The age clause

Real estate contracts under Dutch law often include a clause about the age of the property. This is a way for the seller to limit his liability for possible defects. The wording is important, notably if the intention is to limit the seller’s risk only to defects related to age as the name of the clause indicates.

Normal use clause

In model purchase agreements the seller excludes liability on the one hand and provides a number of guarantees on the other. Usually, the ‘normal use clause’ in the ‘NVM[1]-model’ is considered as a guarantee. With this clause the seller guarantees the normal use of the property sold, but limited.

Limitation of liability with the age clause

Often the seller closes the door a bit further by including an ‘age clause’ in the purchase agreement.

In this matter wording is important. It is apparent from case law that this subject matter can lead to misunderstandings. A judge once ruled that the seller could not invoke the age clause because otherwise the normal use clause would be pointless.

Does the buyer bear more than just the risk of defects due to age?

In NVM-purchase agreements the age clause is regularly phrased in the following manner:

“The buyer is aware that the immovable property is over (…) years old, which means that the demands that can be made on the construction quality are (substantially) lower than for new properties. In derogation of article 6.3 of this sale deed and of article 17 section 1 and 2 of Book 7 of the Dutch Civil Code the lack – partial or whole – of one or more properties of the immovable property for normal and specific use and the possible non-compliance of the property with the agreement is for the buyer’s account and risk.”

This phrasing may raise questions. Is the seller excluding his liability for defects due to age? Or for defects that are unrelated to the age of the property as well?

Limiting the risk for the buyer to defects due to age

If the buyer is only meant to bear the risk for defects stemming from the age of the property the clause could be inserted in the following manner in NVM-purchase agreements:

“The buyer is aware that the immovable property is over (…) years old, which means that the requirements that can be made of the construction quality are (substantially) lower than with new properties. In derogation of article 6.3 of this sale deed the defects (which obstruct the normal use) which stem from the age of the property are for the buyer’s risk.”

This phrasing provides more clarity.

Risk of defects entirely for the buyer

If the intention is to have the buyer bear the risk of defects unrelated to the old age of the property too, to the extent it is possible to pass this risk off to the buyer, article 6.3 with the normal use clause can be entirely crossed out.

I am using ‘crossed out’ and not ‘deleted’ on purpose, so that parties can see in which way they derogated from the model text. This is also a condition for using the model.

This is sufficient to pass the risk to the buyer, given the general exclusion of liability of the seller. In this case an age clause is not required.

To underline the risk of the buyer another article can be added separately – which for the sake of clarity should definitely not be called ‘age clause’ – with a text similar to the text above, for instance:

“In derogation of article 17 section 1 and 2 of Book 7 of the Dutch Civil Code the whole or partial lack of one or more properties of the immovable property and the possible non-compliance of the property with the agreement is for the buyer’s account.”

Although whether this should be the norm is up for debate…

 

Please feel free to contact me for more information on this topic.

 

This is part 2 of two blog posts on model purchase agreements.

Click here for part 1.

 

[1] NVM: Dutch Association of Real Estate Agents and Valuators

 

(Picture: Chris Ross Harris)