Reinier Russell

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Liability for information about the use of business premises

Publication date 26 September 2019

You cannot just start a business anywhere. It is therefore important to check when buying a business property whether what you want to do in it (shop, office, restaurant, etc.) can be done in it according to the zoning plan. Often, the estate agent or seller will provide information about this. You can rely on this, but it is advisable to investigate the permitted use yourself.

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You cannot just start a business anywhere. It is therefore important to check when buying a business property whether what you want to do in it (shop, office, restaurant, etc.) can be done in it according to the zoning plan. Often, the estate agent or seller will provide information about this. Can you rely on this information and neglect your own research with the risk of buying a cat in a bag? And does it matter who gave this information, the seller or the estate agent?

A restaurant is not a shop

The Court of Appeal of Den Bosch had to answer these questions in a case between the buyer of a shop premises and the municipality of Venlo. What was going on?

Sales brochure

The municipality of Venlo was the owner of a vacant shop premises that were used as “city shop” (municipal counter). The municipality engaged an estate agent to sell the building. In 2012, the estate agent made a sales brochure. It said that according to the draft zoning plan, the building was intended for the retail trade and hotel and catering purposes. It took until 2015 for a buyer to come along. The buyer discussed with the estate agent that he wanted to start a restaurant in the building. The parties reached an agreement and signed a sales contract where the building was specified as “shop premises”.

Change of the zoning plan?

Shortly afterwards, the municipality found out that the final zoning plan from 2013 did not permit use as a restaurant anymore. The municipality notified the real estate agent of this, who, in turn, updated the buyer. The buyer demanded change of the zoning plan, so that he could still start his restaurant but the municipality refused this. It did however offer to terminate the purchase agreement and pay a small compensation. The parties did not agree on the conditions for the termination and so the court had to decide.

Contractual penalty because of not taking into possession the building

Both parties demanded the termination of the purchase agreement and claimed the contractual penalty (10% of the purchase price). The buyer because the municipality did not transfer what was agreed upon: a building that could be used as a restaurant; the municipality because the buyer did not take possession of the shop premises. In the first instance it was decided in favour of the municipality.

Seller does not deliver what was promised: contractual penalty

The buyer appealed the decision. It was decided in his favour. On behalf of the municipality, the estate agent had explicitly confirmed to the buyer that it was possible to start a restaurant in the building. The fact that a reservation was made in the brochure did not change this.

Who’s liable: municipality or estate agent?

The brochure was approved by the municipality who had established the zoning plan. It should have interfered when it turned out that the use as a restaurant was no longer permitted in the final zoning plan and the sales brochure thus contained outdated and inaccurate information. The municipality cannot hide behind the idea that the buyer should have investigated the zoning plan himself. In brief: The municipality did not deliver what it should have delivered and has to pay the contractual penalty.

Tips for sellers

Would this have been different if it had not been the municipality, but a private individual, that had provided the wrong information? That’s a good question! The person providing information must vouch for the accuracy of the information. Therefore, it is important that you look closely at the information given by an estate agent on your behalf. A sales brochure should also be viewed closely by the seller.

Tips for buyers

It is advisable for buyers to have their own investigations carried out into zoning plans. Zoning plans are not nearly as easy to find and fathom as the municipality of Venlo stated in this case. A lawyer specialising in real estate and town and country planning can help you with that.

More information

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