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Profiting from someone else’s default in rent law

Sale does not break a lease In rental law, if the owner sells a leased property, the lease remains in place. The tenant’s rights then...

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Sale does not break a lease

In rental law, if the owner sells a leased property, the lease remains in place. The tenant’s rights then remain unchanged. The main rule “buy does not break a lease” articulates this system. This rule may be unattractive to a buyer of a leased property. After all, the latter must continue to tolerate the tenant. In a case that one of our lawyers handled recently, the buyer of an unmanned gas station tried to get out of this rule with a ruse. Our client, the tenant of the gas station, threatened to lose out, but the ruse was seen through. This led to a favorable ruling for the client by the Central Netherlands District Court. This article discusses the ruling.

Case study

The gas station was part of a larger business park. This terrain was leased by an entrepreneur with a garage business. This garage owner leased the gas station on the basis of a sublease agreement to our client, who in turn took care of the operation of the gas station. The garage owner became elderly and developed Alzheimer’s disease. He was no longer able to keep the garage running. A third party saw commercial opportunities and decided to buy the entire business park including the garage and the gas station.

Put on the block

As explained above, this would – should – have no consequences for our client’s lease. By law, his lease would simply remain in place. But it turned out that shortly before the sale, the garage owner had terminated his own rental agreement with the property owner, even though this agreement could not be terminated prematurely. The new owner then took the position that he no longer had anything to do with our client. He believed that he had purchased the business premises free of rent. Although our client still had a sublease agreement with the garage owner, he was now out of the picture. The new owner felt he was not bound by anything as a result. He presented our client with a choice: leave or agree to a (much) higher rent.

List

After his own investigation, it turned out that the buyer had pulled a ruse. The garage owner had not spontaneously terminated his main rental agreement, but on the buyer’s instructions. This was a legal trick to get out of our client’s rent protection. The new owner thus improperly gained a negotiating position to pressure our client into agreeing to a rent increase.

Court’s verdict: profiting from someone else’s default

Our client did not leave it at that. In court proceedings, client claimed damages from the new owner. The court agreed with our client. It ruled that our client had sufficiently demonstrated that the buyer had instigated the garage owner with a premeditated plan to dupe our client. One factor was that the garage owner was in a vulnerable position due to his (health) situation. The buyer had taken advantage of this. Because the buyer then tried to profit financially from this (forcing our client to pay a higher rent), the court ruled that the buyer had committed an unlawful act towards our client. The court subsequently ordered the buyer to compensate all of our client’s damages.

Decisive approach

This ruling shows that an incisive approach can make all the difference. As a result, the ruse was exposed and the tort could be proven. This applies in rental law, but of course also outside of it. The lawyers at Wille Donker are happy to be of service to you as well.