The Disposal Act regulates buying and selling of housing. In May 2019, Stortinget passed amendments to the Disposal Act that are intended to lead to better and safer housing deals. The amendments are expected to take effect no earlier than summer 2020.
Under the current Disposal Act, a property has defects, among other things, if it cannot be used for the purposes for which similar properties are usually used. When the new amendments to the Disposal Act come into force, a property will be defective if it does not comply with what the buyer could expect based on, among other things, the type, age and visible condition of the property. This will probably lead to a more correct deficiency assessment that better matches the buyer’s expectations.
Under the new law amendments, the buyer can claim compensation for a defect if it exceeds NOK 10,000. However, this limitation does not apply to agreements where a building has been sold as new, or if there is public judicial disposal reductions or restrictions on the property. It also does not apply if it turns out that a third party has ownership, mortgage or other right in the property, and it does not follow from the agreement that the buyer shall take over the property with such restrictions. The new amendments to the Disposal Act thus entail that a buyer can claim compensation for minor deficiencies compared to today. Under the current Disposal Act, for properties sold “as is”, it is required that the property is in “substantially worse condition” than the buyer had reason to expect.
When it comes to area deficiency, according to the new law amendments, it is not only information and blameworthy behavior on the part of the seller that can lead to a defect – the behavior of the seller’s aides must also be assessed. According to the new legislative amendments, there is a defect if buildings on the property have a smaller area than what is informed by the seller or aides to the seller, as long as the discrepancy is larger than two per cent and constitutes at least one square meter. However, it is not a defect if the seller proves that the buyer did not emphasize the information.
The new legislative amendments also entail that “as is” and similar general reservations no longer have any effect on consumer purchases. The same applies to reservations that are not specified enough to affect the assessment the buyer makes of the property. Thus, house sellers are given more responsibility for any hidden faults and defects in the house.
A buyer cannot claim as a defect something the buyer knew or had to know when the disposal agreement was signed. According to the new amendments to the Disposal Act, the buyer must be considered to know the circumstances that are clearly indicated by a state report or other case papers that the buyer has been given the opportunity to acquaint themselves with. This provides an incentive for house sellers to give as much information as possible about the property before sale. Both stricter requirements are set for the appraisers’ competence and preparation of the state report, and for the house buyer’s duty to examine. However, it will still be possible to insure oneself against this liability through a house seller or house buyer insurance.
If a seller has the right to rectify a defect, a buyer cannot claim price reduction or rescission if the buyer rejects the correction. The new legislative amendments entail that a buyer can claim compensation even if the buyer violates the seller’s right to rectify a defect, but the buyer may then have to cover parts of the loss.
We in the law firm Hansson have long experience with buying and selling real estate and questions related to this. Often, this can imply relatively large values for those involved, and legal assistance may therefore be both necessary and suitable. We offer estate agency and can, among other things, assist with the preparation of case papers, information about the property and reservations. If there are faults or defects in a house you have purchased, we can assist with claims related to this – such as correction, price reductions, rescission and compensation.