Financing of real estate

For example: after the Didam ruling (i.e. after November 26, 2021), a government agency comes to an agreement with party A on the sale and transfer of a real property in the Netherlands. Party A obtains financing for the purchase by means of a loan from a lender. To secure repayment of such loan, a mortgage on the real property concerned is established. The sale takes place by execution of the SPA, and the real estate transfers to A (i.e. closing). After closing, a third party (party B) takes the position that the Didam-criteria have not been taken into consideration by the government agency (and therefore have not been met). As a result, party B claims the SPA to be null and void (nietig).

In the event the SPA and closing are successfully declared null and void, this will entail that A never became the owner of the real property as a consequence of which the mortgage was never established. In such a case, ownership will in principle have remained with the government agency. However, the lender is not left empty-handed if it can successfully invoke the doctrine of good faith under Dutch law. In a successful plea of good faith, (i) the real property will still be encumbered with a mortgage serving as security for the repayment of the loan by party A to the lender, (ii) while the government agency is (still) the owner of the respective real property. It is likely that in such a case, A will breach the lender's credit terms, the lender would demand repayment of A's loan and A would forfeit a contractual penalty towards the lender.

Takeaways following the Didam ruling

It is important to ensure that new real estate transactions are not affected by the Didam ruling. The duty of government agencies to publish real estate sales in advance is now common knowledge. However, a government agency still has the discretionary authority to decide that a sale does not need to be preceded by a public selection procedure if it believes only one candidate qualifies for the transaction. However, the government agency must publish its reasoning for this decision. As the lender will not be able to determine with complete certainty whether the correct procedures have been followed by the government agency, it will always have to consider the risk that the real estate transaction could be invalid retrospectively in case the seller is a government agency.

With a view to preserving the mortgage, it is important for the lender to request from the purchaser (in its capacity as borrower) whether the Didam-criteria were considered and met in the transaction process before concluding the credit agreement. In our opinion, the lender will generally be bona fide if that question is answered in the affirmative, which will give it consequently third-party protection on the Dutch principle of good faith. In the worst-case scenario, the lender will then be able to enforce the mortgage via public auction.  


The Didam ruling has complicated the dynamics and fundability of real estate transactions in the Netherlands. The Didam ruling may have major (practical) implications for real estate financing. In this blog, we have included a classification of the possible situations that may arise as a result of the Didam ruling for illustrative purposes. In doing so, we have only briefly addressed the issues that may arise in real estate transactions on lenders end, and the possible remedies available in this regard. Should you have any questions after reading this blog or wish to seek advice, please do not hesitate to contact any of the persons listed in the below.