Are you entitled to a refund of expenses if the seller of a house pulls out?

by | Aug 3, 2022 | legal, Purchase realtor

Suppose you bid for a home. You negotiate back and forth some more and finally you have made a deal and the house is bought. This is what we call “will agreement. You will receive a neat email from the selling party confirming the purchase. That same afternoon you will also receive a draft purchase agreement. You email back right away that the purchase agreement looks good and may be signed as soon as possible.

You’ve agreed to have a building inspection done and it’s a few days away. For the architectural inspection you will pay €400. You have also engaged an appraiser who has made an appointment with the selling broker to come and appraise the property. That appraisal has already taken place and cost you €1000.

Everything looks good and now it is really time to sign that purchase agreement. You call the selling realtor again when it will be possible to sign. And then it goes wrong. The selling broker tells you that the seller has decided to withdraw. He has changed his mind and no longer wants to sell the property to you.

Of course, you are quite upset. You ask yourself:

  • Can the seller just withdraw? You did buy the property and have confirmation of that, right?
  • And if the seller can back out at all? Who is going to pay for the architectural inspection of €400 and the valuation of €1000?

Can the seller just withdraw?

If the seller is a private individual (i.e. not a corporation) and the buyer is also a private individual (i.e. not a professional investor buying on behalf of a corporation) then there is a requirement of writing. This means that you do not buy a property in the Netherlands until a purchase agreement has been signed. If it is not signed, then nothing has been purchased.

In the case above, we speak of a “consumer purchase and a consumer sale. If the seller is a company (e.g. Floris Vastgoed B.V.) then there is no requirement to be in writing. A verbal purchase or even better a confirmation of the purchase by email is then immediately a final purchase. This also applies if the buyer is a professional buyer (e.g. Van Kuijeren Vastgoed Beleggingen B.V.). So imagine this: you bid €200,000 on the property being sold by Floris Vastgoed BV. Your bid will be accepted. In this case, the seller(=owner) can no longer withdraw because he is selling as a business and not as a consumer.

Who is going to pay for the costs incurred if the seller of a property pulls out?

If the seller and/or buyer are both individuals (not businesses) and there is no signed purchase agreement yet, the seller is not liable for damages. The costs that the buyer has had to incur, for example, for a valuation report and an architectural inspection, do not have to be paid by the seller. Are you one of those duped? If so, the advice is to try to recover these costs.

In addition, it would simply be very neat if the seller did this.

Isn’t that a little unfair?

Here’s what the law says about that: the seller may simply withdraw at any time if a purchase agreement has not yet been signed. And the buyer should know this. So all costs incurred by the buyer without a purchase agreement already signed are at the buyer’s own risk. In fact, there is always a chance that the seller will back out.

Am I entitled to compensation if I have rented a property and the landlord withdraws?

With rent, it’s different. That’s not where that requirement of writing applies. Suppose you want to rent something and you have agreed verbally or preferably by mail/sms/whatsapp to rent a property by a certain date and for a certain rent. You get the keys next week and you already have to incur necessary expenses in preparation for the move. You’ve already arranged for a change of address, arranged for movers, taken out subscriptions, etc. In that case, you would have a much better chance of being reimbursed for the costs incurred if the landlord just pulled out yet. You have the greatest chance of successful damages if you are already at such an advanced stage of preparation for the lease and have already incurred the necessary costs, that it would no longer be reasonable for the landlord to withdraw without being liable for damages.

In practice, however, this is tricky, as many landlords will be combative and will not readily comply with a liability claim for the costs you have incurred. And the question is whether it is wise to incur all the legal fees then. In that case it is nice if you have legal expenses insurance, because they could help you with this.