Defects

Defects

The law contains a separate provision regarding defects in a property. A defect exists when the leased property cannot provide the tenant with the enjoyment that a tenant could reasonably expect upon entering into the lease agreement. When assessing whether a defect exists, one does not look at the actual condition of the leased property, but at what the condition ought to be. As soon as a defect exists, the landlord is obliged to remedy it, unless the defect cannot be remedied or entails unreasonable expenses.

If the landlord fails to remedy the defect, the tenant may do so (or have it done) themselves and charge the reasonable costs incurred for this to the landlord. The tenant may do this by offsetting the costs against the rent. Additionally, if the defect is not remedied, the tenant may claim a proportionate reduction in the rent.

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 tenancy law. Contact us to discuss the possibilities.

What is a defect? ​​The legal framework (Article 7:204 of the Dutch Civil Code)

The term “defect” is broadly defined in Article 7:204, paragraph 2, of the Dutch Civil Code (BW). A defect is a state or characteristic of the leased property, or another circumstance not attributable to the lessee, as a result of which the property cannot provide the lessee with the enjoyment that a lessee could reasonably expect upon entering into the agreement from a well-maintained property of the type to which the agreement relates. It therefore concerns not only material defects such as overdue maintenance, leaks, or structural defects, but also immaterial defects: consider a missing permit, a public law restriction, or an easement that renders the agreed use of business premises impossible. Conversely, a factual disturbance caused by a third party (for example, noise nuisance from a neighbor) without a claim of right does not qualify as a defect pursuant to Article 7:204, paragraph 3, BW.

To our tenancy law practice, it makes a difference whether you are an international group leasing dozens of locations or the baker on the corner occupying a single building. The standard remains the same, but the impact of a defect – and the importance of a quick resolution – differs by situation. Our lawyers and in-house counsel translate the legal framework into your specific interests.

Landlord's duty to remedy and notice of default (Article 7:206 of the Dutch Civil Code)

Pursuant to Article 7:206 of the Dutch Civil Code, the landlord is obliged to remedy defects at the tenant's request, unless this is impossible or requires expenses that cannot reasonably be expected of the landlord in the given circumstances. The duty to repair does not apply to minor repairs that are at the tenant's expense pursuant to Article 7:217 of the Dutch Civil Code, nor to defects for which the tenant is liable to the landlord.

It is crucial that the tenant must first give the landlord the opportunity to remedy the defect. Only when the landlord is in default following a proper notice of default may the tenant remedy the defect themselves (or have it remedied) and recover the reasonable costs from the landlord, if desired by offsetting them against the rent. A well-drafted written notice of default with a reasonable repair period is half the battle in this regard. Our legal experts will draft this for you and safeguard your evidentiary position, ensuring you are not left empty-handed afterwards.

Rent reduction for defects (Article 7:207 of the Dutch Civil Code)

If a defect diminishes the enjoyment of the leased property, the tenant may claim a proportionate reduction in the rent pursuant to Article 7:207 of the Dutch Civil Code. This reduction runs from the moment the tenant has properly notified the landlord of the defect (or the landlord was otherwise sufficiently aware of the defect) until the moment the defect has been remedied. The tenant is not entitled to a reduction for defects he knew about at the time the agreement was entered into, nor for defects he should have repaired himself.

For residential property, this regulation is mandatory law. For business premises – retail space (Article 7:290 of the Dutch Civil Code) and other business premises such as offices and warehouses (Article 7:230a of the Dutch Civil Code) – the situation is different, as explained below.

Compensation for damages and consequential damages (Article 7:208 of the Dutch Civil Code)

In addition to repair and rent reduction, a defect can lead to consequential damages: spoiled stock, loss of revenue due to temporary closure, and damage to inventory. Article 7:208 of the Dutch Civil Code regulates when the landlord must compensate for such damages. This is the case if the defect is attributable to the landlord, or if the defect was already present at the time the agreement was entered into and the landlord knew or ought to have known about it at the time, or if the tenant was informed by the landlord at the time that the property did not have the defect. The question of whether – and to what extent – ​​the landlord is liable for consequential damages is often the most significant point of contention. Our lawyers assess attribution, substantiate the damages, and litigate where necessary.

Commercial premises: deviation from the law and the ROZ conditions

Unlike in the case of residential property, the regulations governing the lease of commercial premises are largely of a regulatory nature. Parties may deviate from this in the lease agreement. In practice, this is almost always done via the widely used model contracts and general provisions of the Council for Real Estate (ROZ). These ROZ conditions generally exclude the right to a rent reduction (Article 7:207 of the Dutch Civil Code) and severely limit liability for consequential damages (Article 7:208 of the Dutch Civil Code). However, the exclusion fails where the landlord knew or ought to have known of a defect at the start of the lease: Article 7:209 of the Dutch Civil Code prohibits the exclusion of liability for such defects in advance.

For a tenant of commercial premises, it is therefore essential to know before signing which rights are being contracted away; for a landlord, it is crucial to record exclusions in a watertight and valid manner. If a rent reduction cannot be achieved through contractual means, the principles of reasonableness and fairness (Article 6:248 of the Dutch Civil Code) or unforeseen circumstances (Article 6:258 of the Dutch Civil Code) sometimes remain. Whether you are an international group or the entrepreneur around the corner – we review your lease agreement and general terms and conditions and advise on the room for negotiation.

Our approach: from advice to proceedings

A defect dispute begins with the facts and the contract. We first determine whether a defect exists legally, what the lease agreement and general provisions regulate regarding this, and which remedy—repair, rent reduction, compensation, or (partial) termination—best suits your objective. Subsequently, we put the landlord or tenant in default, conduct negotiations, and litigate before the sub-district court where necessary. Because our mixed teams consist of both lawyers and in-house counsel, we switch smoothly between pragmatic advice and robust litigation—suited to the interests and budget of your company.

Frequently asked questions about defects

When is something legally considered a defect?

A defect is any circumstance attributable to the landlord as a result of which the tenant does not have the enjoyment that he could reasonably expect from a well-maintained property (Article 7:204 of the Dutch Civil Code). Therefore, the determining factor is not the actual condition, but what the tenant could reasonably expect.

Do I need to notify the landlord first before I carry out the repairs myself?

Yes. You must put the landlord in writing of the default and grant them a reasonable period of time. Only in the event of default may you carry out repairs yourself (or have them carried out) and offset the reasonable costs against the rent (Article 7:206 paragraph 3 of the Dutch Civil Code).

Can I lower the rent as long as the defect has not been resolved?

For residential property, you are entitled to a proportional reduction in rent (Article 7:207 of the Dutch Civil Code). For commercial property, this right is often excluded in the ROZ terms and conditions; therefore, always have your contract checked.

Who pays for my loss of revenue due to a defect?

Consequential damages are borne by the landlord pursuant to Article 7:208 of the Dutch Civil Code if the defect is attributable to him or if he knew of it at the outset. In the case of commercial premises, this liability may be contractually limited, but never for defects known at the outset (Article 7:209 of the Dutch Civil Code).

More about our tenancy law

Defects are one part of our broad Tenancy Lawpractice. If the dispute escalates, termination of the lease agreement come into play. Furthermore, we advise on rent adjustments and the renovation of the leased property. Feel free to contact us to discuss your situation without obligation – from an international corporation to the baker on the corner.