Disposal Act

What is the Swedish Sale of Goods Act?

The Disposal Act is a law that regulates rights and obligations when disposing of real estate. Disposal is a legal term and means that something passes from one owner to another. The law applies to the purchase and sale of real estate, but also applies when property is exchanged or given away as a gift.

The Norwegian Sale of Goods Act protects consumers if faults and defects are discovered in their homes. The law is also called the Disposal Act, or Act on the disposal of real property. 

What is regulated by the Disposal Act?

The Swedish Sale of Goods Act regulates the transfer of real estate that has been used by a person or company to another owner. Examples of real estate are apartments, terraced houses, detached houses, farms or cabins.

The Act also applies to the disposal of land or vacant land, leasehold rights and shares in housing cooperatives, condominiums in real estate and owner-occupied property.

What is not regulated by the Disposal Act?

The law does not apply to the sale of share flats or bonded flats.

The Act does not apply to agreements between a contractor and a consumer for the construction of a new home for private use. This is regulated by Housing Listing Act, also called for Act on contracts with consumers for the construction of new housing, etc. 

The law does not apply to the construction of garages or outbuildings that are not suitable for residential purposes. This is regulated by Craftsman Services Act, or Act on craftsman services etc. for consumers. 

What is a sale?

A sale occurs when the buyer pays the purchase price and any other costs that may have been agreed, and a deed or transfer of title to a share in a housing cooperative is registered.

What is land registration?

Land registration is a public registration of an agreement between two parties concerning rights and obligations relating to real property. The agreement document is entered in the land registry by Norwegian Mapping Authority.

What is a defect if you have bought or sold property?

Defects and deficiencies in property exists when the property is not in accordance with what has been agreed. The starting point for the assessment is what is stated in agreements. If it is stated in the agreement or in the prospectus that the house should have certain properties that it turns out not to have, there is normally a defect.

See the list of typical faults and defects when buying a home here. 

What is an error if you have bought or sold property?

Even when the sales documents do not state anything in particular, there may be a defect. The question of whether a «defect» in the property is a deficiency in the legal sense is often difficult to determine.

If the buyer discovers a defect in the property, the seller will often reply that he was unaware of this defect and that it is therefore not a defect.

When assessing whether or not there is a defect, the starting point is that the seller's good faith or ignorance of a defect is not decisive. But there are important exceptions.

What is not considered a defect?

Defects or damage caused by wear and tear or normal degradation of materials over time are unlikely to constitute a defect. The fact that something wears out over time is normal, and thus rarely a defect in the legal sense.

What happens if the agreement does not describe the condition of the property?

The Disposal Act states that the property must meet the standard that similar properties should normally have in terms of the quality of building materials and workmanship.

The law also states that the property must comply with public regulations. This means, for example, that the electrical system must be installed by professionals in accordance with regulations.

What is the seller's duty of disclosure?

The seller of a property has a duty to disclose all matters that are relevant to the buyer. This means that the seller is obliged to inform the buyer about pests such as bearded dragons, mice or rats if they are aware of them. Other relevant information may include water leaks in the bathroom, dampness in the basement or faults in the electrical system.

If the seller fails to inform the buyer of relevant conditions, this may be considered a «defect» in the legal sense.

What is the buyer's obligation to investigate?

In principle, no more is required of the buyer than that the buyer attends a viewing to look at the property, but if uncertainty is stated in the prospectus or valuation report about the condition of the property, the buyer's duty to investigate is increased if the buyer is encouraged to make further investigations before the purchase.

What does it mean that the property is «sold as is»?

When a second-hand home is sold «as is», responsibility for any faults and defects is shifted to the buyer. However, provisions in the Sale of Goods Act mean that the seller can be held liable for faults and defects in the property if:

1. The seller has withheld information that has affected the agreement.
2. The seller has provided incorrect information that has affected the agreement.
3. The property is in significantly worse condition than expected.

What claims does the buyer have in disputes about the Sale of Goods Act?

As a buyer, you have several options in relation to the seller.

• Withhold the purchase price. You can withhold the amount it will cost to rectify the defect.
• Require rectification. The seller must, at its own expense, rectify the defect within a reasonable time and without significant inconvenience to you.
• Demand a price reduction. You have the right to demand a price reduction corresponding to the costs you incur in having the defect rectified.
• Cancel the agreement. If the defect constitutes a material breach of contract, you can cancel the contract.
• Claim compensation. You can claim compensation for the financial loss you have incurred as a result of the defect. This compensation is in addition to rectification, price reduction or cancellation of the contract.

What are the seller's claims in disputes regarding the Sale of Goods Act?

If the buyer fails to pay or breaches the agreement in any other way, the seller may demand the following:

• Fulfilment of the agreement. The seller can demand that the buyer fulfils the agreement.
• Cancellation of the agreement. The seller may cancel the agreement if non-payment or other breach of contract is considered material.
• Withhold the title deed. The seller can refuse to allow the buyer to use the property by withholding the title deed.
• Claim compensation. The seller may claim compensation for the financial loss he has suffered as a result of the breach of contract.

What are the deadlines for complaints?

In disputes about the Sale of Goods Act, you can make a claim against the seller. Such a claim is often called a complaint, In practice, this means notifying the seller that there are faults and defects in the property and that it may be necessary to make a claim against the seller. If you do not make a complaint in time, you may risk losing your claim against the seller.

Section 4-19 of the Sale of Goods Act distinguishes between the absolute and relative complaint periods. This means that the complaint period of five years cannot be invoked unless the buyer notifies the seller of the fault or defect within a reasonable time.

In this context, «reasonable time» can mean two to three months after the defect was discovered or should have been discovered. What is within «reasonable time» is decided specifically based on the circumstances of the individual case.

Do I need a lawyer?

Disputes about the Sale of Goods Act are often characterised by a high level of conflict and poor communication. It is also difficult to know which laws and regulations apply.

It may make sense to contact a lawyer who is an expert in property disputes, such as Jørgen Bugge.

Do I have to pay for a lawyer myself?

Your home insurance or villa insurance will normally have a legal expenses insurance, which covers up to NOK 100,000 of your legal expenses in the event of a property dispute. You must cover a deductible under the insurance. The lawyer will then continue the dialogue with the insurance company on your behalf.

Why should I choose Advokatfirmaet Halvorsen & Co?

For almost 30 years, we have assisted many clients in matters relating to the Sale of Goods Act. Our lawyers are experts in property rights, and has extensive experience.

Advokatfirmaet Halvorsen & Co helps clients with faults and defects in housing in the following regions:

Ringerike, Hønefoss, Oslo, Ski, Follo, Ås, Kolbotn, Vestby, Nordby, Moss, Enebakk, Indre Østfold, Asker, Bærum, Drammen, Hurum, Drøbak and Nesodden.

We always offer a free consultation about your property case. Get in touch with us today.