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14 december 2020

Two reasons why you must include a diplomatic clause in your rental agreement

A Diplomatic clause has become very common in rental agreements. There are two different forms of diplomatic clauses. The first form applies to persons (for example, diplomats) who want to rent out their homes when they go abroad. This form of the diplomatic clause has its basis in article 7:274 of the Dutch Civil Code (hereinafter: “Diplomatic clause 1”).

The second form applies to employers who want to provide accommodation to their employees who are temporally working far away from their homes. As an employer, you do not wish to be bound to a rental agreement if your employee has to leave. Therefore, you should include a diplomatic clause in the rental agreement (hereinafter: “the Diplomatic Clause 2”).

Improve your legal position if you rent out your house

We advise you to include a Diplomatic clause 1 when you move abroad and decide to rent out your house. This clause improves your legal position if you rent out your house because it provides a legal basis to terminate the rental agreement.

When you are returning home, and the tenant is unwilling to leave the house at the set date, you must go to court to terminate the contract. However, the Dutch Civil Code is strict. A judge can only assign a claim to terminate the agreement in a few specific situations. A Diplomatic clause 1 is one of those specific situations.

Therefore, with a Diplomatic clause 1 you can assure that the tenant will leave your house eventually.

Housing for your employees: avoid unnecessary costs

Suppose you want to provide your foreign employees who are temporally working in the Netherlands a place to live. Or suppose you want to provide your Dutch employees who are temporally working far away from home within the Netherlands a place to live. In these cases, it is relevant to include a Diplomatic clause 2 in the rental agreement.

People often enter rental agreements for a definite period or an indefinite period with a minimum rental period of one year. In principle, both parties cannot terminate the definite contract or the contract within the first year. However, if you included a Diplomatic clause 2 it is possible to end the definite contract or the contract within the first year. Therefore, you avoid unnecessary rental costs.

Because of COVID-19, including a Diplomatic clause 2 is now more relevant than ever. Many expats have left the country before the end of the rental period. Their temporary apartments were left empty.

Furthermore, many Dutch employees were obliged to work from home. It became unnecessary to live nearby their work. Therefore, many Dutch employees left their temporary apartment and returned to their own homes before the rental period ended.

In both situations, the temporary residences became needless. Nevertheless, the employer's obligation to pay the rent remained even as many apartments were left empty.

Be aware of the possibility to include a Diplomatic clause 2 in the rental agreement. It avoids unnecessary rental costs.

Think ahead

To improve your legal position when you are renting out your house and avoid unnecessary costs for renting an apartment for your employees, we would strongly recommend including a diplomatic clause in the rental agreement.

More information

Do you have any questions about a diplomatic clause? Do not hesitate to contact us. We are more than happy to answer your questions.