Dutch Civil Law
The most important property right within Dutch civil law is the right of ownership. It can only be attached to a movable or immovable thing. A ‘thing’ is a tangible object, susceptible for human control. A house, for example, is a thing. It's tangible, in the sense that it’s actually present and concrete. The same can be said of a piece of land, a car, a bicycle, an animal, a computer, a table, paper, etc.
It’s vital to notice that the right of ownership itself is not a thing. Like any right, it is merely a set of appointments (arrangements) ordering people how to behave. The right of ownership consist of rules of behaviour with regard to a movable or immovable thing. These rules indicate what the proprietor of a right of ownership may and may not do with the thing to which his right is attached and how others should behave towards that thing as well. It also specifies how the owner can defend himself against others who use or damage his thing without his permission. In this respect, a right of ownership is just as intangible as, for instance, the obligatory claim of a creditor. Also a claim is a bundle of rules of conduct, yet only indicating how the creditor and debtor have to behave mutually and what they may expect from each other during the period they are bound by this obligation. The claim itself is not a tangible thing of its own, no more than a story or a verbal agreement is. Just like an agreement it may be written down on paper, but this only makes clear what the content of the right is, so of what it consists. When a verbal agreement is put into script, the written contract doesn’t make out the agreement itself. The arrangements that parties have agreed upon form collectively the agreement. The paper just is an expression of these arrangements, with which the existence and content of the agreement may be proven. The same applies to legal rights that as such are described in a Code or judgement, but that still remain an intangible set of rules of conduct themselves.
So the owner of a thing in fact has not a thing, he only has an intangible right in that thing, namely a right of ownership, consisting of no more then various rules of conduct with regard to the thing he owns, to be respected by everyone, including himself. He doesn’t own that thing, but he is the proprietor of a right of ownership of it. Nevertheless, the Dutch Civil Code often uses the expression ‘things’ as shorthand for ‘the right of ownership of the thing’. It speaks of the transfer of things and of things that belong to the owner. This is done because it is in line with common parlance, where it is unnatural to speak of the transfer of a right of ownership of a thing to the buyer or of a right of ownership that belongs to the owner. The proprietor of a right of ownership of a movable or immovable thing, is named the owner. Only the person who has a right of ownership is called an 'owner'. The concept of ownership only applies to tangible movable and immovable objects, therefore to ‘things’ (Article 3:2 DCC), not to other real property rights or claims. So a person who's entitled to another real property right than the right of ownership, for instance to a pledge, an easement, a long leasehold or an obligatory claim, is never called the owner of the right, but its proprietor. He doesn't own a leasehold, a mortgage or a claim, but he is entitled to it (or it belongs to him).
When looking around, for instance in a street or an office, one will notice all kinds of different things. These immovable and movable things may not be used freely by everyone who bumps into them. A person who walks down the street and encounters a beautiful car, that's parked there, knows that it belongs to someone else, although he probably doesn't know to whom. But for him it's clear that he's not allowed to do with that car as he pleases. He may not force his way into it or use it. He may not damage it and he is not allowed to hand it over to someone else. The same can be said with regard to all other movable an immovable things. It's clear that they belong to someone else, who has certain rights in it. Someone who comes upon a cow in a meadow, knows that he cannot take possession of it just like that. And in the same way he knows that he may not enter into someone else's house without consent of its residents. Even though he is not aware who owns these things, he is certain that someone does, whereas he himself never obtained a right in it, so that he can't use them freely himself, at least not without approval of its proprietor.
Humans have always been surrounded by things. Gradually, when people started to harvest their own crops, hold their own animals and make their own houses and equipments, they tried to reserve these things exclusively for themselves. The oldest right to a thing is 'ownership'. This is also the most including right which as such may be related to a movable or immovable thing. The owner is the only person who has complete power over the thing he owns. He is, to the exclusion of all other people, free to use it as he pleases, to obtain all its fruits (benefits) and to dispose of it, for instance by transferring his right of ownership to a third party. He may also grant someone else the right to make use of the thing for a fixed period of time, either by an agreement or by establishing a limited real property right on the thing. He is even entitled to destroy his property as long as he doesn't harm other people or their property in the process of doing so.
The law regards a person who has obtained the right of ownership of a thing in accordance with the necessary legal requirements, as the owner of that thing. Consequently, it acknowledges that he may use his thing in the before mentioned ways, since this behaviour of an owner towards his property is covered by law, which means that no one can oppose to it. The law indicates on the other hand that no one else may use the thing of the owner, let alone take or destroy it. All other persons must restrain themselves from performing acts which could disturb the owner in exercising his rights over the thing. Therefore a random third person may not occupy the farm of the owner or live their ('right of use'), he may not pick the apples from the trees in the orchard of the owner (`perception of fruits') and he's not allowed to transfer the motor tractor of the owner to another person or to encumber it with a real security right like a pledge ('power of disposition’). The law has reserved all these rights and powers over the thing exclusively for the owner. This automatically means that the owner may oppose against each unlawful violation of his property. He can - if necessary assisted by judicial authorities and the police - remove the squatter from his farm, take back the stolen apples and reclaim the motor tractor from the third person who has acquired the ownership or pledge on it from an unauthorized alienator, taking into account, however, that this person may be protected by law if he acted in good faith when obtaining his real property right.
A right of ownership is always related to a thing, therefore to a tangible object that can be controlled by humans (Article 3:2 DCC). When such a thing comes to existence, for instance when a car is made or a house is built, also a new right of ownership is formed. Someone wants to be regarded as the owner of the newly created thing. The law has responded to this by issuing rules for the acquisition of a right of ownership of newly created things. As soon as a new thing has been made and the legal requirements for its acquisition are met, the law automatically points out the person who has acquired a right of ownership in it. So from the start it is clear who owns a newly formed thing.
The territory of the Netherlands is divided in a few million land plots. These land plots are registered separately at the Dutch Land Registry Office. All land plots are recorded at the public registers for registered property, indicating for each land plot its location, its surface area, its character (housing area, industrial purposes, farmland, woods) and the name and address of its owner. From way back these land plots belong to someone. Over the centuries they have come into the hands of different successive owners. When these land plots passed to them, for instance as a result of a transfer, a marriage in community of property or an apportionment of an inheritance, no new rights of ownership were created. Merely an existing right of ownership was passed to another person who, as of then, became the new owner of the land. Only in exceptional situations new land plots have arisen and only then new rights of ownership of land were created, for instance where the sea has been drained and new land has come to the surface. In such events the State divides this land into several new land plots, which are registered again at the public registers for registered property. At first these land plots were owned by the State. Meanwhile the State has transferred a large number of the involved rights of ownership to other people. In this way new rights of ownership of immovable things were created.
The creation of new rights of ownership of immovable things may also occur when an existing land plot is split up into two or more land plots. For each of these land plots a new right of ownership is formed. Conceivable is also that two or more existing land plots are transformed into one large estate. The rights of ownership of the small land plots cease to exist. A new right of ownership is shaped for the large land plot itself. In the past such a redistribution of land was quite common.
