What is my position as a shareholder? | Differences between the sale of a new and a used property | Help, this didn’t go smoothly, what now? | Termination of Co-Ownership of Apartment Shares | Error situations

Sale of housing shares

Real Estate Transaction in a Housing Corporation – What Am I Buying?

In contrast to property transactions, in a real estate transaction within a housing corporation, the subject of exchange is not a physical property but a security that typically grants the right to manage an apartment located within the housing corporation.

The actual land and buildings are owned by the housing corporation, whereas the apartment owners collectively exercise decision-making authority over the property through their ownership in the corporation. This form of ownership is often referred to as indirect or indirect ownership.

If You Suspect an Error in the Transaction

Clarify the situation and determine the next steps with the assistance of an expert.

What is my position as a shareholder?

The Finnish Apartment Building Act and the Articles of Association define the responsibilities, obligations, and rights of the apartment building company and its shareholders. The law provides the foundation for the operation of the apartment building company, and deviations can be made in certain situations through provisions included in the Articles of Association. The Articles of Association also define aspects such as the basis for maintenance fees and the maintenance responsibility between the shareholder and the apartment building company, which may differ from the provisions of the Apartment Building Act.

Differences between the sale of a new and a used property

The Housing Transactions Act, in turn, regulates housing transactions more specifically. The act includes separate provisions for both the exchange of new and used properties. Similarly, the Housing Transactions Act also governs aspects such as defects in housing transactions.

The sale of a new property typically occurs when a property is being sold for the first time to be used. The provisions pertaining to the sale of new properties are specifically established to protect consumers, as the seller of a new property is often a professionally operating entity, such as a construction company. The act encompasses a comprehensive consumer protection system, including requirements for the seller to provide guarantees and securities during the construction phase and after construction.

The provisions of the Housing Transactions Act regarding the sale of used properties come into effect when a property is sold as used or when a non-professional seller offers a property for use for the first time. Often, in the case of the sale of a used property, both the seller and the buyer are private individuals in a consumer position.

Help, this didn't go smoothly, what now?

Sometimes, real estate transactions don’t proceed smoothly, and errors may be detected during the process. It’s possible that the seller may not have provided information about the property that would have influenced the buyer’s decision if they had received this information before the transaction. The law includes separate provisions for defects in the case of new and used properties. In the case of a new property, a defect could occur, for example, if the property doesn’t meet the construction-related regulations in place during its construction, or if the construction hasn’t been carried out according to proper building practices. Defects in a new property sale could also result from the quality of the materials used in construction, if they are not of the usual good quality in terms of durability or characteristics.

Termination of Co-Ownership of Apartment Shares

In cases of inheritance distribution or other situations, an individual may acquire a share in an apartment ownership. If a co-owner no longer wishes to continue the co-ownership, they have the right to partition their share from the jointly owned apartment. Typically, dividing the apartment itself is not feasible. In this scenario, the co-owner has the right to apply for the termination of the co-ownership relationship and the sale of the apartment through a court application to the district court. A single co-owner can make the application, and the costs are divided among all co-owners in proportion to their ownership shares. The applicant covers the application fee. Usually, legal representation is sought, and upon confirming no conflicts of interest, the appointed attorney gives consent to proceed with the task.

Error situations

When is there a defect in the apartment?

In a used purchased apartment, there might be a defect, for example, when it does not correspond to what can be considered agreed upon. It is considered a defect if the seller deliberately withheld essential information about the apartment from the buyer before the conclusion of the sale, or if the apartment does not match the information that the seller provided before the sale. This is especially the case when these factors may have influenced the buying decision. The apartment also has a defect if it significantly falls short of the buyer's expectations regarding its qualities. In the assessment, factors such as the apartment's price, age, and general standards of reasonable living conditions are naturally taken into consideration.

Buyer's Pre-Inspection Obligation

The buyer of a property also has certain obligations, such as the pre-inspection obligation and timely fulfillment of the obligation to notify defects (reklamaatiovelvollisuus). The binding pre-inspection obligation for the buyer means that the buyer cannot invoke a defect that could have been detected before the conclusion of the purchase agreement. This obligation applies to the buyer even if the inspection is not carried out. Key documents concerning the property that are relevant for the buyer include at least the property manager's certificate (isännöitsijäntodistus) and the maintenance needs report (kunnossapitotarveselvitys), which should be reviewed before making the purchasing decision. In general, the provided information can be trusted, as the buyer is not obligated to verify the accuracy of the information provided by the seller about the property without a specific reason.

Buyer's obligation to notify defects

If the buyer discovers a defect in the property after the purchase has been made, it is their obligation to make a timely complaint to the seller. If the buyer does not notify the seller of the defect and their related claims within a reasonable time from the discovery of the defect or when it should have been discovered, they will lose their right to invoke the defect. In legal practice, a reasonable time for making a complaint has often been considered to be around three months, but depending on the specific circumstances of the case, a complaint period of up to eight months has been deemed reasonable. In any case, it is advisable to report the defect as soon as it is discovered. The essential element is that the complaint includes information about the defect and the claims. If the claim is for a specific amount of money, at least an estimate of the required amount should be provided. As the matter is being investigated, the claims can then be specified further. However, it should be noted that if new defects are discovered during the investigation, a similar complaint must be made regarding those new defects as well.

