Outdated rule of thumb: Three months of rent arrears not always sufficient for eviction from rented property

From now on, landlords have to notify the municipality of rent arrears. Failure to comply with this requirement may be grounds for the court not to dissolve the rental agreement and not to have a tenant evicted. Even if the tenant has not paid rent for more than three months.

Previously, the court considered rent arrears of three months sufficient to dissolve a rental agreement and to have a tenant evicted. This rule of thumb is now outdated. New legislation imposes more obligations on landlords for collecting overdue rent arrears. If the landlord has not complied with these obligations, a claim for dissolution and eviction is less likely to be awarded.

Dissolution and eviction

In the event of rent arrears of several months, the landlord can claim, in court, dissolution of the rental agreement and eviction of the rented property. After all, only the court has the right to dissolve the rental agreement, with a few minor exceptions.

The court assesses a claim for dissolution against Article 6:265 (1) of the Dutch Civil Code. This Article stipulates that the dissolution of an agreement is possible in case of failure (in this case: failure to pay the rent), “unless the failure (…) does not justify the setting aside of the contract and the consequences flowing therefrom”. The court must therefore weigh the interests of the landlord and the tenant against each other. It will allow a claim for dissolution and eviction if the landlord’s interest in dissolving the rental agreement outweighs the tenant’s interest in remaining in the property. This was not easily the case in the past, but the threshold now seems to be even higher.

Municipal Debt Assistance Decree: notification requirement

On 1 January 2021, the Municipal Debt Assistance Decree (in the following: the Decree) came into effect. This Decree may bar a claim for dissolution and eviction. In fact, the Decree imposes a notification requirement on landlords of residential property. The purpose of this notification requirement is that debt problems can be recognized early and people in debt can be helped quickly.

The Decree is an elaboration of the Municipal Debt Counselling Act. This Act obliges municipalities to take initiative with residents in debt. In order to take this initiative, the municipality must be aware of the residents’ debts. A notification takes care of this. This scheme may prevent evictions while still allowing the landlord to collect all or part of the rent arrears.

In case of rent arrears, a landlord has to notify the municipality. Before making the notification, the landlord must have taken a number of steps:

• Making efforts to get into personal contact with the tenant to make them aware of ways to prevent end late payments;
• Pointing out debt relief options to the tenant;
• Sending the tenant a written reminder about the late payment at least once; and
• In that written reminder offering to provide the tenant’s contact details to the municipality with written consent by the tenant. If the tenant has not declined, the notification may be made. Express consent is thus not required.

Only after taking these steps the landlord may report rent arrears to the municipality.

There is no penalty for failure to notify the municipality. The landlord retains the right to request the court to dissolve a rental agreement. However, courts will take non-notification into account when considering whether dissolution and eviction are justifiable. For example, the Roermond District Court recently dismissed a claim for eviction, (partly) because the landlord had not made a notification within the meaning of the Decree to the municipality.

Conclusion

Landlords will thus be wise to send an information letter in which the requirements of the Decree are met and in case of no response notify the municipality. Non-notification may be taken into account by the court when weighing the interests, possibly resulting in rejection of the claim for dissolution and eviction. In some cases the notification may result (after about 12 weeks) in a debt assistance process being initiated. However, the landlord would be well advised not to wait until the outcome of the notification is clear and not to disregard the claim for dissolution for too long.

Lawyer for real estate and rent

Do you have any questions or are you looking for advice regarding a tenant owing rent? Do you have any other questions about real estate and rent? Please contact one of our lawyers. We will be happy to help you.