How is a notarial deed interpreted?

It often happens that there is ambiguity about how an agreement should be interpreted. This is because the parties to the agreement may have had different intentions when concluding the agreement than what is stated in the wording of the agreement or deed. The question then is how the agreement or deed should be interpreted. Roughly speaking, two interpretation methods can be distinguished: the Haviltex method and the CAO method.

The Haviltex standard is a legal principle in Dutch contract law that determines how the content and interpretation of contracts should be assessed. It states that the interpretion of a contract depends not only on the literal wording of the contract but also on the intentions of the parties involved, their mutual expectations, and the context in which the contract was made.

The De Haviltex standard, also known as the Haviltex formula, means that the interpretation of an agreement or deed amounts to the meaning that parties could reasonably have attributed to the provision(s) of the agreement or deed. This takes into account the circumstances of the case and what the parties could reasonably expect from each other.

What is the collective labor agreement standard?

The CAO standard is a purely linguistic interpretation of the provision(s) in the agreement or deed. This interpretation method relies much more on the literal wording of the agreement. This is also called objective interpretation, whereas the Haviltex standard is much more subjective.

How is a notarial deed interpreted?

Now that we know the two different methods of interpretation, we can look at which interpretation should be used for a notarial deed. The Supreme Court, the highest court in the Netherlands, has ruled that a notarial deed must be interpreted objectively, according to the letter of the deed (according to the CAO standard).

BUT, and now comes the crucial part: this only applies to the proprietary law aspect of a deed. Therefore, objective interpretation applies to determining (the scope of) the right transferred or established in the notarial deed. The obligatory part of the agreement must be interpreted subjectively.

Example

To make it all a bit clearer, I will try to explain it using a mortgage deed. In a Mortgage deed The establishment of the mortgage right on a house or office building is often arranged, as is the sum of the mortgage loan that stands against it and the interest rate at which the bank provides the mortgage loan. The mortgage deed is then registered in the Land Registry. The part that regulates the establishment of the mortgage right must be interpreted objectively, because third parties must be able to rely on what is stated in the deed regarding the establishment of the mortgage right, which deed they can consult in the Land Registry.

The section of the mortgage deed concerning the amount of interest to be paid is only relevant to the relationship between the mortgagor and the mortgagee, the contracting parties. These provisions do not affect third parties and should therefore be interpreted subjectively. This means that the interpretation takes into account what the parties, under the given circumstances, could reasonably expect from each other (according to the Haviltex standard).