Often, when a property is rented out, the tenant has to pay the landlord a deposit when the tenancy agreement starts (usually equivalent to one months' rent). The deposit offers the landlord protection should the tenant fail to meet some or all of his obligations.
When the tenancy agreement ends, the landlord should return the deposit to the tenant, unless the landlord has a valid claim on the deposit.
When can a landlord claim the deposit?
There is often uncertainty about when the deposit can be legally claimed to offset other costs or expenses. There are three cases when a landlord may claim part or all of the deposit:
1. Offsetting unpaid rent
Firstly, the landlord has a claim on the deposit if the tenant has failed to meet all or some of his payment obligations. This is known as offsetting rent arrears, or unpaid rent.
2. Offsetting damage / loss discovered on handover
Secondly, the landlord can deduct costs from the deposit if the tenant has breached his handover obligations as stipulated in Section 7:224 of the Dutch Civil Code.
This section of the Code describes two scenarios: firstly, when a description of the rented property is compiled at the start of the tenancy agreement between the tenant and landlord and secondly, when no description is compiled.
Handover with a property description
If a description has been compiled, the tenant must hand over the rented property in the same condition as when he took it over, as detailed in the description, with the exception of permitted changes and any loss or damage caused by ageing or normal wear and tear.
All of this is, in principle, without prejudice to Sections 7:206 subsection 2 and 7:218 of the Dutch Civil Code. The tenant is responsible for minor defects for which the tenant must pay; and for damages, except for fire damage or damage to the outside of the property.
However, if it is apparent from the description that the defects or damage were already present when the tenancy agreement began, the tenant is not responsible for carrying out the repair work.
Handover without a property description
If no description has been compiled, it will be assumed the tenant received the rented property in the state it is in at the end of the tenancy agreement. If the landlord claims that it is in a different state, he must provide evidence to back up this assertion.
In this situation, the tenant is still responsible for minor defects and for damage as mentioned above.
3. Immediate deposit default
Thirdly, in cases where the tenant fails to hand over the property, or hands it over in an unacceptable state, the deposit may automatically be defaulted, for which no notice is required, as stipulated under Section 6:83, subsection b, in conjunction with Sections 7:118 and 7:224 of the Dutch Civil Code.
In such situations therefore, the tenant is immediately in default and the landlord may claim the deposit. The reason for this lies in the nature of the obligation, which can only be fulfilled the moment the tenancy agreement ends. The date of final handover must be viewed as a strict deadline.
Always inspect prior to handover
In order to avoid disputes about the obligations on handover, it is in the interests of both the landlord and the tenant to jointly carry out an inspection a few weeks before the end of the tenancy agreement.
This gives both parties the opportunity - taking account of the description - if any - of the rented property when the tenancy began - to make written agreements about the repair work still to be undertaken by the tenant.
It is essential that both parties sign this agreement. Verba volent, scripta manent: "spoken words vanish, the written word remains!"
Compile a joint report
In a judgement passed by the North Holland District Court on 18 April 2013, the parties had carried out a joint inspection on the day of handover; however, they did not jointly compile a report. Months later, the landlord sent a report which he had unilaterally drawn up and argued that he should be allowed to deduct the repair costs from the deposit.
The court found that, as there was no prior inspection report signed by both parties, the landlord had not proved that the state of the rented property on commencement of the tenancy differed from its condition at the end of the tenancy, and upheld the tenant’s claim to have the deposit repaid.
Limited offset if no prior inspection is carried out
The absence of a prior inspection does not mean the tenant cannot be deemed to be in default. In its judgment in the Van der Meer / Beter Wonen case (HR 27 November 1998, NJ 1999, 380), the Supreme Court ruled that there was a lasting obligation to hand the rented property over in a good state at the end of the tenancy agreement.
However, if the tenant is not given the opportunity to do the repair work himself, then repair costs may only be claimed to the extent these would have been incurred by the tenant had he repaired the property himself. These costs are usually lower than the costs of professional repairs the landlord would wish to offset.
On 22 February 2012, the court in Breda similarly ruled that, regarding the removal of a cat flap and holes in the walls where a number of pictures had been hung, the only costs eligible for reimbursement were the DIY costs of the repair. This was due to the fact that neither a prior inspection nor a final inspection had been carried out and the tenant had not been given the opportunity to do the repair work himself.
Offsetting other damages
On 28 August 2013, the Zeeland / West-Brabant District Court ruled that, in principle, any damages due to losses suffered in the form of loss of rental income, due to the property not being handed over correctly and, therefore, not being immediately available to be rented out to another tenant, were eligible for reimbursement.
However the existence of this situation and the amount being claimed must be clearly established. Moreover, the claim must be properly substantiated (including figures). In the case in question, these two requirements were not met, and the landlord was not able to offset the loss against the deposit.
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