Substitution
“Substitution” is defined as a circumstance in which a person to whom a business is transferred also becomes the tenant of the business space. The (former) tenant may request the subdistrict court judge to grant leave to substitute the new tenant for the former tenant.
On the transfer of a business, it is in the interest of the tenant of the building in which the business is conducted (often the business owner itself) to be able to transfer the lease to the new owner. That is known as substitution. That process is regulated by law and may be enforced in court if the landlord refuses to cooperate. The court can authorise a tenant of business space governed by Section 290 of the Dutch Civil Code to substitute the new tenant for the current tenant. The current tenant must have a compelling interest in the transfer of its business and the new tenant must offer sufficient financial and others guarantees.
Differences between substitution and contract takeover
It is important to be aware of the significant differences between substitution and regular contract takeover. A few of those differences are addressed below:
Substitution
- The landlord’s cooperation is not required.
- A deed between the transferring party and the acquiring party is not required.
- Possible only if the business conducted in the leased property is transferred.
- Possible only if the tenant has a compelling interest.
- Court authorisation can replace the landlord’s consent
Contract takeover
- The cooperation of all the contracting parties is required.
- A deed between the transferring part and acquiring party is required.
- Possible without transfer of the business conducted in the leased property.
- No compelling interest is required.
- No court authorisation is required.
Specialist in substitution
Helma Sengers specialises in advice on and the drafting of substitution agreements. She is a property lawyer and has extensive expertise in the field of the purchase and sale of property, apartment rights and easements. Helma focuses on advising and litigating on leases and purchase agreements, including termination of leases on the grounds of renovation, a rental dispute or non‑conformity.
