Assigning a debt in the Netherlands
Creditors may sell debtor claims to a third party. The result of such an assignment [sale] is that the debtor must pay from now on the third party and can no longer be discharged of all his obligations to the original creditor. How does this work, and what are the most important terms [conditions] to consider?
Before I handle the most important legal requirements pertaining to assignment, I’ll explain the (legal) terminology in short used for specifying parties when assigning a debt. In an assignment there are roughly three individual parties. First, the creditor who assigns a debt [claim], also called the grantor [the assignor]. Secondly, the third one called the assignee receives the transferred claim from the creditor [ assignor]. The last party to be mentioned here, is the debtor who must pay the claim, known as: assigned debtor.
When assigning a debt, you need first and foremost, a deed of assignment. This is a written agreement between the assignor and assignee in which the transferred claim is described. The deed of assignment can be cast in the so-called public deed [authentic instrument] as well as in the private instrument [non-notarial instrument]. The difference being that the public deed is drafted by a civil-law notary and a private instrument by the assignor or assignee (or even a lawyer).
In addition to a deed of assignment, in the case of a public assignment, it’s required that the assigned debtor be notified of the assignment. Without this notification, he has not yet been informed that the claim has been transferred and that from this moment onwards can only clear his debt with the assignee.
You can also choose an undisclosed assignment (assignment without notice to debtor). In that case, you don’t have to inform the assigned debtor if you choose to draft a private instrument which is registered with the Belastingdienst (Dutch Tax and Customs Administration). The assignee can then decide when it is appropriate to inform the assigned debtor of the undisclosed assignment. The assigned debtor must wait to be informed first by the assignee before he can discharge his obligations, in other words, pay the assignee.
Finally, the assignor must be authorized to transfer a claim. Should the assignor already have transferred to a third party, then he is no longer allowed to transfer again nor is he authorized to transfer the claim once more.
The role of the assigned debtor
It’s worth remarking that the debtor, the assigned debtor, may not end up in a worst position due to the assignment. He retains his rights and can defend himself using the same arguments or means of defending himself he had before an assignment was initiated.
Do you have any questions regarding the assignment of a debt and need advice? Are you a debtor confronted by an assigned claim and have doubts about whether the claim is valid [correct]? Then please contact us. We will gladly help you.