The Supreme Court recently made a very interesting ruling in which the question arose as to whether an agreement (of confirmation) regarding the eviction period, which was concluded between the landlord and adult children living in the house after the death of a tenant, should be considered a tenancy agreement.

What happened here?

A housing association rented out a home to a mother and her two adult children. After the mother passed away, which the children had reported to the housing association, the children in the home were visited by an employee of the housing association. This employee had a settlement agreement with her, which was signed during the visit. The purpose of this agreement was to give the children more time to vacate the house, so that they could look for other accommodation in the meantime.

The settlement agreement included the following: .

• that the children were not tenants of the house and that they had not been granted co-tenancy;
• that the children were using the house without right or title, but that the housing association was prepared to tolerate their temporary use of the house in exchange for payment of a user fee equal to the applicable rent;
• that the children would waive a claim before the Subdistrict Court as referred to in Article 7:268 of the Dutch Civil Code and that they would leave the house by 31 March 2020 at the latest and would not cause any damage.

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In January 2020, the children reported that they had not yet found another house. The parties then extended the agreement in writing until 30 September 2020. This second agreement stipulated that the children undertook to actively search for other accommodation. It also stated that a further extension was not possible.

However, the children did not leave the property.

The proceedings before the subdistrict court and the court of appeal

The housing association then initiated eviction proceedings. The subdistrict court initially ruled that both agreements should be considered rental agreements, so that the children were entitled to rent protection. The housing association's claim was thus rejected.

On appeal, the subdistrict court's ruling was overturned. The children were ordered to vacate the house within three months of the judgement being served. In addition, the children were jointly and severally ordered to pay a monthly amount equal to the rent as long as the house had not been completely vacated and made available to the housing association.
The children did not agree with this and appealed to the Supreme Court.

Supreme Court judgement

The Supreme Court agreed with the Court of Appeal and ruled as follows:
“Article 7:201 paragraph 1 of the Dutch Civil Code defines a lease as an agreement whereby one party, the lessor, undertakes to allow the other party, the lessee, to use all or part of a property and the lessee undertakes to provide something in return.

In order to be able to assess whether an agreement should be categorised as a rental agreement, it must first be determined which rights and obligations the parties have agreed to by interpretation based on the Haviltex standard. Once the content of the agreement – that is to say the mutual rights and obligations – has been established (interpretation), it must be assessed whether the agreement can be considered a rental agreement (qualification). If the agreed rights and obligations meet the legal definition of a rental agreement, the agreement must be considered as such. For this qualification, it is not important whether the parties intended for the agreement to fall under the legal regulation of the rental agreement.

If the agreement contains elements based on which the legal definition of rent is met in itself, then it is possible that the agreement, in the given circumstances, considering its content and scope, should not be considered a rental agreement after all. In assessing whether this exception applies, it is also important to consider the situation for which the parties intended to make arrangements and whether a qualification other than a rental agreement is compatible in that situation with the mandatory protection regime for rental agreements relating to residential property.

In a situation such as the one at hand, in which the person entitled to a home could force the resident to vacate at short notice, it is desirable, due to the disadvantage associated with eviction for the resident, that the entitled party does not refrain from giving the resident some respite on the grounds that they would otherwise have to choose between either continuing the use without any (or little) compensation, or entering into a rental agreement, with the protection associated with it for the resident. In such a case, the mandatory protection regime for tenancy agreements does not preclude an arrangement whereby the resident is allowed to remain in the home for a period of time in exchange for payment, in order to look for other housing, and the owner thus refrains from eviction for that period of time, not being considered a tenancy agreement. The legal position of the resident is protected in this situation because entering into an agreement that grants an (extended) eviction period cannot in itself affect the right of the resident to still claim continuation of the lease on the grounds of Article 7:268 paragraph 2 of the Dutch Civil Code, as long as the applicable period is still running. If the occupant still exercises that right, the agreement has no legal effect with regard to the agreed eviction date. This is different if the resident, in order to end uncertainty or a dispute about the right to reside in the home, concludes a settlement agreement with the entitled party in which he relinquishes these possible rights. After all, such a settlement agreement may contain agreements that conflict with mandatory statutory provisions (Article 7:902 of the Dutch Civil Code)."

In assessing the complaints in this specific situation, the starting point was that the children had not argued that they would have been entitled to continue renting the property on the grounds of Article 7:268(2) of the Dutch Civil Code on the grounds that they had had a long-term shared household with their mother. Their argument was that they had become tenants under the two agreements. In view of this, according to the Supreme Court, the court of appeal could assume when classifying those agreements that the children were not entitled to continue the lease pursuant to Article 7:268 paragraph 2 of the Dutch Civil Code, and should have left the house in the short term, disregarding the two agreements.

The court of appeal then used the Haviltex standard to determine the content of the two agreements and came to the conclusion that the parties did not agree that the housing association would make the home available to the children in exchange for payment, but that the parties limited themselves to agreeing on the period in which the children would vacate the house and the compensation they would have to pay during the continued use of the house. According to the court of appeal, the parties did not have any other goal in mind with the second agreement than to extend the period in which the children had to vacate the house. Based on this interpretation, the court of appeal rightly ruled that the obligations arising from the two agreements bear too little resemblance to tenancy to justify the applicability of the associated protective regime.

Conclusion

An agreement in which it is stated that a home is being made available for use in exchange for payment can easily be considered a tenancy, regardless of what the agreement is called. The ‘tenant’ then enjoys tenancy protection. The Supreme Court has now introduced a nuance whereby an agreement in which one party may use the rented property for a period of time in exchange for payment, but must vacate at a certain point, does not automatically qualify as a tenancy agreement. The protection that the legislator intended to give tenants cannot simply be circumvented, but there may be circumstances in which it is not necessarily the case that a rental agreement is involved.

This gives housing associations the opportunity to make arrangements about the eviction and the period in which it will take place, instead of immediately initiating eviction proceedings because they fear for the protection of the lease. This also gives residents more leeway to find other housing if the landlord is no longer forced to strictly adhere to the end date of a lease.

Would you like to know more or do you have questions about your position as a tenant or landlord? Feel free to contact one of our lawyers. We are happy to be of service and will keep you informed of further developments!