Book 7, preview of a new special contract law
On 16 April 2024, the legislative proposal regarding Book 7 “Special Contracts” of the new Civil Code was submitted in the Belgian Parliament. After general contract law, the law on so-called “special” or “named” contracts (sale, contracting, lease, etc.) will also be modernised. In this article, we give a preview of some of the proposed novelties in the field of sale and lease. As this is only a legislative proposal, it is of course possible that the final legislative text may still differ from what we explain below.
Sales law gets a new look
In practice, the question regularly arises as to whether a contract should be qualified as a sale or as a contracting agreement (i.e. a work or construction contract, which will now be legally referred to as a “service contract”). In principle, a transfer of a movable property yet to be manufactured against a price in money is a sale. Only if the client himself provides a substantial part of the necessary raw materials or if the property is manufactured specifically for his needs, will it be a service contract instead of a sale. In case of immovable propertystill to be constructed or renovated, this is a service contract if it only concerns the construction or renovation, but it is a sale if at the same time the ownership of the land or the right of use in rem (e.g. right of superficies) is transferred.
A notable change regarding the sale of immovable property is that the transfer of ownership by operation of law will now only occur upon execution of the notarial deed. It will therefore no longer be necessary to expressly provide for this postponement of transfer in the preliminary sales agreement. The risk (e.g. fire) normally only passes to the buyer together with the property, but if the buyer already acquires the use of the property before the deed, he will now bear this risk earlier as well.
Finally, the dual liability regime on visible and hidden defects is abolished. The seller must now deliver a generally “conforming” good, which must comply with what the contract stipulates and with what the buyer can reasonably expect. The seller is only liable for defects of which the seeds were already present at the time of delivery, regardless of whether he could already had knowledge about them and even if they only come to light later. The existing sanction regime with a choice between restitution or price reduction will be abolished, so that a demand to repair the defects will now also be possible. Finally, the requirement to effectively sue in court within a short period from discovery of the defect disappears. From now on, the buyer must (1) notify the seller within a reasonable time after the discovery of the defect and (2) bring an effective claim before the court at the latest two years after that notification (although this period can be suspended during negotiations or during the conduct of an expert investigation).
Common lease law is also being reformed
Since most leases (e.g. residential and commercial leases) are a competence of the Belgian regions and not of the Belgian federal authorities, the relevance of the (federal) Civil Code in the field of lease is mainly limited to common lease law (e.g. lease of an office space, storage space, garage, holiday residence or movable property).
Also in the case of lease, the tenant must notify the landlord in case of a conformity defect within a reasonable time after he discovered or should have discovered the defect. The tenant’s claim for loss of use and enjoyment expires two years after such notification. However, other claims due to a conformity defect (e.g. the repair of certain defects) do not expire while the lease is still in effect (and may even be made up to two years after its termination).
Another novelty is the landlord’s compensation obligation for any fitting-out or alteration works carried out in the property by the tenant. Only non-removable works carried out without the landlord’s permission do not have to be compensated.
Finally, in the case of the lease of immovable property, unilateral termination by the landlord (on the basis of a resolutive clause or by unilateral notice) remains prohibited. For this, the landlord still has to apply to the Justice of the Peace. Resolutive clauses in favour of the tenant however, will from now on be allowed.
Wibo Van Poeck and Bruno Thoen
De Langhe Attorneys
