The Rotterdam District Court recently dealt with an issue concerning the sale of a €1,100,000 penthouse. In the purchase/construction agreement, it had been agreed that this penthouse would be part of a building with exclusively owner-occupied houses. However, a large part of the building had been sold to an investor who was going to rent out the flats. According to the buyer, there was a shortcoming on the part of the seller because the penthouse did not meet what he was entitled to expect. Was the buyer right?

What was at stake here?

The buyer had signed a purchase and two construction agreements with the seller for a penthouse with parking spaces in November 2022, for a total amount of €1,100,000. The penthouse was located in a building that was part of a project consisting of two buildings with rental flats and two buildings with a total of 90 owner-occupied flats. After the agreement was concluded, 65 of the total 90 owner-occupied flats were sold to an investor who would rent out the flats. The buyer subsequently wanted to waive the sale and purchase agreements because the penthouse delivered did not meet what he was entitled to expect under the agreement. He did not want to live in an apartment complex which he expected to have a high turnover and little social cohesion here (because of rentals). He therefore demanded dissolution or annulment of the purchase and building contracts.

What did the parties agree?

The purchase agreement and the building contracts (which form an indissoluble whole with the purchase agreement) can be dissolved if it is established that the seller has failed to fulfil its obligations under those contracts. The buyer claimed that there was such a shortcoming because it had been agreed that he would be delivered a penthouse in a building with only owner-occupied flats, while in fact a penthouse had been delivered in a building consisting mostly of rental flats. To assess this, the court said, it was first necessary to establish exactly what the parties had agreed in this regard.
Important here is what the parties mutually declared and what they could reasonably infer from each other's statements and behaviour in the given circumstances (the so-called ‘Haviltex’ standard ).

Judgement of the court

In the District Court's opinion, the buyer could expect, based on the brochure and the sales contract, that he would be delivered a penthouse in a building with only owner-occupied flats.

The brochure is intended to interest potential buyers in purchasing a flat. Indeed, the sales information in this brochure contains a disclaimer and no concrete agreements between seller and buyer, nor a guarantee that only owner-occupied flats will be realised in the building. Nonetheless, such a sales brochure does raise certain expectations in a potential buyer and the information contained therein weighs in the decision whether or not to purchase a flat. The expectation created by the brochure that only owner-occupied flats would be built in the building was subsequently confirmed in the purchase agreement dated 10 November 2022, which states that the project of which the penthouse is part comprises 90 owner-occupied flats, including 65 flats in the building. It is also clear from the building contract that the flats are in the owner-occupied sector. Under these circumstances, the buyer was entitled to expect that the building would contain only owner-occupied flats.

Strictly speaking, as the seller also submitted, the flats sold to the investor are still owner-occupied flats. However, in the court's opinion, a reasonable interpretation of the contract implies that owner-occupied flats should be understood to mean flats sold separately to individual buyers who, in principle, will live there themselves. The 65 flats sold in one sale to an investor who intends to subsequently rent out these flats means that these flats can no longer be considered owner-occupied flats as referred to in the purchase agreement, but rental flats. This can also be deduced from the fact that the seller had to submit the intended sale to an investor to the municipal council, which amended the so-called ‘area passport’ to allow the sale to the investor and its intention to start renting out the flats.

Conclusion

According to the court, the seller had therefore failed to fulfil its obligations under the contracts by delivering a penthouse to the buyer while a large part of the other flats in the building had now been sold for rental purposes. As a result, the penthouse did not meet what the buyer was entitled to expect under the agreement. The failure therefore justified dissolution of the contracts.

Would you like to know more or do you have questions about your position as a buyer or seller of a house or flat? If so, please feel free to contact one of our lawyers without obligation. We will be happy to assist you!