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9 Feb 2024 Can landlord suspend the enjoyment of the rent if tenant fails to pay?

In case of late payment, can't a landlord simply deny the tenant the enjoyment of the rent by replacing the locks instead of having to initiate proceedings with all the costs involved? The generally accepted view is that a landlord cannot suspend his obligation to provide rental enjoyment. However, Advocate General W.L. Valk recently threw a different light on this view in two cases.

Office lease case

The first case concerned the letting of office space. The tenant took the position that the space was inadequate because it had not been renovated. At the scheduled completion of the leased space, the tenant did not appear and the tenant never entered the space thereafter. According to the subdistrict court and the court of appeal, the space had been let in a non-renovated condition. The dissolution claimed by the landlord was granted and the tenant was ordered, among other things, to pay the rent due.

The tenant appealed in cassation. There it was argued that the court of appeal had failed to recognise that a landlord cannot suspend the performance of his obligation to make the leased property available (Section 7:203 of the Dutch Civil Code) on account of late payment by the tenant.

A-G Valk concluded that, in his opinion, this view is incorrect. Something else is that self-interest by the landlord replacing the locks of the leased property on his own initiative, for example, and thus putting the tenant in the wrong, is not admissible.

However, self-interest was not at issue in this case. The tenant had wrongly taken the position that it had been agreed that the office space would be made available in a renovated state and had refused to cooperate in handing over the leased property. This refusal had put the tenant in creditor default. Therefore, the tenant remained obliged to pay the agreed consideration. The tenant had also never gone back on the said refusal. The question of whether the landlord had a right of suspension was therefore not even considered.

Business unit rental case

In another case in which the same view was invoked that a landlord could not suspend the obligation to provide for the enjoyment of the lease, Valk came to the same conclusion. Neither the case law, nor the specific rental legislation, provides any basis for such an assumption. In other words, a landlord can deny a tenant access to the leased property in response to rent arrears, provided that this does not constitute a form of self-incrimination.

This case concerned the lease of two units of business premises that were leased to the tenant with effect from 1 June 2016 for a term of five years, renewable for five years at a time, subject to termination by notice by the end of the current lease term.

Since January 2019, no rent was paid by the tenant. After payment arrears arose, the tenant vacated the leased property in May 2019. Afterwards, the landlord replaced the locks. In correspondence between the parties' lawyers, it came up that the landlord was no longer willing to provide rental enjoyment to the tenant again in connection with the late payment. The landlord leased one of the two units to a third party on 1 December 2019. The other unit was let to another third party on 1 April 2020.

The landlord sought dissolution of the lease in the subdistrict court, ordering the tenant to pay, among other things, overdue rent instalments. In counterclaim, the tenant sought a declaratory judgment that the landlord had acted unlawfully towards her, ordering the landlord to compensate the tenant for the damage suffered as a result. The subdistrict court upheld the landlord's claims and dismissed those of the tenant. The tenant appealed but to no avail. The judgment of the subdistrict court was upheld by the court of appeal.

On appeal, the tenant argued, among other things, that she did not owe any rent because the landlord had deprived her of the enjoyment of the rented property by insisting that she vacate the rented property and return the keys and by replacing the locks of the rented property and not giving her the keys of the new locks. However, the court concluded that to the extent the landlord had already deprived the tenant of the enjoyment of the rent, it was true that the tenant had previously defaulted by failing to pay the rent from 1 January 2019. Therefore, the landlord could not be expected to provide the tenant with the enjoyment of the rent. The tenant did not have the power to suspend rent payments. Despite the fact that the tenant had left the leased property at the beginning of May 2019, the lease continued and the tenant had to pay the rent until the landlord had leased the leased property to a third party.

The tenant then went on to appeal. Underlying all of the tenant's complaints was the view that during the term of a lease, a landlord cannot (temporarily) unilaterally release himself from his obligation to provide the tenant with the enjoyment of the rent on the ground that the tenant is not paying or has not paid the rent. At least as a starting point, the obligation to provide the tenant with the enjoyment of the lease could not be suspended, nor could the performance of that obligation otherwise be discontinued during the term of the lease.

