Buying and selling real estate

The estate agency business is an intermediary operation. Property sales and the presentation of rental property via an intermediary is regulated by law, and these operations are subject to strict requirements; one must obtain a licence and pledge assets in order to practise.

Dalan’s lawyers have expert knowledge of what is required for establishing and running an estate agency business and can advise enterprises and estate agents concerning these requirements.

One can check to see whether an estate agent is licensed on the home page of the Financial Supervisory Authority of Norway under the heading ‘Licensing’.

However, the direct sale of one’s own property is not an intermediary operation. A sale directly by the owner of a property, for example by a developer, by the seller him/herself, or through a deceased person’s estate, is not subject to law.

The letting of a property for leisure purposes, or the letting of a hotel room or similar, are also not encompassed by law.

The law prescribes strict rules for the protection of consumers. A consumer is considered to be a physical person who assigns a task to an estate agent; not someone who is primarily functioning as part of a commercial operation. It is, however, also possible to waive the law on several points in other cases than consumer transactions.

The Financial Supervisory Authority of Norway exercises supervision over the estate agency sector.

Estate agents shall act ethically in accordance with the code of conduct for their profession.

The estate agency business is governed by the Estate Agency Act and its regulations.

Only those who are in possession of an estate agent’s licence, or who are legal practitioners with a permit issued by the Financial Supervisory Authority of Norway, and lawyers entitled to use the title of “estate agent” can take on estate agency business. These persons are responsible for compliance with the law, which stipulates that they must carry out the essential elements of the estate agency transaction. Moreover, they must ensure that their assignments are carried out in accordance with the estate agency code of conduct.

It is only an authorised estate agent who is permitted to enter into a contractual arrangement, view and examine the property in question, provide information and advice that may be of importance for the transaction, administer a bidding round and manage a contract meeting.

The authorised estate agent may enlist the assistance of certain colleagues. An approved assistant who has passed the relevant exam (cf. Section 4-4 of the Estate Agency Act) may gather information for use in the sales prospectus, conduct viewings and draw up a draft contract and other documents. But it is the authorised estate agent who is responsible for the assignment and he/she must instruct, control and approve the work of the assistant.

An estate agent must exercise due care on behalf of both parties to the transaction and must not act in such a way that might lead to a loss of public confidence in the integrity and independence of the profession. This means that an estate agent, inter alia, cannot buy or sell the property of next-in-kin through his/her own firm or participate in the real estate market in any other manner than as estate agent.

An estate agent must remain a neutral and impartial intermediary.

When one contacts an estate agent, he/she shall draw up an agency contract that contains all the requisite information pursuant to Section 6-4 of the Estate Agency Act. The assignment cannot be of more than 6 months’ duration, though it may be renewed in writing. If the property is sold within the assignment period without the direct involvement of the estate agent, the estate agent may be entitled to the agreed remuneration.

An assignment can be terminated at any time. In such a case, the estate agent will be entitled to a reasonable remuneration for the work he/she has carried out and for the costs thereby incurred.

The estate agent shall ensure that the buyer, prior to bidding, is given the information concerning the property that the buyer may be expected to receive pursuant to the provisions of the Residential Property Construction Act and the Alienation Act. If the estate agent has failed to collect or control these details before a bid is made, the estate agent must inform the buyer of this in writing.

The estate agent must always prepare a sales prospectus that contains all the statutory information pursuant to Section 6-7 of the Act, apart from in cases where the contract is restricted to the implementation of an already agreed purchase.

The estate agent shall also draw up a written contract, ensure that the title deed is prepared and registered, and administer the financial settlement.

The estate agent is independently responsible for ensuring that the stamp duty and registry fees are paid.

The estate agent has also a duty to ensure that the title deed is registered before the seller gains access to the purchase sum.

The practice of bidding is governed by the regulations attached to the Estate Agency Act.

The estate agent shall arrange for bidding to be conducted in an appropriate manner. This means that the estate agent, as far he/she is able, must direct the parties in such a way that bids and any counterbids are made with time limits that are adequately long enough. In consumer property sales the estate agent shall not communicate bids with a shorter time limit than until 12 noon on the first working day after the most recently held viewing. Moreover, the estate agent shall only communicate written offers.

The person who wins the round of bidding to become purchaser of the property shall be presented with a copy of the bid journal as soon as the offer has been accepted. Other bidders may request an anonymous printout of the journal once the property has been sold.

It is sometimes the case that bidders make their bid directly to the seller and not the estate agent, even though the estate agent has been engaged and the transaction shall take place via him/her. It is now the law of contract that governs contractual relationship between buyer and seller, and the property is sold if the seller accepts such a bid. The Estate Agency Act governs solely the role of the intermediary.

An estate agent is liable to pay compensation in accordance with the non-statutory rules governing liability for damages both within a contract and externally to it.

In order that the estate agent can be held liable he/she must have acted negligently and the negligence must have caused a loss. It must also be possible to put a figure on the loss.

Should the estate agent fail to discharge some of his/her clear statutory duties, it is highly likely that he/she will be held liable for negligence. The question is then one of whether this negligent behaviour has caused a loss or not.

There is no time limit on lodging a complaint – but one should send a written claim to the estate agent as soon as one believes that an error, for which the estate agent is responsible, has been made. Any claim one might have against an estate agent becomes time-barred three years after one became aware of, or should have become aware of the error for which the estate agent is responsible.

There is also a complaints board for estate agency services, established in a collaboration between the industry and the Consumer Council, to which one can appeal. An appeal to this body will also interrupt the statutory limitation period.

Alternatively, one might submit an application for conciliation proceedings, or issue a writ, in order to interrupt the statutory limitation period.

The Alienation Act governs the purchase and sale, exchange and donation of real estate. The purchase of self-owned properties, holiday properties, owner occupied units, housing cooperative units, freehold and leasehold plots all come under this Act.

The Alienation Act lays down the rules that define the duties of both buyer and seller during such real estate transfers. The Act governs transfers of real estate between professionals, between professional and private persons, and between private persons.

In a sale to a buyer who intends to use the property personally together with his/her family and household, the transaction is considered to be a consumer purchase in which the buyer is afforded particular protection. In such cases one cannot agree to anything that gives the buyer worse protection that that which derives from the provisions of the Act. In other sales, however, it is possible to deviate from a number of the “compelling provisions” of the Act.

If the house or holiday home has not been completed by the date of sale (by bid/acceptance), the Alienation Act does not come into force but the Residential Property Construction Act does.

Read more about the Alienation Act.