Price reduction

The most common consequence of a defect is a price reduction, which adjusts the purchase price of the property to a level that would correspond to the price of a defective property. When determining the amount of the price reduction, any potential increase in the value and improvement of the property achieved through repairs is also taken into account. However, the amount of the price reduction is rarely directly equivalent to the cost of repairs. When evaluating the reduction in price, repairs that are the responsibility of the housing company are not considered.

Cancellation of the Purchase

Cancellation of the purchase is usually considered only when there is a significant defect in the property, and the cost of repairs is substantial compared to the purchase price. In simple terms, canceling a real estate purchase means that the obligations of the seller and buyer cease, and any payments already made must be returned. Cancellation is always a consequence of a material breach of the contract by one of the parties involved in the transaction. A cancellation agreement must be made in writing, and it's important to note that canceling the purchase could potentially lead to a double payment of transfer tax. The cancellation clause may also be included in the original purchase agreement.

If a settlement cannot be reached, the cancellation must be sought through the legal system. If a home insurance policy with legal protection coverage was in force at the time of purchase, it might cover some of the costs. In a cancellation situation, the seller is required to return the paid purchase price and compensate the buyer for any damages, as well as reimburse any significant profit or benefit gained from the property. The seller is also obligated to pay statutory interest on the refunded purchase price from the day they received it.

Seller's Actions and Their Impact

If the seller has acted dishonorably, negligently, or with gross negligence, the buyer has the right to claim a defect even if they failed to make a timely complaint. In legal practice, the seller's conduct has been considered dishonorable and unworthy, for example, in situations where the seller assured the buyer about certain aspects of the property without being certain about them. Even if the seller did not intentionally provide incorrect information to the buyer, their behavior was deemed blameworthy according to the law's intention.

If you have identified a defect in the property you have purchased or suspect one, please contact us! We can help you determine the extent of the defect, assist you in making a complaint, and presenting your claims.

The responsibility of a real estate agent

In many real estate transactions, a real estate agent is involved, and there is a brokerage agreement between the property seller and the real estate agency. The real estate agent must perform their tasks professionally, diligently, and adhere to good brokerage practices while considering the interests of both parties in the transaction. The real estate agent has an obligation to inquire and provide information. The agent must provide both parties with all the information that could affect their decision to proceed with the transaction. The agent is responsible for their own actions, and if they act incorrectly, depending on the situation, they may be held liable to either the seller or the buyer. Liability to the seller for errors could relate to non-compliance with legal requirements or the terms of the brokerage agreement between the agency and the seller. The real estate agent is responsible for any inaccurate information provided. If the agent's incorrect actions result in damage, they may be liable for compensation to the buyer. It's important to remember to file a complaint if there are any issues or errors.

The property manager's responsibility - Error in the property manager's certificate

The property manager's certificate is an important document when conducting a real estate transaction, as it contains crucial information about the housing company. The Condominium Act specifies the details that must be included in the property manager's certificate. If the information provided in the property manager's certificate is found to be inaccurate after the real estate transaction, the property manager may be held responsible for this. The housing company itself can also be held liable for an erroneous property manager's certificate. The Condominium Act outlines the property manager's liability for compensation. The Real Estate Transaction Act also outlines the compensation liability related to the property manager's certificate. Due to the significant importance of the information in the property manager's certificate for both buyers and sellers, it's essential to exercise diligence in its preparation.

The responsibility of a building inspector

When a defect arises after a real estate or property transaction, which was not included in the inspection report, questions about the liability of the building inspector may arise. When the consumer is the client of the inspection, consumer protection laws come into play regarding the liability of the building inspector. The terms of liability for the building inspector are also influenced by the contract between the client and the building inspector. The building inspector must perform the work with professionalism and diligence. The building inspector is responsible for their own actions, and it's important to note that the building inspector generally does not bear responsibility for defects in the property; the responsibility for those defects usually lies with the seller. However, several factors influence the liability of the building inspector. The liability is typically limited to the amount of the fee charged.

Through us, you can obtain comprehensive assistance in clarifying the matter, significantly expediting its resolution. We have an extensive network of collaborators at your disposal. We will work with you to assess the overall situation and arrange an on-site inspection of the property, with our lawyers, building inspector, and construction contractor present. This approach ensures a thorough assessment and enables prompt initiation of dispute resolution and property repairs.

By involving us from the beginning, we are immediately up-to-date with the situation. This allows us to promptly establish the scope of the dispute and the estimated cost of repairs, and we can quickly draft a demand letter for the opposing party. Time-wise, this approach can save months, and costs can be significantly reduced. The earlier an attorney is involved in handling the matter, the quicker a resolution is usually achieved. The longer an attempt is made to resolve the matter independently, the larger the differences in perspectives tend to become.

Sale of housing shares

If You Suspect an Error in the Transaction

What is my position as a shareholder?

Differences between the sale of a new and a used property

Help, this didn't go smoothly, what now?

Termination of Co-Ownership of Apartment Shares

Error situations

When is there a defect in the apartment?

Buyer's Pre-Inspection Obligation

Buyer's obligation to notify defects

Price reduction

Cancellation of the Purchase

Seller's Actions and Their Impact

The responsibility of a real estate agent

The property manager's responsibility - Error in the property manager's certificate

The responsibility of a building inspector

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