Previous case law and literature

For this view, the tenant could rely on various decisions of subdistrict courts and courts of appeal and some literature. The reason usually given is that the obligation to make available is a continuing obligation that cannot be fulfilled for the past if the tenant clears its arrears. Sometimes another argument is used, namely that such a suspension anticipates dissolution by the court and is thus contrary to the rationale of Section 7:231 of the Civil Code (according to which dissolution of a lease relating to a built-up property can only be done by the court). Some case law also mentions (usually in passing) that the obligation to provide the enjoyment of the lease is the landlord's core or main obligation.

Conclusion Valk

In Valk's opinion, the aforementioned view is not without merit. There is no rule in Dutch law that in the case of continuing obligations no suspension would be possible. It is true that after the payment arrears have been cleared, performance of the suspended enduring obligation is no longer possible for the past, but it follows from Section 6:59 of the Dutch Civil Code that this is for the account of the party that caused the suspension. After all, an authorised suspension by the other party leads to creditor default according to that article. During his default, the creditor simply remains obliged to pay the agreed consideration. Indeed, in the case of continuing obligations, the consequence of this is that even after purging his default, the creditor is left with a disadvantage because the past can no longer be changed, but that does not change the matter. The thrust of the figure of the creditor's default is precisely that the creditor bears the adverse consequences of his default. He who burns his buttocks must pay.

That the obligation to provide rental enjoyment is the landlord's main obligation is undoubtedly true. Nor does the above mean that the outcome in the aforementioned judgments would be incorrect. All those cases had in common that the landlord, in response to late payment, had unilaterally denied the tenant access to the leased property, often by changing the locks of the leased property. This is a crass form of wilful action. Its unlawfulness hardly seems to be in doubt. The leased property had already been put at the tenant's disposal, but this was subsequently reversed by active actions in order to thwart the tenant.

Such active reverting to a service already rendered should also not be called suspension. Suspension is the debtor's power to postpone performance (with the special feature that postponement leads to cancellation). The reversal of a performance already rendered by the debtor in view of non-performance by the other party cannot be justified by invoking a right of suspension. Only within the limits of the right to suspend performance can it possibly be said to legitimise self-fulfilment. Beyond that, in the interests of legal peace, the landlord needs an enforceable title to unilaterally deprive the tenant of the enjoyment.

In this second case, too, self-incrimination was not at issue. It is true that the landlord had replaced the locks of the leased property, but this took place after the tenant voluntarily left the leased property in May 2019. At that time, significant arrears of payment existed. Indeed, the tenant had not paid rent since January 2019. In an e-mail dated 4 July 2019 from her lawyer, the tenant had then taken the primary position that the lease had terminated by mutual consent, but in response to the landlord's position that the lease was still ongoing, she asked whether the landlord was willing to provide the tenancy (again). To this, the landlord gave the answer that due to payment arrears, there was no such willingness.

According to Valk, this position unmistakably amounted to suspension. According to the court of appeal, the tenant's delay in payment was reason why the landlord did not have to provide the enjoyment of the rent It was not incorrect or incomprehensible that the court of appeal had ruled that the landlord was indeed entitled to a right of suspension. The fact that the obligation to provide enjoyment of the rent was continuous and, moreover, the landlord's main obligation, did not prevent this. Neither did the fact that dissolution by the landlord is only possible through the courts.

For the sake of clarity, the following was noted. According to the court, the landlord's conduct contained nothing unlawful. Of course, a landlord who is confronted with a (considerable) payment arrears of the tenant is allowed to try to induce the tenant to leave the leased property, as long as this attempt to induce does not contain an unlawful element (including, in particular, violence, threat or trickery).

Conclusion

In view of the foregoing, the tenant was also unsuccessful in cassation.

It can be concluded that under certain circumstances, a landlord can refuse his tenant access to the leased property. However, it does not mean that in order to get rid of the tenant, the locks can simply be replaced without consultation. For that, the route of legal proceedings should still be followed.

Would you like to know more or do you need questions or advice on a tenancy issue? Then feel free to contact one of our lawyers without any obligation. We will be happy to assist you!

SPEE advocaten & mediation Maastricht

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