4.1 The need for more vacuum

parties to a transfer have to explicitly choose for a priority notice, which – unless it is more or less included in the customary practice and fee of a standard real estate transaction,1 such as in Germany – they often fail to do. An illustration of how this brings about difficulties is provided by a Dutch lower court judgement.2 An apartment building had been sold without using a priority notice, but prior to delivery/conveyance, the building had been attached by a creditor of the seller. The purchase price was more than sufficient to satisfy the claim of the creditor, but the creditor refused to cancel the attachment. This meant that the buyer could not acquire the building without the attachment of the creditor. The court, however, ruled that the attachment would be ineffective so that the transaction could take place. The argument that the court used was that it would be in the interest of everyone involved to carry on with the transfer. To carry on with the transfer is, of course, beneficial for buyers, because it means that they can actually acquire the immovable property and that their preparations have not been in vain. Contrary to what one might expect, this state of affairs is also beneficial for creditors. Because the purchase price exceeds the claim of the creditor, the interests of the creditor are sufficiently looked after. When the transaction has concluded, the creditor can take recourse against a sum of money (the purchase price) which can be easily divided amongst the creditor and the seller in accordance with the creditor’s claim. Furthermore, the collateral for the creditor is higher, because the market value or purchase price in general exceeds the forced sale value. To secure the interest of the creditor, the court ordered that the notary had to wait for one week before releasing the purchase price to the seller, so that the creditor has ample time to attach the purchase price while the purchase price is still held by the notary. In short, the court mimics the effect of a priority notice.3 In giving this order, the court gives a nice illustration of the argument developed in subsection 3.3.3, namely that a vacuum instrument that confers a grantee an interest that can be invoked against creditors, maximises the value of assets. This is beneficial to everyone involved, on the condition that also (the) creditor(s) profit(s) from this maximisation of value, which can be assured by ordering the notary to wait for one week with releasing the purchase price to the seller. This reasoning, however, does not only apply to the specific circumstances of this case. Instead, it applies to almost every conflict between a grantee and a creditor: the value that a grantee/buyer places on an asset almost always exceeds the value that a creditor is able to generate in a forced-sale situation.

Securing the performance interest of the buyer without a vacuum instrument is an arduous task for legal practice. This is illustrated in subsection 2. The mere risk that a grantor loses the power to dispose of an asset between the contract of sale and delivery will inevitably give rise to transaction costs, because the legal practitioner has to check at the last second before the intended transfer whether both parties still have the power to dispose. These costs can be easily avoided by a more frequent use of vacuum instruments.

Traditionally, immovable property is considered the most important type of property. For this reason, the legal status of immovable property is registered in public land records, which justifies the existence of a priority notice in this context: the publicity of the notice justifies its third party effects. However, nowadays, other types of assets can be just as crucial as immovable property. Consider, for example, shares in a company that owns immovable property: from an economic point of view, ownership of those shares is just as important as the immovable property itself. Also, consider intellectual property rights: buyers of those rights may redesign their factory to incorporate these rights in their production process way ahead of the actual transfer, which underlines the importance of performance for those purchasers. The mere fact that there is no public register that keeps track of the legal status of these objects, does, however, not necessarily bring about that the performance interest of the buyer cannot be secured at the expense of creditors, as is illustrated by the VPCT.