As an entrepreneur buying commercial property as an investment, you rely on the information provided by the seller. You look at the rental income, the term of the lease agreements and the expected return. But what if it later turns out that the seller withheld crucial information — for example, through a forgotten addendum (a supplementary document to an existing (lease) agreement)?

A recent ruling by the Arnhem-Leeuwarden Court of Appeal shows what the consequences can be and what lessons you, as an SME entrepreneur, can draw from this.

The purchase

In April 2023, a private limited company (B.V.) purchased a partly rented commercial property for €1,225,000. The seller presented the property with a so-called Investment Memorandum: a document giving prospective buyers insight into the expected return on the property.

The memorandum shows an annual rental income of €128,701 and a “weighted average lease length” (hereinafter: WALL) of the lease agreements of 3.0 years. According to the seller, one of the larger tenants had a lease running until 31 August 2026. To the buyer, the investment looked solid, and the purchase was completed on 1 May 2023.

The surprise after completion

Shortly after the purchase, the buyer discovered that an addendum existed to the lease agreement of that one major tenant. This addendum had never been provided to the buyer. And what did it turn out to say? The addendum gave the tenant the right to terminate the lease early at any time, subject to a one-year notice period. The WALL of 3.0 years that had been presented was therefore, in reality, lower.

The tenant did in fact exercise this right of termination and cancelled the lease as of 31 August 2024. As a result, the buyer risked losing a substantial part of its expected rental income. Moreover, it turned out that the tenant was also using part of the third floor free of charge, and there were still ongoing disputes over service charge arrears for 2021 and 2022.

The proceedings

The buyer therefore went to court. He initially sought to have the purchase agreement annulled on the grounds of mistake (dwaling), arguing that he had entered into the agreement based on an incorrect or incomplete representation of the facts. Should that claim not be upheld, he claimed, in the alternative, dissolution of the agreement or financial compensation, initially amounting to just over €211,000, for the loss he would otherwise incur. The district court dismissed all claims, and the buyer appealed.

In the meantime, the buyer had already resold the property to a third party for €1,250,000. As a result, annulment of the purchase agreement was no longer possible, and the buyer amended his claim: he asked the Court of Appeal to compensate his loss by payment of €211,000, or alternatively two years of lost rent amounting to €115,681.

What did the court rule?

The Court of Appeal largely ruled in the buyer’s favour. The seller had breached his pre-contractual duty to disclose by failing to provide the addendum. This duty to disclose means that, as a seller, you are obliged to share all information that is material to the buyer in making a sound decision. The addendum directly affected the rental income stream and the term of the lease agreements — precisely the core of what the buyer had purchased.

The seller tried to defend himself by invoking the so-called “as-is” clause in the purchase agreement: a provision stating that the buyer accepts the property in its current condition. The Court of Appeal rejected this defence. In the court’s view, this clause did not cover the accuracy and completeness of the information provided about the ongoing lease agreements. The seller could therefore not hide behind the “as-is” clause.

On the matter of the third floor being used free of charge, the court ruled differently: here, the buyer should have asked further questions himself during his viewing, since he could have seen that the floor was in use.

Moreover, legally speaking, there was no question of a tenancy without consideration, and therefore no tenancy right that could disadvantage the buyer. The service charge dispute over 2022 had already been contractually allocated to the seller, so the buyer suffered no loss from it either.

The damages

The court then had to determine how much damage the buyer had suffered as a result of the mistake. To do so, it applied a method previously established by the Supreme Court in 2026 (ECLI:NL:HR:2026:199): you compare the actual situation, in which the buyer entered into an agreement based on incorrect information, with the hypothetical situation in which the mistake had not occurred. In other words: “what would have been agreed if I had had the correct information?”

For that reason, the claimed amounts were dismissed, as they were based on a scenario in which the tenant would leave entirely, which the court considered too speculative.

Instead, the court reasoned as follows: had the buyer known about the addendum before closing the deal, he would in all likelihood have negotiated a rent guarantee for the period during which the tenant could leave early. The court estimated the likelihood that the seller would have provided such a one-year guarantee at 50%. As a result of this probability calculation, only half of the expected loss of rent qualified for compensation. The court set the resulting loss at approximately €39,841 and rounded this, on a reasonable estimate, to €40,000. Statutory interest is also owed on this amount from 9 December 2023.

The key lesson

The core of this case is clear: a seller of rented property may not hide behind an “as-is” clause if he himself has provided incorrect or incomplete rental information. The seller’s duty to disclose is active, not passive. It is not enough to rely on the buyer’s duty of investigation and say “the buyer should simply have asked.” If, as a seller, you know that an annex exists to a lease that increases the tenant’s flexibility, you must provide that annex. If you fail to do so, you run the risk that the buyer can successfully invoke mistake and recover the damage suffered.

What does this mean for you as an entrepreneur?

Whether you are buying a commercial property as an investment or renting one out yourself, this ruling offers concrete practical guidance.

As a buyer of rented commercial property, you would do well, during due diligence, not only to request the lease agreements themselves, but also to explicitly request all annexes, addenda, side agreements and addendums to those leases. Do not rely blindly on the information sent by the seller alone, and ask enough questions yourself to bring all information to light. This way, you at least fulfil your duty of investigation as a buyer. It is still frustrating, however, to have to litigate afterwards over losses you could have prevented in advance. The legal costs of such proceedings can eat significantly into an otherwise favourable judgment.

As a seller of rented commercial property, the rule of thumb is: provide everything a buyer needs to make a well-informed decision about the rental income streams. This includes not only the main lease agreements, but also supplementary arrangements, termination options, discounts and ongoing disputes. An “as-is” clause will not protect you if you yourself have provided incomplete information about the very lease agreements referred to in that same clause. Have any free-of-charge usage arrangements or other goodwill arrangements been made? Make sure these too are disclosed transparently, up front, during the negotiations.

For both parties, it also holds true that you should be specific in the purchase agreement about which warranties are given and exactly what the “as-is” clause covers. Clarity in advance saves disputes afterwards.

Do you need help buying or selling rented commercial property, assessing purchase and lease agreements, or setting out clear arrangements? We, the business lawyers at The Legal Company, are happy to help. Feel free to contact us at info@thelegalcompany.nl or call 020-3450152.

Blog by our corporate lawyer Puck de Jong LL.M.