruled that a new ground rent system is not automatically contrary to reasonableness and fairness. We review proposed amendments and conduct proceedings where necessary.

Termination, cancellation and compensation

A leasehold can be terminated in various ways. In principle, the leaseholder can terminate the lease himself (Article 5:87, paragraph 1, of the Dutch Civil Code). The landowner can terminate the lease if the leaseholder fails to pay the ground rent for two consecutive years or seriously defaults on his obligations (Article 5:87, paragraph 2, of the Dutch Civil Code). Termination is effected by bailiff's writ, observing the statutory time limits (Article 5:88 of the Dutch Civil Code). After the termination of the leasehold, the leaseholder is entitled to compensation for the value of any remaining structures and installed works (Article 5:99 of the Dutch Civil Code), and he may exercise a right of retention until that compensation has been paid (Article 5:100 of the Dutch Civil Code).

Transfer, mortgage and sub-lease

The leasehold right is transferable and can be encumbered with a mortgage, making it a fully financeable right. The landowner may stipulate in the deed that transfer or allocation may only take place with his consent; if he refuses without reasonable grounds, the sub-district court may replace the consent (Article 5:91 of the Dutch Civil Code). Sub-leasehold is also possible, unless the deed prohibits it (Article 5:93 of the Dutch Civil Code). The transfer of a leasehold is a delivery of registered property; see also our page on transfer and delivery and on registered properties.

Common leasehold disputes

In practice, most leasehold issues concern a sharply increased ground rent upon revision or renewal, the interpretation of provisions in the notarial leasehold deed, the validity of a notice of termination due to arrears in ground rent, and disputes regarding compensation at the end of the lease. Additionally, questions arise regarding the buyout of leasehold and switching to freehold ownership, now that more and more municipalities are phasing out the municipal leasehold system. We advise and litigate for both landowners and leaseholders, ranging from sole proprietorships to large real estate developers.

How MKB Juristen helps you with leasehold

MKB Juristen works with mixed teams of lawyers and in-house counsel. This combination makes the difference: the strategy of a lawyer with the business perspective of a legal expert. We review leasehold deeds and general terms and conditions, advise on entering into, amending, or terminating leaseholds, negotiate ground rent revisions and buyouts, and assist you in proceedings before the sub-district court or the district court. Whether you are an international corporation or the entrepreneur around the corner, you receive clear, practical legal assistance. Feel free to contact us to discuss your leasehold matter without obligation.