Mandatory Rules in the Norwegian Disposal Act - What does it Really Mean?

Generally, when purchasing a property and the buyer is a consumer, the Norwegian disposal law regulates the agreement between the buyer and the seller, cf. § 1-1

Certain rules in the law are mandatory, and agreements cannot be made contrary to such rules. Mandatory rules are common in laws where the buyer is a consumer. Because both the buyer and the seller in most cases are consumers in relation to sale of property, the law is in such cases only partly mandatory.

The Norwegian Disposal Act (Avhendingslova) or the Norwegian Housing Construction Act (bustadoppføringslova)?

There is therefore a distinction depending on whether the seller is a trader or a consumer. Further, the relationship can determine whether the disposal law applies, or whether the agreement is regulated by the housing construction law. If the latter applies, the buyer has greater protection.

Fast sales

It is well known that the housing market is characterized by high turnovers. Real estate agents focus on good sales and safe purchases. Some do however focus too much on high prices and fast sales, resulting in gross mistakes. The question following is whether the agent/seller has sold the property ‘as is’ contradictory to the Norwegian disposal act. A fast online search shows that the issue is highly relevant.

Can the Property be Sold ‘as is’?

It is clear in the disposal act § 1-2 in which cases it is not necessary to follow the law for the disadvantage of the buyer:

«§ 1-2.Høvet til å fråvike lova, forbrukarkjøp
(1) Når ikkje anna er særskilt sagt i lova, kan lova fråvikast ved avtale.
(2) Lova kan ikkje fråvikast ved avtale til ugunst for kjøparen ved forbrukarkjøp av nyoppført eigarbustad som ikkje har vore brukt som bustad i meir enn eitt år på avtaletida, dersom seljaren har gjort avtalen som ledd i næringsverksemd.»

This means, that when it is not specifically mentioned in the act, the act must not necessarily be obeyed, subject to agreement. Further, the act cannot be evaded by agreement to the disadvantage of the buyer in the case of consumer purchase of newly registered property which has not been used as domicile for more than a year in the agreement, if the seller has made the agreement as a trader.

Generally, the rules in the act can be avoided unless it is otherwise stated in the act, c.f. section 1. The issue in question follows section 2.

Mandatory Rules

Certain conditions must be satisfied for the entire act to become mandatory.

The property must be recently registered, this is different from the housing construction act regarding agreements about registration of property.
The property cannot be used as domicile for more than a year in the agreement period.
The seller is not a consumer.

If these conditions are satisfied, the act is mandatory.

3.1 The effect of such an application of the act.

When the property cannot be sold ‘as is’ c.f. § 3-9 section 1, this means that a potential clause regarding the property being sold ‘as is’ or on similar terms, will not be valid.

Seller Attempting to Avoid Responsibility

The reason the seller wants to sell the property under such conditions is to avoid responsibility in regards to mistakes and deficiencies in the property. As stated in § 3-9 there will only be deficiencies in the property if false information has been given, if information has been withheld, or if the property is of significantly poorer condition than stated. The buyer therefore takes over the risk of mistakes and deficiencies in the property. The buyer and the seller are agreeing away from the other decisions in the disposal act.

Such conditions are inconsistent with the law in § 1-2, section 2, stated above. Therefore the property cannot be sold subject to § 3-9. The result of the property not being sold ‘as is’ is that consideration of deficiencies must be done according to §§ 3-1 and 3-2.

Which Claims May be Brought as a Result of This?

The threshold for the property to be defined as deficient cf. the disposal act §§ 3-1 and 3-2 is low, compared to older properties. There are no requirements of the deficiencies being significant, which means that any deviation from the agreement will be considered a deficiency according to § 3-1. Further, regulatory violations will constitute deficiencies according to § 3-2. Therefore the buyer will also have the right to deficiencies counting against the seller also in minor circumstances. The buyer is therefore in a much stronger position. The seller has not agreed that the buyer takes over the risk of insignificant deficiencies.

Decent Agent Behavior

For real estate agents the above includes that if a newly registered property is sold with an invalid clause regarding conditions c.f. § 3-9, the agent has acted contradictory to decent agent behavior. According to the Norwegian law on real estate agents § 6-3, section 2, an agent must protect the buyer and the seller in relation to all the parts of the trade. Further it is stated in § 6-8 that the agent must create a written contract of purchase including important terms for the trade. When the agent has created a contract contradictory to the disposal law, the agent might risk being liable for compensation to the buyer and the seller.

Do you have any questions regarding important deficiencies in a property and mandatory terms?

Contact Osloadvokatene by trainee barrister Ørjan Onarheim
E-mail onarheim@advokat.no, telephone 915 886 65

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Kontakt Osloadvokatene ved Advokat Ørjan Onarheim.