Penalty and damages for rescission of purchase agreement?

Often when buying or selling a home, use is made of the NVM purchase agreement. That includes a penalty clause. This is also the case in the Amsterdam model sales contract. In the event that either party default of the purchase agreement, the other party forfeits a penalty. Often that 10% of the purchase price. Attorney Conner Canters specializes in disputes over the purchase and sale of homes and in this blog discusses whether you are entitled to damages in addition to the fine.

Functions of penalty clause in home purchase agreement

The purpose of the penalty clause in the purchase agreement of a home, is to ensure that the damages caused by the default are compensated. In addition, a penalty clause has an incentive function. It ensures that the other party does its best to properly comply with the purchase agreement, otherwise it forfeits a penalty. Another function of the penalty clause, is to prevent discussion about the amount of damages. Fixing the amount of the penalty in advance ensures that it is clear in advance how much must be paid, without the possibility of discussion as to whether the damages are actually as high as stated.

In summary, the penalty clause in the purchase agreement of a home has the following functions:

• Incentive function: because there is a high penalty for not complying with the purchase agreement, parties have an incentive to properly comply with that purchase agreement. This is also known as the deterrent function.
• Establish consequences: because of the penalty clause, it is established in advance what will happen if one of the parties fails to comply with the agreement. This reduces the topics that can be discussed.
• Fixation of damages: setting the penalty at a percentage of the purchase price avoids having to debate the amount of damages actually suffered. 

These functions overlap with each other. Because compensation is fixed at an often relatively high amount, this also benefits the incentive function.

Damage exceeds fine: entitled to additional compensation?

But what if the damage is not lower, but rather higher than the forfeited fine? In that case, you may want to claim additional damages. But given the fixation principle, are you entitled to that? That is what the North Holland District Court recently had to decide. In its judgment of July 30, 2025 (ECLI:NL:RBNHO:2025:8696) involved a case in which the agreed penalty was insufficient to cover the full damages. The central question was whether additional damages could also be claimed. 

Fine awarded after rescission of purchase of home

The proceedings concerned a purchase agreement for a house in which a purchase price of €755,000 had been agreed. The NVM purchase deed was used. In previous proceedings between the parties, the contractual penalty of ten percent was awarded. The buyer was ordered in those proceedings to pay a sum of €75,500 to the seller.

Damage found to be higher than fine forfeited

Subsequently, the seller sold the property to a third party. The purchase price was significantly lower than the agreed purchase price of €755,000. Moreover, the damages (the difference between the original purchase price and the purchase price with the third party) exceeded the amount of the contractual penalty. Therefore, the original buyer was again subpoenaed. The second proceeding sought payment of the difference between the fine paid and the actual damages.

Starting point: no additional compensation in case of penalty clause

At article 6:92 BW provided that a penalty clause supersedes damages. The buyer invoked that provision. He felt that the seller could therefore not claim an (additional) compensation. However, the court did not go along with this. This is because that provision that the buyer invoked is of regulatory law. That means that the parties can deviate from that statutory provision by agreement.

Deviating from legal premise in purchase agreement is possible

That is what happened in this case. In fact, Article 11.2 of the used purchase agreement states: 

“Upon rescission of the purchase contract on the grounds of culpable breach, the defaulting party shall forfeit to the other party an immediately payable penalty of ten percent (10%) of the purchase price without judicial intervention, without prejudice to the right to additional damages, if the actual damages exceed the immediately payable penalty, and without prejudice to reimbursement of costs of recovery.”

The court therefore ruled that if the damages exceed the forfeited fine, then the seller is entitled to payment of the additional damages:

“The court therefore finds that under Article 11.2 of the purchase agreement, [plaintiffs] are entitled to compensation for their damages to the extent that they exceed the contractual penalty.”

How should you determine the amount of your damages?

The judge additionally addressed the question of how you determine what your actual damages are:

“The basic principle in compensation for damages is to put the party who has suffered damage in the same condition as he would have been in if the party liable for damages had fulfilled his obligations. In doing so, it is important that there is sufficient connection between the damage and the event (conditio sine qua non connection).”

In short, it comes down to comparing the following situations:

• the situation you would be in if the other party had duly fulfilled its obligations (i.e.: received the full purchase price);
• the situation you are in now (i.e.: the purchase price you actually received.

So in this case, it's about the difference between:

• The purchase price you would have received if the original purchase had gone through, and;
• The purchase price you received after the second purchase plus the penalty received.

However, the judge did find that the seller had to deduct some ‘benefits’ he received from his damages. That was about rental income and tax benefits. 

Dissolution of sales contract entitles buyer to penalty and damages

In conclusion, therefore, it is possible to claim additional damages in addition to the contractual penalty. However, this is only possible if it is stipulated in the purchase agreement and if the contractual penalty does not fully cover the damages. The exact wording in the purchase agreement is essential in this regard. Therefore, have your purchase agreement Before you sign that one.