Living area of Dutch home proves much smaller than stated in the sales brochure: how big is the loss?

A couple bought a home via Funda, a Dutch property website. The sales brochure stated a living area of 150 m2, which turned out to be only 124 m2 after the house had been bought. The buyers then held the estate agent liable for the loss. The case was even taken to the Dutch Supreme Court following proceedings at the Court of Justice. The parties continued to disagree on the manner in which the loss should be determined. Dutch property lawyer Marco Guit explains the decision of the Supreme Court.

Incorrect information: is the Dutch estate agent liable?

After the Dutch district court had awarded a claim for damages to the amount of € 20,000.-, the estate agent lodged an appeal against that decision. In interlocutory proceedings, the court of appeal considered how the loss should be determined. Consideration was also given to the question whether the buyers were misled by an incorrect representation of facts. Based on those facts, they had entered into an agreement (…) which they would not have entered into if they had known the actual living area prior to the purchase. According to the court, consideration had to be given to the loss of value ensuing from the fact that the house only had a living area of 124 m2 instead of 150 m2.

Depreciating effect

According to established Dutch case law, this so-called depreciating effect can also be described as that part of the purchase price of the house that has not fulfilled its objective, namely the acquisition of the reasonably expected enjoyment of a property. The court intended to have the depreciating effect established by an expert, but the lawyer of the estate agent had meanwhile lodged an appeal with the Supreme Court. The estate agent’s lawyer argued that the method of determining the amount of compensation as applied by the Court of Appeal, constituted an incorrect interpretation of the law.

Estate agent’s lawyer: no depreciation

According to the estate agent, no depreciation occurred due to the circulation of incorrect information about the living area. If the estate agent had informed the buyers about the living area correctly, then this, he claimed, would not have led to any change in the living area or a different value of the house. There could therefore be no question of any depreciation caused by an unlawful act.

Establishing the loss through comparison

The Supreme Court concurred with the estate agent’s point of view. According to the Supreme Court, the amount of the loss sustained by the buyers should be determined by comparing their current situation to the situation in which they would have found themselves if the estate agent had stated the correct living area of 124 m2. In that hypothetical situation, the house would also not have had a living area of 150 m2. The Supreme Court referred the case back to the court of appeal, which will now have to recalculate the loss with due regard for the aforesaid ruling.

Property lawyer in the Netherlands

It is certain that the buyers would not have entered into the agreement if they had known the actual living area prior to the purchase. The amount of the loss should be determined on the basis of the hypothetical situation that the buyers would not have bought the house if the actual living area had been stated. In this, it is important that the court estimates the loss in a manner that is most in keeping with its nature, and that an estimate of the loss is made if the exact amount cannot be determined. The court enjoys a considerable degree of freedom in doing so.