One could say that in reality seldom new rights of ownership of immovable things are created. Where a new component is added to or taken from an immovable thing, solely the object to which the already existing right of ownership relates, expands by accession or it diminishes by establishing a right of superficies or an apartment right.
Every day millions of new movable things are made and, with that, new rights of ownership arise and cease to exist. Each day new breads are baked, pieces of meat are sliced, cars are produced and so on. Depending on the way in which a new movable thing is formed and the nature of the newly made thing (these facts together are a ‘juridical fact’), the law regulates who has become its owner (‘legal effect’ of that juridical fact). The most important ways of acquisition of movable property are mentioned here.
The most apparent way to acquire property is by means of the 'perception of fruits' (‘vruchttrekking'). The owner of a movable or immovable thing becomes, by operation of law, the owner of the fruits that are produced by and separated from that thing. As long as the fruits are still attached to the movable or immovable thing, they simply form one of its components and not an independent thing. An unborn calf laying in the uterus of the cow is legally just a component of that cow, whereas the cow itself is regarded as a movable thing in itself. So the owner of the cow (movable thing) is automatically also the owner of the calf. An apple hanging from a tree (immovable thing), is a component of that tree, which itself forms a component of the land. The owner of the land automatically owns all its components, like the trees on his land, and also the components of these trees, like the apples hanging from their branches. As soon as the calf is born, it is separated from the fruit bearing object (cow) and has become an independent thing that is feasible to be owned separately. The same applies when an apple is picked from the tree or has fallen on the ground. After it has been separated from the fruit bearing object (tree), it has become an independent movable thing which, according to law, can be owned by someone independently (Article 3:9 paragraph 4 DCC).
But now the question arises to whom the separated fruits belong. The law states that the owner of the fruit bearing thing by operation of law acquires the right of ownership of the fruits separated of that thing, unless another person is entitled to it by virtue of a right to enjoy the fruit bearing thing (lessor, usufructuary, leaseholder), in which case this other person acquires the right of ownership of the separated fruits immediately (Article 5:17 DCC). The owner and this other person have agreed to this up front and the law recognizes their agreement by assigning the right of ownership of the fruit, instantly at its separation, to this other person. This means that the owner of the fruit bearing thing does not become the owner of the fruit first, for example under the obligation to transfer it to the person with a right to enjoy the fruit bearing object. This other person directly acquires a right of ownership in the separated fruit as soon as it is disconnected from the fruit bearing thing, whereas the fruit never passed the property of the owner of the fruit-bearing object.
Far out the most movable things come to existence by what is called 'specification' (‘zaaksvorming’). Specification means the making of new movable things from other objects, supplies and substances. These materials may have belonged to the person who has created the new thing or to someone else. In both cases the law attaches a right of ownership to the newly made thing. The question whether a new thing is formed, must be answered by common opinion. Important in this respect is whether the new thing still can be named by the old name of one of its components, whether it is still possible to disassemble it and turn it back to its original components and whether its value is for a large part the result of the operational process of its creation. But overall common opinion remains decisive. If, according to these criteria, no new thing has been made, then the law doesn’t speak of specification, but of accession. As mentioned before, the legal result of an accession is not the creation of a new right of ownership, but the expansion of the movable or immovable thing to which an already existing right of ownership is connected.
In the event of specification Article 5:16 DCC indicates who has become the owner of the newly created movable thing. As a starting point the person who has manufactured the new thing will acquire the right of ownership of it as soon as the new thing is completed, regardless to whom the materials from which it was made belonged previously. Therefore the manufacturer becomes the owner of the new cars he has created in his plant, even when they are composed of parts and materials belonging to others, for instance to his suppliers who had delivered their goods under retention of title. As soon as these parts and materials have become a component of another – newly formed – thing, the suppliers have lost their right of ownership.
Nevertheless, the manufacturer will not become the owner of the new thing he has made when the supplier did not only put the necessary materials at his disposal, but also did order (instruct) him to create a new thing from these materials. In that event the owner of the materials, who also asked the manufacturer to create a new thing, will become the owner of that new thing as soon as it is completed. Again the law has created a new right of ownership, yet not for the manufacturer, but for the person on whose behalf the new thing was made. The manufacturer is solely entitled to a remuneration for the work he performed.
It is conceivable, however, that the manufacturer creates, under an instruction of someone else, a new thing from materials which, prior to the completion of the new thing, belonged to different owners. In that event the owners of these materials become proportionally co-owners of the newly created thing, each for a share corresponding to the value of the material from which the new thing is made (Article 5:16 paragraph 1 DCC in connection with Article. 5:14 paragraph 2 DCC).
A right of ownership may be acquired by means of ‘connection’. This happens when two or more movable things are connected in such a way to each other that, according to common opinion, they make out one new thing, but without having obtained another character or nature (no specification) and without being able to point out one principle thing which has absorbed the other as its component (no accession to property). Not a new type of thing has been created, but two or more things of the same type are connected to each other and have formed a larger thing of the same type. An example of this can be found when two pipes are soldered to one big pipe. The two pipes have ceased to exist as an independent thing and, with that, also the separate rights of ownership of these two pipes have come to an end. The two pipes together form a new thing of the same type. This means that a new right of ownership is created pursuant to law by connection (or fusion). According to Article 5:14 paragraph 2 DCC the original owner of the two pipes has become the owner of the newly formed pipe. In the event that the two pipes belonged to two different owners, the new pipe will be owned by them jointly. They each have a share in the right of ownership of the newly created pipe. This new pipe doesn’t belong to the person who has manufactured it, because his work had hardly any influence on the creation of the new pipe in view of the fact that the character of the materials itself has not changed.
Some movable things can be mixed with other movable things. ‘Mixture’ means that separate quantities of fluid (wine, petrol) or gases (oxygen, nerve gas) or of other materials suitable to be blended (grains, pebbles) or combinations of them (bird seeds), are put together in such a way that one new substance is produced with its own specific character (Article 5:15 DCC). The person to whom the original materials belonged, will acquire a right of ownership in the newly formed substance. When someone puts dried orange pulp in a bottle of water, in order to make orange juice, he will become the owner of the newly formed beverage, provided that he was the owner of the pulp as well as of the water. Where the original materials belonged to different owners, they will acquire a share in the newly created right of ownership, in proportion to what they have contributed in the creation of the new substance.
When two substances are put together, without creating a new substance with its own specific character, then there is no mixture in the legal sense of the word. Since no new type of substance has been created, the type of one of the used old substances will still decide what is the principal thing according to common opinion. The owner of this substance will acquire by accession the right of ownership of the substance that has been added to his property and that has become a component thereof.
A mixture should not be confused with what is known as an ‘unreal mixture’. When an unreal mixture occurs, several movable things are in such a way mingled with each other that they still live on as a separate movable thing (contrary to a real mixture), but it’s no longer possible to identify them as such, meaning as well that their proprietor is no longer able to prove which of the mixed things exactly belonged to him prior to the unreal mixture.
