How to conduct proper due diligence for your property in Holland

Last updated on December 18, 2023

All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.

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Everything you need to know is included in our The Netherlands Property Pack

Embarking on the journey of buying a property in the Netherlands is a substantial and potentially life-altering decision.

Whether you are on the hunt for a new home, an investment opportunity, or a serene vacation retreat, delving into the world of Dutch real estate can be an exhilarating experience.

However, it is imperative to approach this process with caution and meticulous consideration. Conducting thorough due diligence is a pivotal step in the property acquisition journey that should never be underestimated.

In this article, we will delve into the significance of due diligence when it comes to purchasing a property in the Netherlands. We will highlight the key factors and considerations that every prospective buyer should be well-versed in. From navigating legal regulations to conducting comprehensive property inspections, our aim is to provide you with invaluable insights to ensure that your real estate investment in the Netherlands is not only exciting but also secure.

Finally, please know that the full due diligence cheklist is included in our property pack for Holland.

What is a due diligence when you buy a property in Holland?

In the context of a residential real estate transaction in the Netherlands, due diligence is a critical step for buyers.

It involves conducting a thorough investigation into the property being considered for purchase. This process ensures that the buyer is making a well-informed decision and helps avoid any unpleasant surprises after the purchase.

The purpose of due diligence is to uncover potential issues with the property. This includes checking the legal status of the property, ensuring there are no hidden debts or claims against it, and verifying the property's physical condition.

It's essentially doing homework before making a big commitment.

While due diligence is not mandated by law, skipping it is risky. Without due diligence, a buyer might end up with a property that has legal issues or requires costly repairs that were not initially apparent.

In extreme cases, there could even be unresolved legal claims against the property, leading to significant losses.

Typically, the buyer initiates the due diligence process. Some aspects can be handled personally, like visiting the property and asking questions.

However, for legal and technical aspects, it's common to hire professionals such as real estate agents, notaries, or building inspectors. These experts can identify issues that might be missed otherwise.

Due diligence should start as soon as a property is seriously considered and ideally should be completed before any binding agreement is signed or a deposit is made.

The duration can vary from a few days to several weeks, depending on the property's complexity and the depth of investigation desired.

There are costs associated with due diligence, especially when hiring professionals. These costs vary, but they should be viewed as an investment in making a safe and informed real estate decision.

It's preferable to be aware of any potential issues upfront than to face expensive problems later.

Get the full checklist for your due diligence in The Netherlands

Don't repeat the same mistakes others have made before you. Make sure everything is in order before signing your sales contract.

What to check during a due diligence in Holland?

We'll give here a very brief overview of the elements you have to check when you conduct a due diligence in Holland ; if you want a full checklist, please check the "Due Diligence" document in our property pack for Holland.

When you're buying a house in the Netherlands, the due diligence process is like putting together a puzzle.

Each piece gives you a clearer picture of what you're getting into.

First off, checking the property title.

In the Netherlands, this means going through the Land Registry, known as Kadaster. It's like a detailed biography of the house. It tells you who owns it, if there are any debts attached to it, and its history. This step is key to make sure the seller really owns the house and there are no hidden issues.

Then, there's understanding the local rules.

Each area in the Netherlands has its own set of zoning laws and building regulations. These rules dictate what you can and can't do with the house.

Maybe you're thinking of adding an extension in the future, or turning it into a business? The local municipality can tell you if that's possible.

It's like knowing the rules of the game before you start playing.

Financial due diligence is another big piece. This is about making sure you're financially sound to make this purchase. It's not just about having enough for the buying price.

Think about property taxes, maintenance costs, and if you're getting a mortgage, whether the interest rates are favorable. It's like checking your wallet before you go on a shopping spree.

In the Netherlands, you also need to think about the environment around the house.

Are there any pollution issues or flood risks? Sometimes you might need an environmental assessment, especially if the house is older or in a sensitive area. It's like making sure the ground you're building on is solid.

Building inspections are your eyes and ears. They tell you if everything in the house is in good shape - the roof, the foundations, the plumbing.

In the Netherlands, while not always mandatory, they're definitely recommended. It's like getting a health check-up for the house.

Checking utilities is next. You want to know if the house has reliable access to water, electricity, gas, and internet. Sometimes this means talking to utility companies or checking the house's connections yourself. It's ensuring you have all the essential services you need.

Researching the neighborhood is about looking beyond the house.

What are the schools like? How's the crime rate? Are there enough shops and parks? It's like choosing the right community, not just the right house.

