Penalty home purchase agreement

When you buy or sell a home, there is usually a penalty clause in the purchase agreement. This stipulates that if one of the parties does not properly comply with the purchase agreement, a notice of default can be sent. If there is still non-compliance, then a penalty may be claimed. The purchase agreement can also be dissolved.

Penalty on purchase of home: notice of default first

Before the penalty starts running, there must be a default. Then a notice of default must be sent. The contract of sale states how to do this. Often this is with a registered letter or a bailiff's writ.

Sales contract not fulfilled: penalty

If after 8 days there is still non-compliance, then the other party can choose. The choice is then between the dissolve the sales contract or demand compliance. Upon rescission, the party rescinding is usually entitled to a penalty of 10% of the purchase price. If performance is sought, then a daily penalty goes into effect. This is 3 per mille (0.3%) of the purchase price. It may be that the specific purchase agreement stipulates other penalties or deviates from the usual model purchase agreements.

Penalty in NVM purchase agreement

In fact, a model purchase agreement is usually used for a home transaction. Usually, the model NVM purchase agreement used, but in the Amsterdam region you sign the purchase agreement at the notary. He uses the Amsterdam model sales contract. With respect to the penalty, the main difference between those models is that, as in the case of rescission, the 3 promille daily penalty in the NVM purchase agreement is capped at 10% of the purchase price: thus, after just over 33 days, the full penalty is forfeited. The Amsterdam model has no maximum. In doing so, one must be careful. In theory, the fine can even exceed the purchase price.

Moderation of penalty purchase agreement home

The law states that a fine can be mitigated under circumstances. However, case law shows that this does not happen easily in the case of a fine based on a purchase agreement home. This is because the reason is that the fine has an important incentive function. The threat of the fine must therefore be such that the other party actually does its best to comply with the agreement. If the court then easily moderates, that incentive function is gone.

Penalty home purchase agreement: for what shortcomings?

The fine is a sanction for all failures to fulfill the purchase agreement. Usually, however, we see that this involves the failure to deposit the deposit or provide bank guarantee.

Fine worked out after delivery

Regardless of the default, vigilance is required. Among other things, it is important that the penalty clause is worked out after delivery. Therefore, if it appears that the seller is unable to properly deliver, for example, because there appears to be hidden defects, it may be prudent for a buyer not to accept delivery so that the penalty can continue to run.

Attention: who was in default earlier, buyer or seller?

However, there is also a risk in this. Because if the buyer is wrong and it later turns out that the seller did deliver properly, that could mean that the buyer is in creditor default has come. If the latter is then also in default, then the buyer in turn is going to forfeit the penalty. Therefore, contact a lawyer real estate To be advised. The attorney can then additionally ensure that a proper formal notice is sent.