Conveying real property in the Netherlands

The conveyance of real property (i.e. land, buildings etc.) can be broken down into two stages:

a. Contract of sale               

In a contract of sale, the seller and the buyer agree that the buyer will acquire the title to a piece of real property on certain conditions, at a certain price and on an agreed date. This contract becomes effective when they have agreed on all the conditions of the sale. The parties are bound by such a contract. If the parties are natural persons who are not acting in the course of their profession, occupation or business, the agreement must be concluded in writing. This rule was introduced on 1 September 2003. Since that date the buyer has the right to cancel the contract of sale within three days, and it is possible to have the contract entered in the public registers.

A contract of sale does not need to be drawn up by a notary, but as it is binding on the parties it is wise to consult a notary at an early stage in order to obtain the necessary expert guidance and advice on legal details. Besides describing the property and recording the price, the contract of sale lists any other agreements between the parties. The involvement of a notary will therefore ensure that as far as possible neither party to the transaction finds himself saddled with obligations he cannot reasonably fulfil. For that reason, a contract of sale may include conditions subsequent, for example a condition that the sale will not go ahead if the buyer fails to obtain a municipal residence permit or a mortgage. Often the contract also includes a penalty clause for the event that either party fails to comply with its obligations. The notary informs the parties of their obligations and explains how to comply with them.

The contract of sale often stipulates that the buyer should pay a deposit to a notary, as an independent third party. This deposit is subsequently deducted from the purchase price. Because notaries are impartial, it is in the buyer’s interests to pay the deposit into the notary’s client account rather than to the seller. Instead of a deposit, the buyer can also provide the notary with a bank guarantee.

b. Conveyance 

The property is conveyed, or the title transferred, by entering a certified copy of the instrument of conveyance in the registers of the Land and Public Registers Agency. The instrument of conveyance must be drawn up by a notary and signed by the latter and both parties. Before signing, a notary is required to investigate the title to the property and the seller’s power to dispose of it in the public registers.

Unless agreed otherwise, the costs connected with buying real property are borne by the buyer. These include:

• transfer tax (6% of the purchase price of the property), which is paid via the notary;
•  the notary’s fees;
•  the costs of registering a certified copy of the instrument of conveyance at the Land and Public      registers Agency

Other costs the buyer may be required to pay include the estate agent’s commission, if an estate agent was involved in the sale, and a proportion of the property tax which the seller is required to pay in the calendar year in which he sells the property.

A notary generally arranges the financial completion of the property transaction. The buyer does not become the legal owner of the property until the instrument of conveyance has been signed and the notary has ensured that a certified copy has been entered in the public registers. The purchase price is not transferred to the seller until the notary has confirmed that the property is not encumbered with any mortgages or attachments other than those that were disclosed when the instrument of conveyance was signed. The buyer is responsible for insuring the property from the date on which the instrument of conveyance is signed.