An unreal mixture often occurs with regard to money coins and banknotes that are handed over to someone else. As soon as the owner of these coins and notes can no longer prove which of these movable things exactly belonged to him, he has lost his property. In return the law grants him, either on the basis of an agreement, tort or an unjustified enrichment, an obligatory claim against the recipient to obtain an equal sum of money.
New rights of ownership of movable things arise as well when a component of a principal thing is 'separated' from it. Since the owner of a thing is entitled to do with it as he pleases, he may also pull out one or more of its components. This is nowhere to be found in the Civil Code, but results implicitly from the powers and rights which the law has granted to the owner of a thing. When a component is separated from the principal thing, it becomes an independent thing of its own, susceptible to be owned separately. By operation of law the owner of a principal thing, who has separated a component of this thing, acquires a separate right of ownership in the separated component, that is now a thing of its own. He still has a right of ownership of the principal thing, but the volume of the underlying object has decreased. In addition, together with the formation of a separate thing (the former component), a new right of ownership is created.
Not only the owner of a thing can break away one of its components, but this can be done also by a third person. When a third person has removed a component from a principal thing, a new independent thing has come to existence just as well. And again the law ties a new right of ownership to that separated thing. But, of course, this right of ownership doesn’t belong to the third person who has removed the component unlawfully, but it still belongs to the owner of the principal thing. Even though the third person has control over the separated component as an independent movable thing, the law still considers the owner of the principal thing as the owner of the thing that was separated from it (former component). By operation of law he becomes the owner of the new formed movable thing. This result even sets in when the third person intended to keep the removed component for himself, like a thief who has stolen something.
What happens, according to law, when Willie puts the hand wheel on his own bike? In that event Willie has acquired indirectly the right of ownership of the hand wheel after all, because it has become a component of his own bicycle, falling within the scope of his own right of ownership. Obviously, he can’t get away with this. The law imposes an obligation on Willie to undo the damage that he has caused. Tom therefore has indeed lost his property, but in return he has obtained by operation of law an obligatory claim against Willie (derived form a tortious act), forcing Willie to give the hand wheel back to Tom and to pay damages.
‘Occupancy’ concerns the acquisition of an ownerless thing by taking possession of it. A person who seizes possession of a movable thing that belongs to no one, obtains by operation of law a right of ownership in it (Article 5:4 DCC). The performance of a factual act (taking a thing in possession) makes the law respond by granting this person a right of ownership of the thing (legal effect).
Things that have no owner are known as ‘res nullius'. This concerns things that never have belonged to anyone, like animals in the wild, shells on a beach and fish in the sea. A person who catches a wild rabbit, becomes by occupancy its owner. Taking control over the rabbit with the intention to keep it for himself, is enough for civil law to create a right of ownership. This happens irrespective of the fact whether the involved person has a hunting license that permits him to hunt wildlife. For the occupancy of a thing that belongs to no one, it is of no importance whether it has been caught in violation of penal or public law. But, of course, the one who has offended a rule of penal or public law may be fined with a financial penalty or even a prison sentence. Relevant is neither whether the rabbit has been caught on the land of the person who has taken possession of it or on the land of someone else. Since the rabbit lives in the wild, it is not under control of the owner of the land where it was caught. It never has been. It moves freely from one land to another. So the owner of the land where it was caught has never obtained a property right in it. The person who firstly takes possession of it, automatically becomes its owner. If he has trespassed another person’s land, he has committed a tortious act. The result of this juridical fact may be that he has to hand over the rabbit to the owner of the land or pay damages. But this doesn’t prevent him from being the first person who has acquired a right of ownership of the rabbit.
It is possible as well that an existing thing once did belong to someone else, who has abandoned his right of ownership thereof after a while. One speaks in this respect of ‘res derelictae’. This is for instance the case when someone has thrown away a soft drink can after he has drunken its content or when someone has placed his old cough in the vicinity of his household waste, clearly with the hope that the garbage collector will take it away. When a random passer-by seizes possession of the can or cough, he will acquire a new right of ownership of it, because it’s obvious that the former owner has given up his right. This means that at the time of occupancy the thing didn’t belong to anyone. The right of ownership of the former owner already had ceased to exist. Occupancy does not revitalize this abandoned right of ownership. It’s gone forever. The legal effect that the law links to occupancy is the coming to existence of a new right of ownership. Therefore a right of ownership based on occupancy doesn’t involve a derivative acquisition, but an original acquisition.
Contrary to what the law provides for in respect of movable things, a right of ownership of an immovable thing can never be acquired by occupancy. In other words: immovable things are never regarded as ‘res nullius’. If the person who is registered as the owner of an immovable thing is not alive anymore and has no heirs or others to succeed him, then the right of ownership will, by operation of law, fall to the State of the Netherlands (Article 5:24 DCC).
Flowers, trees, mushrooms, fruits and other similar plants growing in the wild, are always a component of the land on which they grow. Therefore they can’t be regarded as ‘res nullius’ either, contrary to wild animals moving freely from one place to another. The owner of the land (and there will always be at least one owner) automatically is the owner of all plants growing on his land, unless someone else has obtained a right of enjoyment thereof. As soon as these plants are separated from the land or from its components (like the fruits that are separated from trees or bushes on the land), they become a movable thing and immediately belong to the owner of the land or to the person who has a right to enjoy the fruit bearing land or its components (Article 5:17 DCC). A passer-by who takes possession of them, does not obtain a right of ownership. It is not possible simply by taking possession of another person’s property to acquire a property right of his own.
The right of ownership of a movable thing can only be obtained by occupancy when the thing doesn’t belong to anyone and therefore forms a ‘res nullius’. Sometimes the nature or value of a thing already indicates that its owner has not abandoned it intentionally, so that it can’t be regarded as res nullius. Its finder cannot obtain a right of ownership by taking possession of it. He knows or at least ought to know that someone has lost it unwillingly. Since that person has not abandoned his right of ownership of the thing, the law still regards him as its owner. But someone who has found a lost object and takes it under control, may nevertheless after course of time acquire a right of ownership in it. The law namely states that the finder who has reported his finding to the proper authority (i.e. the police) will become the owner of it when the real owner has not claimed it as his property within one year after it was found and reported to the proper authorities (Article 5:5 and 5:6 DCC). The finder acquires his right of ownership on the basis of the juridical fact called ‘finding’.
A particular form of finding is 'treasure finding' (‘schatvinding'). A treasure is a movable thing of value that has been concealed (hidden) for such a long time that as a result it’s impossible to trace back its earlier owner (Article 5:13 paragraph 2 DCC). Once more the law regulates to whom the found treasure belongs. A treasure belongs for equal parts to the person who has discovered it and to the owner of the property where or in which it was found (Article 5:13 paragraph 1 DCC). The finder must report his finding to the proper authorities. If he has not informed his finding in conformity with the law or if it’s uncertain to whom the found treasure shall belong, then the Municipality may demand that it is handed in until it is clear who owns it (Article 5:13 paragraph 3 DCC).
