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More notaries are allowed to execute ground-lease deeds in Amsterdam

02-09-2020

The municipality of Amsterdam will offer more notaries the opportunity to execute ground-lease deeds. With this move, Amsterdam takes away potential anticompetitive concerns.

For the execution of ground-lease deeds of homeowners who want to switch from continuous to perpetual ground lease or who want to buy off their ground rent, the municipality of Amsterdam pre-selected notaries in the greater Amsterdam area only. Notaries outside that area were not allowed to execute such deeds. That decision restricted the choice of Amsterdam homeowners looking for a notary. The Netherlands Authority for Consumers and Markets (ACM) had received reports about this practice, and concluded that this restriction could be at odds with competition rules.

Martijn Snoep, Chairman of the Board of ACM, explains:”We are satisfied with the commitment of the municipality of Amsterdam that they will allow other notaries, too, to execute such deeds. As a result, homeowners in Amsterdam will have greater choice. This will give other notaries the opportunity to execute those deeds, thereby promoting competition among notaries. That, in turn, will act as an additional incentive to lower prices, and increase the quality of their services.”

What was the problem?

A couple of years ago, the municipality of Amsterdam decided to allow homeowners that have ground-lease contracts with the city to switch to a different ground-lease regime. Ground lease is a form of ‘rent’ of the ground on which a private property is located. Amsterdam homeowners are given two options: switching from continuous ground lease to perpetual ground lease, or buying off the ground rent for the perpetual period. Before early-2020, Amsterdam homeowners had the opportunity to participate in a special scheme offering more favorable conditions for switching. Many Amsterdam homeowners did so. Those that decided to switch to perpetual ground lease or to buy off their ground rent had to contact a notary for executing the deed. The municipality of Amsterdam had decided that these deeds could only be executed by notaries in the greater Amsterdam area.

More notaries are allowed to execute ground-lease deeds

ACM has had several discussions with the municipality of Amsterdam. These discussions revealed that, by preselecting notaries, the city wanted to safeguard the quality of, expertise in and experience with Amsterdam ground-lease law in the ground-lease deeds. ACM has pointed out that the municipality used standardized contracts, and it also reminded the municipality of the regulations of the trade association of notaries, which safeguard the quality of notaries. Following these discussions, the municipality of Amsterdam committed to allowing other notaries to execute ground-lease deeds if they make such requests, and also meet the city’s criteria. ACM will closely follow the drawing-up of these criteria. The municipality will formalize this commitment as soon as possible.

Enforcement of compliance with the competition rules

ACM wishes to ensure that markets work well for people and businesses. It enforces compliance with the competition rules in many different ways. In this particular case, ACM pointed out the possible risks to competition, and the problem was subsequently resolved quickly by mutual agreement. No further investigation was needed.