18 July 2022
On 24 December 2021, the Supreme Court ruled that contractual joint tenants may invoke the separation arrangement of Article 7:267(7) of the Dutch Civil Code.
Tenants who rent together but want to separate can ask the court to assign the rental relationship. The court can then assign the rental relationship to one or several of them. For the other tenants, the rental relationship comes to an end. The ruling has far-reaching implications for the position of a landlord. He has knowingly entered into a tenancy agreement with several tenants. Here, I will discuss contractual joint tenancy and the separation arrangement of Article 7:267(7) of the Dutch Civil Code. I will also discuss the consequences of the Supreme Court’s ruling for the landlord.
Joint tenancy exists where two or more persons are each fully responsible for fulfilling the obligations of the tenancy agreement. In legal jargon, this is called ‘joint and several liability’. The landlord can hold each of them liable, for example for payment of the rent.
Dutch law recognises two types of joint tenancy: legal joint tenancy and contractual joint tenancy.
Legal joint tenancy
As the word suggests, one becomes a legal joint tenant by virtue of the law. Did someone marry a tenant or enter into a registered partnership and has his/her main residence in the rented property? Then he/she automatically becomes a joint tenant on the basis of Article 7:266(1) of the Dutch Civil Code.
Persons other than spouses or partners can also become joint tenants. This happens on the basis of Article 7:267(1) of the Dutch Civil Code. A legal joint tenancy exists if they have maintained a long-term joint household. With at least one tenant for two years. Or when they have their main residence in the rented property and the landlord agrees to the joint tenancy. If the landlord does not agree, cohabitants can request the court to determine the joint tenancy.
Contractual joint tenancy
In addition, one also becomes a joint tenant by entering into a tenancy agreement with one or more other persons. From the start of the tenancy agreement, each of these persons are then a joint tenant under the agreement. They are each individually a party to the tenancy agreement. An important point is that contractual joint tenants can, in principle, only give notice of termination of the tenancy agreement jointly. One of them cannot individually cancel ‘his/her share’.
In the law a ‘separation rule’ applies to both types of legal joint tenancy. These separation rules are laid down in Articles 7:266(5) and 7:267(7) of the Dutch Civil Code. The separation rules provide that legal joint tenants who stop cohabiting – for example, because they have ended their relationship – may each request the court to assign the right to rent to one or several of them. If the court grants the request, the court will determine when the tenancy will end for the departing joint tenants. From that date, the landlord cannot hold the departing joint tenants liable for fulfilment of the tenancy agreement.
Legislative history shows that the separation rules are the result of a balancing of interests between, on the one hand, the interests of a landlord not to lose tenants involuntarily and, on the other hand, the interests of a joint tenant not to be bound to a tenancy agreement for a rented property where he/she no longer resides. The legislator balanced the interests in favour of the joint tenant and laid this down in Articles 7:266(5) and 7:276(7) of the Dutch Civil Code. Both articles aim to give similar protection to spouses/partners and other cohabitants.
In 2007, the Supreme Court ruled that when spouses/partners jointly enter into a lease agreement and thus are contractual joint tenants, they can also invoke the separation rule of Article 7:266(5) of the Dutch Civil Code. They would in fact have become legal joint tenants if they had not entered into the tenancy agreement together. The Supreme Court considered that they should be afforded the same protection as spouses/partners who are legal joint tenants.
Following this ruling and in view of the aforementioned similar protection under both separation rules, the Supreme Court ruled on 24 December 2021 that legal joint tenants who are not spouses/partners but who are also contractual joint tenants, are also entitled to rely on Article 7:267(7) of the Dutch Civil Code. The Supreme Court made this decision because the landlord had agreed to multiple tenants. The consent required by Article 7:267(7) of the Dutch Civil Code was therefore fulfilled. These contractual joint tenants should therefore enjoy the same protection as legal joint tenants within the meaning of Article 7:267(4) of the Dutch Civil Code.
The ruling of the Supreme Court has far-reaching implications for the position of the landlord. In 2007 and again on 24 December 2021, the Supreme Court ruled that a court decision based on the separation rules, in which it determines that the tenancy agreement terminates for the departing joint tenants, also applies to the landlord. This means that a landlord who deliberately entered into a tenancy agreement with several contractual tenants and was thus able to hold several persons liable for fulfillment of the tenancy agreement, may lose its rights towards these tenants in court proceedings. Neither the landlord nor its interests are involved in the proceedings. The joint tenants are not even required to notify the landlord of the court ruling.
This ruling by the Supreme Court has relinquished the main rule that contractual joint tenants can only terminate the tenancy agreement jointly. As a result, they are free to agree among themselves to whom the rental relationship should accrue in order to subsequently terminate the tenancy agreement with respect to the departing tenant, either through default or other proceedings.
It is not possible to include provisions in the tenancy agreement regarding the continuation of the rental relationship by one or more tenants upon the departure of the other tenants. The separation rules are mandatory law, so they cannot be deviated from in the tenancy agreement. The landlord is powerless in the face of the ruling by the court.
The ruling of the Supreme Court of 24 December 2021 has far-reaching implications for the position of the landlord. Joint tenants who end their cohabitation may request the court to assign the rental relationship to one/some of them. The tenancy agreement then ends for the others. As a result of the ruling by the Supreme Court, contractual joint tenants who have deliberately chosen to enter into the tenancy agreement jointly, with all its obligations, can also easily evade liability in this way. From the end date determined by the court, the landlord cannot hold the departing joint tenants liable for fulfillment of the tenancy agreement. The landlord is not involved in any way and its interests are not part of the assessment. It is obliged to tolerate the ruling and cannot undertake any action against it.
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