Ownership is a real property right. Everyone has to observe it under the penalty of paying damages to the owner on the basis of a tortious act. For this reason everyone must be able to assure if such a right over a thing exists and, if so, to whom it belongs. The rules of law on this subject are in fact quite simple. A person who, in the circumstances, reasonable ought to have been aware that he violates the right of ownership of someone else, is towards the owner accountable for the damage caused, and this because he has committed a tortious act against him. If he didn’t know and reasonably could not have known that he acted in violation of someone else’s property, he’s protected by law. In such a situation the owner of the thing cannot make him responsible for the negative results of his behaviour. The owner himself bears the risk of being damaged, by and large because he did not publish his right of ownership properly, so he is to blame (as well) that the other person acted on the basis of a wrong presumption.
The question whether a right of ownership of a thing exists, thus if someone owns a tangible object, isn't so hard to answer. That someone may call himself the owner of the thing is practically always certain. As seen before, a person who accidently encounters a thing, for instance in a street or a field, has to assume that it belongs to someone else, whose rights he has to respect. Even as a child we learn to make a distinction between what's mine and what's yours. With immovable things it's not even possible that they do not belong to anyone. They always have an owner, for the reason that when no person comes forward to claim it rightfully as his property, it automatically belongs to the State of the Netherlands. It's therefore unthinkable that an immovable thing isn’t owned by anyone. Movable things will generally as well belong to someone. He who runs into a car, a book or an office inventory, which things seem to be left behind because there's no one in their vicinity acting as their owner, may not presume that he is unreservedly entitled to these properties himself. As a rule every movable thing of value will be someone’s property. An exception has to be made with regard to wild life and (worthless) things that are clearly abandoned by their owner.
The second question - who is the owner of the thing - is much harder to answer. At first sight it's not always clear which person owns a thing. A man walking the streets of a strange town, will know that the houses and cars he passes by belong to someone else, but he can't see to whom in particular. Even when he notices a man in one of the houses or a woman who’s driving a car, he doesn’t know their names or identity. Usually this is of no importance to him. Why should he want to know who these persons are and if they own the house or the car? But this may become important when he wants to obtain a certain property right in the thing himself. Only the owner has the right to grant him an obligatory claim or limited property right which enables him to make use of the thing in accordance with the law. Should he get such a right from another person, without the approval of the owner, then his claim or right has no meaning at all. The owner isn't obliged to comply with the debts of someone who acted without his authorisation in his name. Where a person has acquired a right of use of a thing from an unauthorized person, the owner may deny the acquiring party of exercising his rights over the thing. The same applies when someone, without authorisation of the owner, has transferred the ownership of a thing to a third party or when he has encumbered it with a limited real property right on behalf of someone else. In principle the law doesn’t recognize the transfer or establishment of these limited real rights, since the third party did not acquire his right in accordance with all legal requirements. So the law can’t accept this change of entitlement to the thing. It still regards the original owner as the one to whom the right of ownership belongs, whilst the third party has not obtained any right in it at all, but must turn to the unauthorized person for damages. This is a logical starting point. Of course a random bystander can't transfer the ownership of a car to a third party without the consent of the owner of the vehicle. Neither is he able to establish independently a mortgage on someone else's house in favour of the bank as a security for his own loan. It would lead to the most undesirable consequences if an owner just like that could be deprived from his property. The law’s main objective is to prevent such a state of chaos and unfairness. Therefore the owner always has to participate in a legal act which purports to bring about a change in the way he may exercise his rights over his property. If his approval or participation is missing, then there's no valid transfer or encumbrance. It has no effect, whatsoever. Only the law decides when a person has acquired a right.
Where it concerns an obligatory claim of someone to make use of the thing of the owner, the situation is slightly different. A claim is just a personal property right. It has no real effect, but it is only enforceable against the debtor who is accountable for it. So when the owner of a thing isn’t involved in the creation of an obligatory claim granting a right of use of his property, this claim in itself is valid, even when it is its objective to give someone else the right to use his property. But it can only be upheld by the third party who acquired the claim against the person who has granted it to him, because it is attached to him personally, and not the any object. If this person is not the owner of the involved thing, he simply cannot comply with his obligation, since he has no power to enable the third party to make use of the thing in the way he had promised, whereas the owner is not obliged to perform this obligation and may demand that every person refrains from acts that could disturb him in exercising his rights and powers over the thing. So the owner doesn’t need to hand over his property to a third party who has acquired a claim related to it from an unauthorized person. In the same way it is not necessary that the owner is involved in the sale or donation of his property or that he has to give his approval to it. Anyone may enter into an agreement under which he engages himself towards another person to transfer or encumber someone else’s property. But without the consent of the owner of that property he's not able to perform the indebted performance to his creditor. His creditor may then of course claim damages from him on account of a breach of contract, but he can't force the owner, who had nothing to do with the sale or donation agreement, to deliver the property to him. A third party who wants to obtain a real property right in a thing or a personal right of use of it, without facing the risk of dealing with an unauthorized counterparty, must reasonably be sure that he acts with the owner of that thing or, at least, that the owner agrees with the transaction. In order to achieve this result the law has developed a system in which all real property rights in things, including the right of ownership, have to be published correctly so that everyone at least has the possibility to find out who is the owner of a thing, therefore who has power of disposition. This publication system differs depending whether the right of ownership is vested on a movable or an immovable thing.
Immovable things, such as lands, buildings and houses, generally represent a high economic value. Their turnover, therefore the degree in which they change of owner, is on the other hand low. Both characteristics make it possible to institute a special register in which all legally important data about immovable things can be recorded. This idea has been developed by setting-up public registers for registered property, which are kept by the Dutch Land Registry Office. In these registers all land plots of the Netherlands are described individually. The surface area of each land plot is recorded and also if the land is qualified as farmland, business area, a yard or garden. If a house, a factory, an office or another construction is attached to the land, this is mentioned too. Always the name and address of the owner of an individual land plot are registered. The owner of the land has the right of ownership of all things attached to it, like buildings, trees and so on. Where such a component has been legally split off of the land by means of a limited property right (right of superficies, apartment right), this is recorded too, as well as the name and address of its proprietor and the nature of the limited property right. The Dutch Land Registry makes all registered information available to members of the public, companies and other interested parties. Everyone may consult the public registers, so each person has the possibility to determine who's the owner of a land plot, a house or another immovable property. In this way the publication of the right of ownership of an immovable thing is guaranteed.
