Legal system, title & land registry

01-06-2024

General remarks on the Dutch Legal System

The Dutch legal system is based on a civil law tradition. Certain legal principles are emphasised throughout the legal system, notably the principle of freedom of contract.

The legal system in the Netherlands is based on civil law, which means that the main sources of law are written laws and regulations, rather than judicial precedents or common law. The Netherlands is a founding member of the EU, and participates in the EU’s legal and political integration. The principles of the European Union (EU) law, which has supremacy over national law in matters of EU competence.

The Netherlands has a strong commitment to combat corruption, both domestically and internationally. Dutch anti-corruption laws prohibit bribery, fraud, money laundering, and abuse of office, and apply to public officials, private individuals, and legal entities. The Dutch anti-corruption laws are enforced by the Public Prosecution Service, the National Police, the Fiscal Intelligence and Investigation Service, and the Financial Supervision Authority, which cooperate with each other and with foreign authorities. The Netherlands also ratifies and implements various international anti-corruption conventions.

The reliability of Dutch governmental entities is generally high, as the Netherlands has a stable and democratic political system, a transparent and accountable public administration, a robust and independent judiciary system, and a vibrant and diverse civil society. The Netherlands ranks among the top countries in the world in terms of the rule of law, the quality of governance, the control of corruption, and the respect for human rights. The Netherlands also has a well-developed and efficient legal framework for resolving disputes, enforcing contracts, protecting property rights, and facilitating business transactions.

In terms of foreign investment, the Dutch legal system is characterized as rather predictable, with public authorities usually being relatively experienced in corresponding with foreign entities. Additionally, national authorities make considerable efforts to ensure that online information, as well as standardized forms, are available in English.

The Dutch civil law system is organized in a hierarchical structure of courts, which are independent and impartial. The lowest level consists of eleven district courts, which have general jurisdiction over civil, criminal, and administrative cases. The next level consists of four courts of appeal, which review the decisions of the district courts on questions of law and fact. The highest level consists of two supreme courts, which are the Supreme Court of the Netherlands and the Council of State. The Supreme Court is the final court of appeal for civil and criminal cases, and ensures the uniformity and development of the law. The Council of State is the highest administrative court, and also advises the government and parliament on legislative and administrative matters.

Title to real estate

Any legal “person” may own real estate. This will include individuals, companies, entities established by statute and certain charitable bodies. Partnerships (e.g. limited partnerships, public partnerships, undisclosed partnerships) cannot legally own real estate in their own name (only beneficially). Owners of commercial real estate include private developers, insurance companies, pension funds, banks and other financial institutions, private or public property companies, charities, the government and local authorities.

There are no restrictions preventing foreign nationals or companies from owning real estate. Real estate refers to 'immovable property' (onroerende zaak) under Dutch law. There are two types of real estate rights under Dutch law: 'rights in rem' (zakelijk recht) and 'personal rights' (persoonlijk recht). Rights in rem are the most extensive and apply to both movable and immovable properties. The main right in rem is the right of ownership. Other rights in rem related to real estate are derived from or similar to the right of ownership, such as the right of leasehold the right of superficies and apartment rights.

Ownership (eigendom) is the most comprehensive right to real estate. Freehold ownership of Dutch properties entails both rights and duties for the owner. The owner has the exclusive right to possess, use, enjoy, dispose or encumber the real estate according at his sole discretion. Limitations to the right of use may exist in public law.

Leasehold (erfpachtrecht) can be used for various purposes, such as residential, commercial, agricultural, recreational, or public use. The right of leasehold may be vested for a defined period or perpetually whereby the conditions of the leasehold (for example, the amount of the ground rent) may be adjusted from time to time. A right of leasehold may be vested on a right of ownership, but also on another right of leasehold (sub leasehold) or on an apartment right. The right of leasehold is frequently used by municipalities as owner of the land, particularly in urban areas such as Amsterdam, to enable the municipality to pursue a specific land-use policy. The ground rent received is also a welcome source of revenue for the municipality. Leasehold in Amsterdam has been a source of controversy and litigation, especially regarding the valuation of the land, the calculation of the ground rent, and the renewal of the contracts.

The right of superficies (opstalrecht) is the right to own buildings, works or plants in, on or above another person's real estate. It has various similarities with the right of leasehold described above and regulates the ownership of certain structures. The right of superficies is often used to govern the entitlement to renewable energy projects such as windfarms,  solar parks or thermal heating systems. A right of ownership, right of leasehold or right of superficies can be divided in apartment rights (appartementsrechten). An apartment right gives entitlement to a share in the divided real estate, with the right of exclusive use of a certain part thereof. Certain parts can also be designated for communal use by the collective owners of the apartments. Each apartment unit has its own owner, who also owns a share of the common parts of the building or complex. The owner of an apartment right has the exclusive right to use and dispose its apartment right. By operation of law, each holder of an apartment right is a member of the owners' association. The owners' association is responsible for the management and maintenance of the common parts of the building or complex, as well as for the representation and protection of the collective interests of the respective owners of the apartment rights. The owners' association has a reserve fund to cover the costs of the common parts. The apartment owners usually pay a periodical sum to the association. In cities such as Amsterdam, for example, large old warehouses are often split up into apartments for residential use. Other cases in which apartment rights are used is in case of multifunctional building which include residential apartments, offices and parking facilities.

Land Registry

The Dutch Land Registry, or Kadaster, is a public organization that registers and provides information about the legal status and location of real estate, ships, aircrafts, cables, pipelines, and other spatial data in the Netherlands. It also maintains the national coordinate system, the topographic map, and the cadastral map of the country. Recorded in the Land Registry is the nature of the entitlement, legal restrictions that apply to the entitlement, and whether the plot is subject to an attachment or right of mortgage.

The Land Registry is part of the legal system of land registration in the Netherlands, which is based on the civil law tradition and the principle of registration. This means that the transfer of ownership or other right in rem over real estate require a notarial deed and registration in the Land Registry. The registration creates a presumption of validity and enforceability of the rights, and also serves as a public notice to third parties. In real estate transactions the registration at the Land Registry of a transfer or establishment of a rights of rem, including the vesting of a mortgage, is a condition precedent for payment of the (purchase) price by the notary.

The Land Registry is publicly accessible through an electronic account. The fees charged by the Land Registry for the registration of rights are relatively low. The Land Registry provides accurate and fast information on land and properties and is updated every business day. The reliability of the Land Registry together with the Dutch notarial system is the reason that title insurance is very rare in the Dutch market.