Didam ruling by Supreme Court: government bound by rules when selling property

Didam ruling by Supreme Court: government bound by rules when selling property

Didam's town hall, a Master Plan of the municipality and the battle between Albert Heijn and Coöp are the reason for a Supreme Court ruling that will be discussed for a long time to come. At the end of last year, the Supreme Court namely, ruled that public bodies may not facilitate one-for-one sales of real estate or land when there may be other interested parties. In addition, public bodies should develop criteria under which they choose who may purchase the property. Real estate specialist Myrthe de Vries Discusses the ruling and what its implications are.

 Sale of property in Didam by municipality unfair

As part of its Master Plan, the Municipality of Montferland wanted to sell a plot of land containing its town hall, located in Didam. The Master Plan was dominated by a radical change in the village center. The local Albert Heijn, located outside the center, saw on the site of the old town hall an ideal place for its supermarket. Several times, the franchisee who operated the Albert Heijn expressed to the municipality an interest in purchasing the plot.

Municipality sells property to other interested party

To its surprise, Albert Heijn learned some time later that the municipality had sold the plot privately to a project developer who wanted to establish a Coöp supermarket on the plot. Albert Heijn is not happy about this course of events and takes the matter to court. In summary proceedings the Albert Heijn claimed that the municipality should be ordered to sell the plot only after going through a public and non-discriminatory bidding process. Both at the court and at the court the Albert Heijn catches the eye. It was ruled that the municipality had not acted unlawfully. Also, the public law standard of competition would not apply in this case. The Supreme Court, however, thinks otherwise.

Didam ruling: fair bidding process in government sale of property

After all, the Albert Heijn is not going to leave it at that and is going into cassation. The Supreme Court explains that if a public body acts as a private law party, it cannot be equated with a purely private law party. Indeed, the general principles of proper administration apply to a public body even then. This means that when entering into and performing private-law contracts, a public body must observe, for example, the principle of equality. This therefore also applies to the decision with whom and under what conditions it enters into a property purchase agreement.

Supreme Court: any prospective buyer must be able to participate in government sale of real estate

As a result, a public body must make it possible for any interested party to bid. To then determine which party the government wants to enter into a purchase agreement with, clear criteria must be established. Those criteria must be objective, testable and reasonable.

Sale of property by public body as much public as possible

The Supreme Court goes on to say that the principle of equality also entails that when a public body sells a property, it must do so sufficiently in public rather than privately. In addition, the government must then provide information about, for example, the selection procedure so that any candidate can be considered for the purchase of the immovable property.

Only if a public body may assume that there is only one interested party may the sale take place by private treaty. However, the public body must then disclose in a timely manner that it intends to sell a property in this manner.

What does the Didam ruling mean for practice?

In practice, this ruling will have major implications. A public body will always have to determine prior to the sale of an immovable property whether there are multiple interested parties. If so, everyone must be given the opportunity to compete for the property. One-to-one sales are made more difficult to a great extent, so that there is an equal opportunity for the sale for multiple parties.

Want to enter into a purchase agreement with a government agency? Then get advice from Myrthe de Vries, real estate specialist at Lexys Lawyers.