This publication system brings along that when a right of ownership of an immovable thing passes to someone else, the new owner has to be recorded as well in that capacity. Other people must always be able to trace back who owns an immovable thing, also after its alienation to another person. This means, for instance, that the transfer of a right of ownership of an immovable thing has to be registered in the public registers for registered property. Such a transfer is a wrapped matter. For this reason the law requires the intervention of an impartial lawyer, the notary, who ensures that all formalities are observed and that the person who claims to be the owner of the immovable thing is regarded as such by law and has the necessary power of disposition to pass the property to someone else. The fact that someone owns property doesn't necessarily mean that he's allowed to transfer it to another person. A mortgage or an attachment (seizure) on the immovable thing makes it impossible for the owner to pass the ownership to a third person. The notary ensures himself and the parties involved in the transfer that such a blockade doesn’t exist. The intervention of the notary is also wanted to keep the public registers pure and free from incorrect data. These registers would become polluted rapidly if just everyone could change the data registered therein. Consequently, the owner who has sold his immovable thing still has to visit a notary in order to transfer the ownership of the sold object to the buyer. The notary draws up an authentic (notarial) transfer deed. Before he signs the deed, he consults the public registers to check if the seller has power of disposition over the sold object and also if it is encumbered with limited real rights of others of which the buyer perhaps is not aware. He reports his findings to the seller and buyer. When there are no irregularities, the buyer is assigned in the transfer deed as the new owner of the immovable thing. With this, however, the buyer has not yet obtained the right of ownership of the sold immovable property. He only will have reached a position in which he can uphold his ownership against third parties when everyone is correctly informed about the change of ownership of the thing. All real property rights, and therefore also a right of ownership, must be published as required by law. To get this result, the law specifies that the alienation of an immovable thing shall not be completed before the moment on which the notarial deed is registered in the public registers for registered property. So the notary must present the notarial deed to the Dutch Land Registry, who will check if all legal formalities are met. If this appears to be the case, then it will register the deed in the public registers. Subsequently it will change all recorded data related to the involved land plot in accordance with the information presented on the notarial deed. Only after the notarial deed has been registered as such, the buyer has acquired the right of ownership of the immovable thing. From that moment everyone is able to see, by consulting the public registers, that the ownership of this specific immovable thing has passed to someone else, who now is registered as the owner thereof.
Also in relation to movable things, like cars, bicycles, clothing and home furnishings, third parties must always be able to know to whom the object belongs, for instance when they want to obtain a right of ownership or another real property right in it. Only the owner of the movable thing has power of disposition. The law has chosen for a simple system of publication of real property rights in movable things. As a starting point the person who actually holds a movable thing in his power, may be regarded as the owner of that thing. From the fact that a movable thing is under control of a specific person, everyone may conclude that he is the owner of it. This means that the right of ownership of movable things is published factually by the circumstances. There is no official register where real property rights in movable things can be published. Setting-up such a register would be practically impossible, seen the large number of movable things as well as their low value and high turnover rates. Think about the strange situation that would arise if a baker, to become the owner of the bread he just baked, first should have to make a deed in which his right of ownership is sufficiently recognized and, after that, also should have to publish his ownership in a public register. A customer should, before buying the bread, consult this register to check if this specific object indeed is owned by this baker. When the baker sells the bread to the customer the same procedure would have to be done over again from scratch. The customer should be registered as the new owner of the bread. And after he has eaten the bread, he should notify the keeper of the official register that this movable thing no longer exists. This is far to complicated and wouldn't work at all. Therefore the law has looked for a more practical form to publish real property rights in movable things. It thereby has reverted to the oldest form for publishing property rights, namely 'exercising the actual power' over a thing. The person in whose power a movable thing actually remains, thus the one who has it under his control and within his reach, is considered to be its owner. That this norm really works in practice appears every day. When looking at people who, on a beautiful summer day, are sitting on an outside terrace of a restaurant, one will notice that they automatically keep their movable things under control. Without being aware of it, they all continuously exercises the actual power over their things, for example over a jacket, a wallet, a handbag, a packet of cigarettes, namely by keeping these things in their immediacy, generally within hand range. A person who wants to visit the toilet, shall take his handbag with him, unless there are other people sitting at his table who he knows well and who will not take away his property. If a random passer-by would walk to a table and grab a jacket or packet of cigarettes of a person sitting there, he certainly may count on a response of that person and probably also of the other visitors of the terrace, because this is seen as a violation of the possession of the person who keeps these things within his reach. The owner will immediately try to get his things back. Possibly other visitors will try to stop the thief too and, when they catch him, hand over the stolen goods to the person who originally had them under control. By continuously exercising the actual power over a movable thing the owner makes clear to everybody who he might encounter on his way that this object belongs to him and that no one may use or take it without his approval. In general other people who run into this person acknowledge that this movable thing belongs to the person who exercises control over it and they know it is not allowed for them to use or take it themselves.
Of course the rule, implicating that a person who actually has control over a movable thing must be its owner, is not always in line with legal reality. A man who rides a bicycle doesn't need to be the owner of it at all. He may have borrowed it from his friend. Although he has control over the bicycle and also over the accessory keys of the biking lock, he is not its owner. Within the relationship between the legal owner of the bicycle and the cyclist, thus the one who exercises actual power over it, both parties know what the real legal situation is. Between them this legal relationship continues to exist even when the bicycle is actually in the hands of the cyclist who rides and holds it. The cyclist only uses the bicycle of the owner and, according to their agreement, has to give it back to him after a while. If he doesn't comply with this obligation, the owner may take his property back, if need be with the assistance of the court and police, while in addition he may claim damages from the cyclist who refused to return the borrowed bicycle in time. Within this legal relationship the law recognizes that the right of ownership of the bicycle has not passed to the cyclist, because the parties have not performed a juridical act to which the law responds with the passage of ownership. The (verbal) agreement to borrow the bicycle to the cyclist is not a valid legal basis for a transfer of this movable thing. If such a legal basis is absent, then the law cannot allocate this effect to the facts which determine the legal relationship between the owner and the cyclist. Only in relation to third parties, therefore to the outside world, the cyclist who actually keeps the bicycle in his power, may be considered as the person who owns it and who has power of disposition, for instance in order to transfer the bicycle to another person. Third parties may assume this as long as they shouldn’t have known better. It’s clear that this system is not as sound as the system for the publication of real property rights in immovable things, where the interference of an impartial and competent notary is required to observe if all is done well, and where, due to this interference, the public registers nearly always point out the people who undeniably have a real property right in the registered properties. Possible shortcomings in the publication system for real property rights in movable things are solved by law along another way (see hereafter).
With regard to the payment of the purchase price the same procedure must be followed in order to establish the moment on which the price itself is paid to the creditor, this means on which moment the creditor may call himself the owner of the money coins and bank notes. Money consists of notes and coins, which are movable things too. As long as the debtor, who has to pay a sum of money, keeps the notes and coins in his pocket or purse, thus in his actual power, he still owns them. Everyone who becomes aware of the money, for instance when seeing it in the hand of the debtor or in his purse, knows that the coins and notes belong to him. They also know that the holder of the money won’t tolerate that another person grabs the coins and notes out of his hands. When someone buys a sandwich at a bakery, he becomes the owner of the bread on the moment that it is handed over to me. Then again the baker becomes the owner of the money as soon as the opposite party has handed over the coins and notes to him. As of that moment the baker holds these movable things actually under his control, for example by putting them in his pocket or by placing them in his pay-desk. Now it's clear for everyone that the baker is the new owner of the money, since his right of ownership is published by exercising the actual power over it. Only after obtaining the ownership of the money, the debt of the buyer is settled, and his obligation has come to an end. At cashless payments (also called funds transfers) the moment on which the payment is completed, is once more the moment that the creditor has gained the transferred sum in his actual power. Decisive is therefore not the moment on which the debtor has ordered his bank to transmit an equivalent sum to the savings account of the seller, nor the moment on which this sum is written off of his own bank account, but the moment on which the sum indeed is added to the saving account of the creditor, so that he, if he desires so, could withdraw it from his account and convert it into real coins and bank notes.
