Error in invoking financing reservation is not a default

The buyer of a property who appealed the financing reservation, made a mistake in doing so. Namely, when invoking the financing reservation, he failed to also show a copy of the submitted financing request and the rejection. However, this was required. This is stipulated in the model of the NVM purchase agreement that had been used in this case. According to the seller's attorney, that provided a deficiency on. Who wrote to the buyer:

“Clients take the position that you did not, on the proper grounds, grant the resolutive has invoked a condition and therefore has not validly concluded the contract rescinded. This means that you have defaulted on your obligation under the agreement. “

In other words, according to the seller, the mere fact that the financing reservation had not been properly invoked would constitute a default. Therefore, it would not even be necessary for the buyer to still declare in default. The seller dissolves the sales contract and claimed the contractual penalty of 10% of the purchase price. The seller fell flat twice in doing so. First at the court which rejected all its claims (ECLI:NL:RBMNE:2024:6480), then again at the Court of Appeals (ECLI:NL:GHARL:2025:8621).

Seller makes mistakes in rescission and reliance on penalty clause

The seller believes he is entitled to payment of a penalty. In fact, the purchase agreement states that if a party fails to perform the purchase agreement and remains in default for 8 days after a notice of default, the purchase may be rescinded. In that case, the seller may claim a penalty equal to 10% of the purchase price. However, the seller makes two mistakes.

1. First of all, the buyer ‘only’ made a mistake in invoking the financing reservation. Namely, who forgot to show the agreed documents. However, the consequence was not that the buyer was therefore in default. At most, the consequence was that the sale was not dissolved by the invocation of the financing reservation. The buyer then defaults only at the time he does not take delivery of the property. The seller did not wait for that.
2. The second mistake is that the seller did not wait for the latter. He immediately rescinded the sale, even though the contract clearly states that there must first be a shortcoming (there was none), then a notice of default must be sent (which was not done) and then the other party must be in default for another 8 days.

Seller initiates proceedings without sufficient basis

As a result, the lawsuit that the seller subsequently initiates runs aground. He only based his claim on the ’shortcoming’ of the incorrect invocation of the financing reservation, but that is not a shortcoming at all. Let alone a ground for dissolution of the purchase agreement. The seller could possibly have remedied this by sending another notice of default after the letter from his lawyer quoted above, but apparently that did not happen.

District Court and Court of Appeals reject home seller's claims

Both district court and Court of Appeals therefore give short shrift to the seller's claims. The Court of Appeals rules:

“Appellants thereby lose sight of the fact that a financing proviso, as addressed in Article 15 of the purchase agreement, does not give rise to an obligation on the part of the respondent which, in the event of non-compliance with it, would constitute a shortcoming vis-à-vis the appellants, let alone that non-compliance with what is stipulated in such a clause could be grounds for dissolution of the purchase agreement. Article 15 of the purchase agreement allows the respondent to release himself (if he so desires) from the purchase agreement by invoking the resolutive condition contained in this article. If he makes insufficient efforts to obtain financing, this may entail that the resolutive condition is thereby deemed not fulfilled if reasonableness and fairness so require.”

If the purchase agreement was validly rescinded, the sellers' claim is assigned, right?

The steps the seller should have followed are all described in the purchase agreement. However, he did not follow them. But even if he had, the penalty would not have been awarded. On that, the Court of Appeals said that in this case, that penalty would be contrary to reasonableness and fairness. This is because the property was sold for a higher price. As a result, the seller did not damage suffered and the Court of Appeals finds it unreasonable if - if rescission did occur correctly - a fine would be allowed to be charged. The court considered:

“Under Article 6:94 of the Civil Code, the court has the possibility to mitigate a contractual penalty at the request of the debtor. According to established case law, for moderation be grounds only if equity clearly demands it. This criterion implies that the court may only use its power of mitigation if the application of a penalty clause leads to an excessive and therefore unacceptable result in the given circumstances. In doing so, the court will have to consider not only the relationship between the actual damage and the amount of the penalty, but also the nature of the contract, the content and scope of the clause and the circumstances under which it was invoked.”

Lawyer in dispute over purchase or sale of home

It is increasingly common for judges to consider contractual Mitigate fine when buying home. Whether that is justified remains to be seen. It may well be that mitigation should take place in your situation. Also, not all the prescribed steps may have been followed properly. This comes very close. Therefore, contact Lexys' real estate law attorney to have your case reviewed.