Understanding easements and rights of way is a bit tricky. These are legal rights that others might have on the property, like a path going through your yard. The Land Registry can help you here, too. It's about knowing who can use your property and how.

Lastly, future development plans and historical listings.

You'll want to know if there's going to be a new highway or a shopping center nearby in the future. Local planning offices can tell you about any upcoming projects. And for historical listings, if the house is old or in a historical area, there might be restrictions on what changes you can make to it. It's like looking into the future and the past of the house.

Everything you need to know is included in our Netherlands Property Pack

What's the process and who are the professionals involved in a property due diligence in Holland?

When you're buying a house in Holland, there are a few key professionals you'll likely need for the due diligence process.

Each brings their own expertise to the table, ensuring you cover all bases.

Firstly, a real estate lawyer is invaluable. They guide you through the legal aspects, like checking the property title and understanding local regulations. They're regulated by the Dutch Bar Association, ensuring they adhere to professional standards.

Then, you might need a surveyor, especially if the house is older or you have concerns about its condition. They do a thorough check of the property, looking at the structure, potential damages, or areas needing repair.

Surveyors in the Netherlands are usually members of professional bodies like the Dutch Association of Real Estate Brokers and Real Estate Experts, which maintain quality standards.

If you're not fluent in Dutch, language can be a barrier. But don't worry, many professionals in the Netherlands are proficient in English, especially in larger cities.

If needed, you can also hire a translator for additional support. This helps ensure clear communication and that you fully understand all aspects of the transaction.

Regarding the contract, once it's signed, making changes isn't straightforward.

Both the buyer and seller need to agree to any amendments, and they should be in writing. This is where your lawyer comes in handy, to ensure any changes are legally sound and in your best interest.

After signing the contract, the timeframe to complete all paperwork and get the necessary approvals can vary. Typically, it takes a few weeks to a couple of months. This period allows for the mortgage to be finalized, the property to be registered in your name, and any other legalities to be sorted.

It's a waiting game, but your lawyer and real estate agent will keep you updated on the progress.

A mistake in your due diligence could cost you thousands of dollars

Make sure you don't overlook critical checks when assessing the condition of your prospective property purchase. Avoid legal complications. Stay prepared, get our comprehensive guide.

What are the common pitfalls happening during a property due diligence in Holland?

After our research and the feedback collected from our local real estate partners, we have written an article about the risks and pitfalls when buying a property in Holland.

In the Netherlands, like in any country, buying a house comes with its own set of risks and pitfalls, especially in the due diligence process.

Understanding these can help you navigate the process more smoothly.

One unique pitfall in Holland is related to water management.

Much of the country is below sea level, so issues like flooding and land subsidence can be more common than in other countries. This means you really need to check the local area's water management strategies and whether the property has any history of water-related problems.

Foreigners often face risks around language barriers and unfamiliarity with Dutch laws. For example, not fully understanding the terms of the contract due to language differences can lead to surprises later.

Real-life examples include buyers not realizing they're responsible for certain taxes or maintenance costs because these details were lost in translation.

Culturally and historically, the Dutch are very straightforward in their business dealings, but this can sometimes be perceived as blunt by foreigners.

Misinterpreting communication can lead to misunderstandings in the negotiation process.

Legally, Dutch property law has its specificities. For example, the concept of 'verborgen gebreken' (hidden defects) means the seller is responsible for undisclosed defects they were aware of.

However, proving the seller's knowledge can be challenging, leading to disputes post-purchase.

In contracts, common pitfalls include overlooking clauses related to penalties for late payment or underestimating the closing costs.

Always have a legal professional review the contract.

To mitigate these risks, get a good real estate lawyer who understands Dutch law and can communicate in your language. They can translate and explain the legal jargon, ensuring you're fully aware of what you're signing up for.

Regarding property insurance, in the Netherlands, it's strongly recommended to have opstalverzekering (building insurance) to cover damages to the house itself, and inboedelverzekering (contents insurance) for your belongings. Flood insurance is also a consideration, given the country's geography.

In case of a dispute, legal avenues in Holland include mediation or going to court. The 'Kantonrechter' (sub-district court) handles smaller disputes, while larger cases may go to higher courts.

For property-specific disputes, you can also approach the 'Raad van Arbitrage voor de Bouw', a specialized arbitration board for construction-related issues.

-The Netherlands: how to buy real estate as a foreigner

-How to understand the property purchase agreement in Holland