Sometimes it would be very complicated when, in order to accomplish the transfer of ownership of a movable thing, this thing should be handed over to the new owner for real. This is for example the case when the owner wants to transfer the ownership of a movable thing at a moment on which this thing already remains in the custody of the buyer, for instance by virtue of a lease agreement under which the buyer was granted a personal right of use of the thing. It's not uncommon for a company to lease machines with the possibility of buying them after course of time (hire-purchase agreement). When the company, after a while, wants to obtain the ownership of machines which were located already at its factory, the requirement of actual dispossession would mean that the machines firstly would have to return to the owner, in order to enable him to actually hand over the machines again to the company who already used and held them. That's foolish. For this reason the law specifies that in these situations the transfer of ownership of a movable thing may also be completed purely by means of a declaration between the old and new owner, indicating that the ownership of the thing is transferred from its original owner to the person who already has it under his control. No change of position of the transferred machines is required. Before the declaration of transfer the machines were held by the company, though at that moment solely for the real owner. Towards the outside world it already seemed as if the company, who exercised the actual power over the machines, owned them, although in the relation between the real owner and the company both parties knew what their legal position really was. Since there was no agreement on which a transfer could be based, the law could not acknowledge the facts as a passage of property. Towards the outside world the declaration between the old and new owner brings no changes in the publication of ownership, so it is not necessary that this declaration is published. But to make the law respond in the wanted way, that declaration is necessary indeed. It forms the legal basis for the transfer of ownership. After the declaration, in other words after the transfer, the legal ownership is in conformity with what third parties already were allowed to assume in the circumstances. Because of the declaration of transfer, the one who controls the machines is now indeed the owner of these things. As far as it concerns other people, the legal positions of parties has merely been brought in conformity with the actual situation as published openly. Such a transfer of ownership, taking effect while the acquiring party already had the thing in his control, is called a delivery ‘by short hand’ ('traditio brevi manu').
It’s conceivable as well that the movable thing, which is to be transferred to a new owner, is in the hands of a third party who recognizes that the original owner, who has given the thing to him, has the right of ownership of it. Such a third party may for instance be a lessee, repairer, depositor, carrier or charterer. The owner himself doesn't have the movable thing in his power, but the third party does. This party, however, holds the thing for the real owner and acknowledges his right of ownership. What would be the consequence if the principal rule for the transfer of movable things would apply in such instances? Suppose that someone has ordered a ship-owner to transport his goods from Shanghai to Rotterdam. During the time that the goods are at sea, he wants to transfer the ownership of these goods to a buyer in Paris. According to the earlier mentioned principle rule a transfer of ownership would not be possible before the goods had arrived in Rotterdam. They could only be transferred after they were unloaded in Rotterdam, because only then the actual power over the goods can be handed over by the seller to the buyer or his representative. And what would be the consequence of the principal rule when these goods are stored in a warehouse of a third party at a moment on which the owner wants to transfer them to someone else, for instance because the new owner cannot immediately store them himself? This would lead to absurd situations also. The owner would first have to pick up his goods at the warehouse and then, secondly, he would have to hand them over to the buyer (transfer), who subsequently would have to bring them back again to the same warehouse for further storage. That’s why also in such a situation the law makes it possible to transfer the ownership of movable things by means of a common declaration, now of the old and new owner addressed to the third party who is holding the goods. Initially that third party held the goods for the original owner. If required, he would mention to other people that he wasn’t entitled to these goods himself, but that they belonged to someone else, their real owner, of which he was aware. After the old and new owner have notified him that the goods from now on belong to the new owner, this declaration ensures that the third party knows that someone else has acquired the right of ownership of the goods. For the third party it’s clear that as of that moment he holds the goods for the new owner (Article 3:115 DCC). The movable things have been transferred to the new owner purely on the basis of the declaration, without any change in their actual location. During and after the transfer of ownership the movable things remain in the custody and care of the third party. If asked by others, the third party shall now explain to them that the new owner is entitled to these goods. Once more, the declaration of the old and new owner, addressed to the third party, forms the legal basis for the transfer. This declaration is sufficient to pass the right of ownership of a movable thing to the new owner, since in these circumstances the person who has to be aware of the legal status of these goods is first of all the third person who keeps them actually under control. One speaks here of a delivery ‘by long hand’ ('traditio longa manu').
Finally an actual dispossession does not speak for itself when the owner, after the transfer of ownership to another person has been completed, still wants to keep the thing for some time actually in his power, for instance to use it to fulfil a certain task or because the new owner isn't able to receive the thing already. So it's possible that a buyer immediately wants to obtain the ownership of a car, although he hasn't yet got enough space to park it. He then may ask the seller to hold the car on his behalf during some time after the transfer. Here too the requirement of actually handing over the car to the new owner would lead to a wash-out. Again, to accomplish the transfer of ownership, a declaration between the old and new owner is enough. Although the car during and after the transfer remains under control of the seller, there's been a change of ownership on the basis of the declaration between the two involving parties. The old owner, who firstly kept the car for himself, keeps it after the declaration for the acquiring party, being its new owner. This form of property transfer is known under the name 'delivery under a simultaneous creation of holdership' (`constitutum possessorium’).
The law, in general, requires a dispossession of the transferred movable thing in order to publish the change of ownership so that everyone at all times is able to determine who owns the thing. By actually holding the thing in his power, other people can see that a person has obtained a right of ownership of it. Where a transfer of ownership can be achieved by means of a declaration, without any actual dispossession of the transferred movable thing, this may lead to problems. However, not in case of a delivery by short hand. The legal position of parties is then merely brought in line with the actual situation, since the buyer already prior to the shift of ownership held the transferred thing in his actual power. After the transfer he is indeed also legally its owner. So there is no longer an inconsistency between the situation as it is published and his position according to law. In case of a delivery by long hand or under a simultaneous creation of holdership this is different. The new owner has acquired his right of ownership purely on the basis of a declaration between him and the old owner. The thing, of which he legally has obtained ownership, remained in the hands of the third party or, respectively, of the former owner, so the new owner doesn’t actually got it in his power himself. Therefore, the new owner isn't able to present himself to the outside world as the person to whom it belongs. Of course, when asked for, the third party and old owner, both actually holding the thing for the new owner, must confirm that they have no right of ownership of the thing themselves, but that it belongs to someone else, the new owner. But if they don’t, other people may assume that the legal situation is published correctly, in the sense that the person who has control over the thing, thus the third party or, respectively, the old owner, undoubtedly is the owner with power of disposition. When the holder of the thing presents himself towards another person as its owner and transfers the thing to that person, he breaches his contract with the real owner, because he was compelled to hold the thing for him on his behalf. But since the real new owner did not publish his right of ownership correctly, it is conceivable that the acquiring party assumed and reasonably could have assumed that the holder (third party, old owner) was entitled to alienate the thing to him. The acquitting party has acted in good faith. Where the acquiring party has obtained a right of ownership in good faith from a person without any right to dispose of the thing, he is protected by law. Due to the fact that the real owner had not published his right of ownership in the required way, while the acquiring party honestly didn't know that he obtained his right from an unauthorized person, the law has turned the scale in favour of the acquiring party. Yet, he is only protected when he acquired his right from an unauthorised person against payment of a valuable counter performance (Article 3:86 paragraph 1 DCC). When he has obtained his right on a gratuitous basis, there is no need to protect him, since he hasn’t suffered any loss in order to get his right, and for this reason the scale swings back in favour of the real owner.
