Eviction of Commercial Property Due to Rent Arrears

Failure to pay rent (on time) constitutes a breach, which may justify termination of the lease.

In Practice

As a rule of thumb, a three-month rent arrears threshold is used, but in practice, it heavily depends on all circumstances, such as any previous payment issues, mutual agreements, and future prospects.

A payment of the arrears does not undo the breach that occurred in the past (Supreme Court, 11 January 2002, ECLI:NL:PHR:2002, para. 3.4, Schwarz/Gnjatovic). Nonetheless, a judge will take the current rent arrears into account before the hearing in any claim for termination of the lease and/or eviction of the property. In other words, if a tenant makes a payment just before the hearing, there is always a risk that the landlord’s claims may be dismissed.

Summary Proceedings

A main proceeding, including appeals, can take years; hence, many landlords opt to request eviction in summary proceedings as an interim measure. A summary hearing can be scheduled within a few weeks. Although the lease is not terminated after an eviction, tenants often forgo further procedures in practice.

To succeed in summary proceedings, a landlord must demonstrate that it is likely that a termination claim would be granted in a main proceeding.

Urgent Interest

A key requirement is the so-called urgent interest. A landlord suffers damage as long as they cannot rent the property to a tenant who pays rent correctly. A significant rent arrears typically justifies an urgent interest on the part of the landlord (Court of Appeal Den Bosch, 1 October 2019, ECLI:NL:GHSHE:2019:3605, para. 3.5).

In practice, however, different judges may assess the requirement of urgent interest with varying degrees of strictness. Especially when the tenant reduces the arrears during the proceedings, the urgent interest may not always be recognised. Additionally, a judge may rule that while there is an urgent interest in the eviction, this does not apply to the claim for payment of the arrears. As a result, a landlord may still need to initiate a main proceeding to enforce payment of the arrears.

Recent Case

In a recent case at my firm, the tenant had accrued a seven-month rent arrears, sufficient to justify eviction in summary proceedings. My client indicated during the oral hearing that they had sought an amicable solution for a considerable time, but they and the tenant simply could not reach an agreement. The judge granted the requested eviction but ruled that there was no urgent interest concerning the monetary claim (rent arrears), as my client had still been willing to part ways on mutually agreeable terms a few months before the hearing. It was somewhat ironic that my client’s willingness to compromise was now held against him, especially as the claim itself was undisputed.

On appeal, the claim for payment was granted. The Court of Appeal found that due to the tenant’s self-reported financial issues, the landlord had an interest in obtaining an enforceable title as soon as possible. Consequently, both the claim for payment of the rent arrears and the contractual penalties and interest were granted in summary proceedings.

Conclusion

These rulings illustrate that the requirement of urgency can be applied differently by judges. As such, it is crucial to carefully consider which procedure may be most effective in your situation. We are happy to advise you on the right strategy.

More information

If you have any questions regarding eviction due to rent arrears or any other issue with your tenant, please feel free to contact us.