NETHERLANDS Law and Practice Contributed by: Coco van Zuiden, Marijn Bodelier, Sabine Schoute and Simone Wijngaard, Greenberg Traurig, LLP
• Spouse’s consent – if a natural person (eg, a director), other than in the ordinary course of business, grants a guarantee, surety, accepts joint and several liability, or any other form of personal security as security for the debt of a third party, such person’s spouse must give their consent to the granting of such form of security. If such consent is required but has not been obtained, the relevant spouse may annul the granting of the relevant security. 3.6 Formalities When a Borrower Is in Default Under Dutch law, security rights can be enforced in the event that the borrower is in default in the performance of secured liabilities (ie, a payment default). Any other default would therefore need to result in accelerating the loan to force a pay - ment default. In case of a payment default, a mortgagee (and a pledgee) has the right of summary execution and, in the case of bankruptcy or suspension of payments, may in principle enforce its security rights as if there were no bankruptcy or suspen - sion of payments (see 3.9 Effects of a Borrower Becoming Insolvent for nuances). A right of mortgage can be enforced by way of (i) a public auction (without court order) or (ii) a private sale authorised by the competent Dutch court, all with due observance of the applicable Dutch law provisions. Appropriation by the mort - gagee is not allowed, but the mortgagee may bid on the assets in a public auction and, if a private sale is requested and the mortgagee submits a more favourable bid before the end of the hear- ing of such request, the Dutch competent court may authorise that the assets are sold to the mortgagee.
If the mortgagee wishes to enforce its right of mortgage and sell the property free of leases, the mortgagee must invoke the lease clause ( huurbeding ), which must be explicitly agreed upon in the deed of mortgage. The mortgagee must invoke such lease clause before executing the mortgage. Several formalities must be con - sidered in the enforcement of the lease clause. Obstacles A creditor with control over the property (eg, a contractor) may, under certain circumstances, invoke its right of retention which may (subject to certain conditions, and depending on which right is of older date) give such creditor priority over the right of mortgage. Execution by Other Creditors There are no additional steps to be taken to give priority of the lender’s security interest over the interests of other creditors. If a lower-ranking mortgagee proceeds with enforcement of its right of mortgage (if at all permitted in the con - text of the applicable financing), the first-ranking mortgagee may take over the execution, but that is not required for it to keep its priority over the other creditors. The first-ranking mortgagee may recover its claim on the borrower from the pro - ceeds of the execution regardless of whether it initiated the execution. 3.7 Subordinating Existing Debt to Newly Created Debt Existing secured debt may become subordinat - ed to newly created debt either (i) by changing the rank of the relevant in rem security rights (this was already possible on the basis of explicit legal provision for rights of mortgage, and recently, as confirmed in Dutch case law, also for rights of pledge), or (ii) pursuant to an intercreditor and/ or agreement among the relevant lending par -
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