A particular way of transferring the ownership of movable things, which resembles a delivery by short hand, is a delivery under a retention of title. Under a retention of title the seller immediately hands over the sold thing to the buyer, but under the condition, as accepted by the buyer, that the ownership of the thing shall only pass to the buyer at the moment that the purchase price has been paid in full. As soon as the purchase price is fully paid, all conditions for a valid transfer of the right of ownership are met. The right of ownership shall then automatically switch to the buyer, who already held the movable thing in his power. But up until that moment he held it on behalf of the seller, who still was the owner of it because not all requirements for a transfer were fulfilled. Although a person with power of disposition (seller) had brought the movable thing under control of the buyer (dispossession) by virtue of a valid legal basis (sale agreement), the transfer was nevertheless blocked by the condition that the purchase price still has to be paid to complete the transaction. By paying the purchase price the buyer can conclude the transfer independently, thus without further help or approval of the seller.
A delivery under a retention of title is in fact just a delivery under
a condition precedent (Article 3:91 DCC). The intended legal effect (transfer
of ownership) shall only set in when the suspending condition (payment
of the full price) is fulfilled. Because of its practical importance the
law has explicitly regulated this postponed transfer of ownership of movable
things (Article 3:92 DCC). In business dealings between two companies
where the sold objects are handed over to the buyer before the purchase
price is fully paid, virtually all transactions are concluded under a
retention of title. If the buyer does not comply with his obligation to
pay the purchase price, the seller is able to reclaim the transferred
goods as his own property, even though they are under control of the buyer.
As the owner of the goods he can uphold his real property right against
everyone, and therefore also against another creditor of the buyer who
might want to seize all goods on the premises of the buyer and against
the liquidator in the buyer’s bankruptcy. The seller may pick up
his property. The liquidator in the bankruptcy of the buyer can only prevent
this by paying the (remaining part of the) purchase price to the seller.
If he refuses to make such a payment, the seller can take his property
back. Where the seller already had received a part of the purchase price
from the buyer, he has to refund it to the liquidator.
Also in another way the seller, who has sold his goods under a retention of title, can lose his right of ownership before getting paid completely. This happens when the buyer, who actually holds the goods in his power, although he's not yet the owner, uses them - with or without consent of the seller – to manufacture new products. As soon as the goods become a component of a new product, they lose their individuality and therefore aren't recognized anymore by law as an independent thing that as such can belong to a person other than the proprietor of the principal thing of which it has become a part. A component of a thing is always the property of the owner of that thing. Contrary to immovable things, where components can be separated legally from the land and from each other as an individual object by establishing a limited property right (right of superficies, apartment right), Dutch law has not opened this possibility where it concerns real property rights in movable things. A real property right in a movable thing is always vested on the thing as a whole. So while the same thing may be encumbered with three different real property rights at the same time – right of ownership, usufruct, pledge on the right of ownership or on the usufruct – it is not possible to legally split off a component of the movable thing, for instance to encumber it with a usufruct or a pledge, while the rest of the thing remains captured by a right of ownership. That the good had been handed over under a retention of title cannot prevent this legal effect, called ‘accession’. So the buyer who received a good under a retention of title becomes the owner of it when he processes it, usually together with other materials, in an independent principal thing that he owns, for example a new product that he has created. The seller has lost his right of ownership of this specific good as soon as it has become a component of a new product, which in itself belongs to the person who manufactured it or on whose instructions it was made (Article 3:16 DCC). The seller is left with an obligatory claim that he may enforce merely against the buyer personally. When all goods on the premises of the buyer are sold off by foreclosure he can’t claim any of these things back as his property, neither is he ranked higher at the distribution of the sale proceeds of the sold off property of the buyer.
The law hasn't succeeded in creating a waterproof publication system for property rights. Sometimes it's not visible for third persons if an object is encumbered with a real property right or to whom this right belongs. And sometimes the publication system indicates falsely that no real property right exists or it points out the wrong person as its owner or limited proprietor. Third persons may, because of an incorrect or incomplete publication, have acted on an incorrect assumption with someone claiming to be the owner or proprietor. For these situations the law must provide a solution as well. Who is to be protected: the person who, according to law, was the real proprietor and who has been deprived from his right by actions of an unauthorized person? Or the third person who, when acting in good faith when he entered into a transaction with the unauthorized person, relied on the visible publication, which however appeared to be incorrect? The law has chosen for this third person, provided that he has performed a valuable counter performance to acquire his right in the thing, because otherwise no one would dare to perform any legal transactions. A third party, who in good faith acquired a property right from an unauthorized person, is protected by law at the cost of the real proprietor whose property right had not been published correctly. If, however, the real proprietor succeeds to make plausible that the third person in reality knew that the publication was incorrect, then this third person will not have acted in good faith on the basis of that publication and he, therefore, doesn’t deserve to be protected by law. Only then the real proprietor is able to surpass the incorrect publication of his property right and reclaim it from the third person. In practice, however, the real proprietor seldom is capable to prove that the third person, who is pointing at the incorrect publication to defend himself, reasonably must have known that it was not in line with legal reality. Where the third party has received his right gratuitously from the unauthorized person, there’s no need to protect him. The real owner always may claim his property back from him, since he has remaind its owner.
Where it concerns real property rights in immovable things, the law has chosen for a system in which the entitlement of the owner or limited proprietor shows from a public register for registered property. Although this occurs rarely, it is not impossible that the Land Registry Office makes mistakes when processing the offered data. So it is conceivable that the former owner of a house is still registered as such, although the house meanwhile belongs to another person who, in accordance with all legal requirements, has presented the notarial deed of transfer to the Land Registry Office for registration. Nevertheless, due to an error, the data on this notarial deed were not registered or have been registered incorrectly or incompletely. Mistakes do happen. When third persons consult the public registers for registered property, they will notice that the former owner still is mentioned as title-holder. The law assures that they may rely on all published data. So when a third party buys the house from the old owner, he will be protected by law. The notary drawing up the accompanying deed of transfer will in the same way be fooled by the incorrect publication in the registers for registered property and therefore assume that the registered person is indeed the owner of the house with power of disposition. Even the Land Registry Office will not immediately detect the mistake. Consequently the notarial deed of transfer between the third person and former owner will be registered in the public registers for registered property. As of then the buyer has become the new owner of the house, while the real owner, whose entitlement wasn’t registered by mistake, has lost his right of ownership, unless he proves that the buyer in reality knew that the publication which showed from the public registers was incorrect. The real owner will hardly ever succeed in furnishing this proof, so usually he must turn for damages to the former owner, who of course knew that he was not entitled to sell and transfer the house for the second time. But against the registered new owner, who in good faith has acquired a real property right in the house, he has no possible actions. The real owner should have checked if his acquired entitlement was registered correctly.
