The previously more or less established rule in case law that three months of rent arrears was sufficient for a court to decide to pronounce dissolution and eviction is now outdated. More effort is expected from landlords to collect rent arrears and reach out to tenants to still pay the rent.

When tenants have rent arrears of three months or more, many landlords start proceedings in which they claim dissolution of the lease and eviction of the leased property as well as payment of rent arrears.

Dissolution

Section 6:265 of the Dutch Civil Code provides that any failure in the performance of an obligation (such as non-payment of rent) entitles the other party to dissolve the contract in whole or in part, unless the failure does not justify such dissolution in view of its special nature or minor importance.

Rent arrears of three months or more do not automatically mean that the lease will be dissolved by the court and the tenant will have to vacate the rented property. Dissolution can be avoided if the court considers that dissolution is not reasonable, i.e. if the default (in this case, the non-payment of rent) does not justify dissolution of the lease in view of its minor significance or special nature.

Balance of interests

When assessing the landlord's claims, the court should take into account all the circumstances of the case. The tenant's residential interest must also be taken into account in the assessment. The court must weigh up the landlord's interests in dissolving the lease and evicting the leased property and the tenant's interests in continuing to live in the property.

A circumstance that could lead to the lease not being dissolved despite a 3-month rent arrears, for example, is being able to catch up in the short term. The court may give the tenant a last chance to pay, a so-called "terme de grȃce". If the tenant does not fulfil its payment obligation within the term specified by the court, the lease will still be definitively annulled.

Municipal Debt Relief Decree

Another circumstance that could prevent dissolution and eviction is the Municipal Debt Relief Decree, which came into force on 1 January 2021. This is a decree based on the Municipal Debt Relief Act. This act creates obligations for debt relief providers to take initiative on their own with residents in debt. However, they depend on notifications to become aware of those debts. The decree creates a notification obligation for landlords of housing. The purpose of this duty to report is that debt problems can be recognised early and people in debt can be helped quickly. According to the explanatory note to the Decree, this will also prevent evictions.

Duty to report

According to the Decree, if a landlord is in arrears in paying rent, he must provide the contact details of the tenant and the amount of arrears to the debt relief board, if he:

1. has made an effort to engage in personal contact with the tenant to make them aware of ways to prevent and end arrears;
2. made the tenant aware of the possibilities for debt assistance;
3. sent the tenant a written reminder about the arrears at least once; and
4. in that written reminder offered to provide the tenant's contact details to the college with the tenant's written consent and the tenant did not respond negatively.

Cooling off period

The landlord should note that the municipality may request a cooling off period under the Municipal Debt Rescheduling Act. The effect of this cooling-off period is that the landlord cannot claim the rent arrears in court during the cooling-off period. A cooling-off period can be imposed for a maximum period of six months.

Sanction?

There is no penalty for failure to report. The landlord retains the right to request the court to dissolve the lease. However, the court will take the failure to report into account when considering whether dissolution and eviction are justifiable.

The Roermond District Court (ECLI:NL:RBLIM:2022:2597) recently reprimanded a landlord for failing to comply with the decree. The landlord's claim for eviction was dismissed, partly in view of the fact that the landlord had not filed a notification within the meaning of the Decree with the municipality. The tenant here was a government-approved victim of the so-called "benefits affair" at the tax office.

Conclusion

Landlords would therefore be wise to send an information letter complying with the requirements of the Decree and report to the municipality in case of no response. Failure to report may be taken into account by the court when weighing up the interests, possibly resulting in the rejection of the claim for dissolution and eviction.

Do you have questions or would you like advice regarding a non-paying tenant? Please feel free to contact one of our lawyers. We will be happy to assist you.