The public registers for registered property may for another reason entail incorrect information. This may occur when initially the sale agreement and transfer have been performed correctly, so that the public registers have been adjusted correspondingly, but one of the parties afterwards invokes the nullity of the sale agreement, for instance because of his legal incapacity or of a fundamental mistake. When the sale agreement appears to be null and void from the start or when it is nullified afterwards on a ground of voidability, there has never been a valid transfer, since the legal basis for it has been removed with retroactive effect. This means that, according to law, the transferred property has never left the property of the transferor, despite of the fact that the acquiring party was registered in the pubic registers for registered property as the (new) owner of the house. Of course, the public registers will be modified immediately as soon as parties or the court have acknowledged the nullification. The former owner will again be registered as title-holder. But it’s possible that the acquiring party, before this adjustment has been made or even before parties knew that there was a ground for nullification, has transferred the house to a third person. At the moment of this transfer the acquiring party was still registered as owner of the house. No one could suspect that after some time his acquisition would be nullified with retroactive effect. Third persons who in the meantime have relied on the – in retrospect incorrect – publication, will be protected by law. Even though the former owner may have succeeded in nullifying the first transfer, he will not regain his right of (full) ownership, because a third party in the mean time has acquired in good faith a property right (ownership or limited property right) in the underlying thing.
Finally, the data of the public registers for immovable property may become polluted because persons fail to report to the Land Registry Office new developments in an entitlement. According to Dutch marital property law, a universal community of property comes to existence by operation of law as soon as man and wife enter into a marriage with each other, unless the spouses have made derogating arrangements by means of a publicly registered marriage contract. Most couples, however, get married without such a marriage contract. During a universal marital community of property both spouses hold equal shares in the assets of the community. So when the man, prior to the marriage, owned a house of his own, his wife will, after the conclusion of their marriage, automatically have acquired half of it. This result sets in by operation of law, without the necessity to publish this change in the public registers for registered property. Often it is not reported at all to the Land Registry Office. As a result the man remains registered as the sole owner of the house, while in reality he only obtains half of it. One would assume that a third person, who in good faith relied on this incorrect registration, and who, on that basis, has only entered into a sale agreement with the man, is protected by law. This, however, is not the case. The law indicates that this third person should also have consulted the marriage register of the municipality where the marriage of the man and his wife was concluded. These registers are public too and offer the possibility to detect if the spouses are married under a universal marital community of property. But in practice this is no real option. A third person cannot detect merely from appearances whether his counterparty is married, let alone where his marriage was entered into. So if the counterparty informs a third person falsely that he is not married, this third person has no means to verify this information. Nevertheless the spouse of that counterparty will be protected by law.
But, as a rule, the spouse who is registered as sole owner in the public registers for immovable property, will in his mutual relationship to the other spouse, have the right of administration of the registered asset of the marital community of property (Article 1:97 paragraph 1 DCC). The right of a spouse to administer an asset encloses the power of disposition over that asset (Article 1:90 paragraph 2 DCC). This would mean that the other spouse is not able to nullify a transfer which has been performed solely by the spouse who has the right of administration.
An exception has to be made where it concerns the sale and transfer of the marital house, irrespective if it is registered in the public registers for registered property on the name of one or both spouses and even irrespective of the marital property regime applicable to the marriage. A spouse always needs the approval of the other spouse to perform an agreement purporting to alienate, encumber or give in use the residential space in which both spouses jointly live or in which the other spouse lives alone (Article 1:88 paragraph 1, under point (a) DCC). So even when the marital house is registered solely on the name of one of the spouses, for instance because the registration in the public registers for registered property has not been adjusted to the change in entitlement caused by the marital community of property or simply because there is no marital community of property at all and the house forms the private property of the registered spouse, and it is transferred by this spouse to a third person, then the other spouse is still able to nullify the transfer when he has not given his approval to it in writing. The fact that the third party relied on the publication in the public registers for registered property, and thus acted in good faith, doesn’t help him. The same applies when a spouse has encumbered the marital house with a mortgage or another limited real property right without the approval of the other spouse.
The publication of real property rights in movable things is frequently not in line with legal reality. Although, as a starting point, exercising actual control over a thing is an efficient way to show who has a real property right in it, this system doesn’t guarantee that the person holding the thing indeed is its owner. He may use it on account of an obligatory right of use against the real owner or hold it on the basis of a pledge or usufruct. It’s also possible that the movable thing has been transferred to him under retention of title, which means that he is not yet the owner of it. Third persons can’t deduce this from the actual state of affairs. Shortcomings in the system of publication must be corrected with the help of the principle of ‘good faith’. A third party who has acquired a movable thing and who, on account of an incorrect or incomplete publication of the right of ownership of the real owner, wasn’t aware and reasonably ought not to have been aware of the fact that his counterparty wasn’t the owner with power of disposition, acted in good faith, and is therefore protected by law. Even though his counterparty never had a right of ownership himself in the movable thing, he is able to grant it to the acquiring party at the cost of the real owner, who has lost his right of ownership. Under these circumstances the interests of the third party, who can’t be blamed for the lack of a proper publication, must prevail over the interests of the real owner, who could have prevented that the third party would act on the basis of an incorrect presumption, simply by publishing his right of ownership in the required way. If the real owner hadn’t grant the actual power over his movable thing to someone else, then this mistaken assumption wouldn’t have arisen. He shouldn’t have entrusted his property to someone who wrongly presents himself towards third persons as the owner of the thing.
Of course a third person is only protected by law if he didn’t have to assume that his counterparty had no power of disposition. The fact that a person actually holds a bicycle in his power is not always enough to be able to think that he owns it. Other circumstances are relevant too. When a hard-core addict tries to sell a bicycle near central station for a surprisingly low price to people walking by, a third person may not take for granted that he is dealing with the real owner. The buyer must ask for additional proof, like a copy of the contract on the basis of which the seller has obtained the bicycle, or a passport in order to check the seller’s name with the name engraved in the bicycle’s frame. If he fails to ask additional proof and nevertheless buys the bicycle, then he has not acted in good faith. When the real owner is able to trace back his bicycle, the buyer must hand it over to him. He has not acquired the right of ownership of the bicycle, not even when he has paid a valuable counter performance to the unauyuthorized person who sold the thing to him.
A third person who has acquired a right in a movable thing from an unauthorized
person, is only protected when he acted in good faith and has performed
a valuable counter performance himself (to the unauthorized person). Where
he acquired his right gratuitously, the law is of the opinion that he
does not suffer any damage when he has to give the thing back to the real
owner. In such an event the third person must hand over the received thing
to the real owner and turn for damages to the person who had granted him
the right without power of disposition.