In July 2021, a married couple entered into an agreement to purchase a detached house in Ullensaker. The purchase price was NOK 6.7 million
On the property is a detached house built in 2005 of 178 square metres. The property also has a double garage built in 2007, where the second floor was furnished as a rental unit in 2016 and completed in 2017.
Homeowner misinterpreted the regulations – must pay tax on rental income in own home
Thought the rental income was tax free. The court believes the homeowner has acted grossly negligently.
Marketed with an approved rental unit
The property was clearly marketed as a detached house with an approved rental unit. This appears in a number of places in the sales documents. On the front page of the prospectus it says, among other things, “Approved rental part” and further on in the prospectus it says “Approved rental part above the garage”.
The rental income was stated to be NOK 8,500 per month.
In the self-declaration form, the seller wrote “Approved by Ullensaker municipality as a change of use of a room about the rental apartment.”
After taking over, and having rented out the rental part to a relative for some time, the buyer wanted to rent out the dormitory via Utleiemegleren AS. One of the conditions for being able to rent out via the letting agent was that the rental unit was approved for letting.
When the buyer contacted Ullensaker municipality and was sent the decision regarding the rental part, the buyer discovered that the decision did not imply an approval of the rental part as an independent housing unit, but only a change of use from loft storage to annex. It was expressly stated in the decision that water and sewage installations were not permitted in the rental unit.
The relevant building application concerned a change from an attic storage room to a living room, storage room and bedroom, as part of the main residence, i.e. in practice an annex, and that the establishment of an independent housing unit/rental unit above the garage was not applied for.
The buyer complained to the seller in July 2022, later there was a complaint about faults in the heating cables. Furthermore, the buyer got a surprise when the municipal taxes were doubled after the purchase, which the new owners believe the sellers have kept hidden.
The home buyer demanded a discount of millions after a high party factor
I think that too much party noise came with the purchase of the apartment. The Financial Complaints Board believes that the buyer himself must bear the risk that the noise challenge was higher than expected.
Mediation between the parties led nowhere. The buyer then took the case to court, with one goal in mind: to get the deal lifted. In addition to all the shortcomings, it has been shown by the buyer that they have “lost all trust in the seller and broker”.
Broker: – Went a little fast
The case went before the Romerike and Glåmdal district court at the end of March this year. The verdict came in April, and the court first of all states that the broker should have checked the legality of the rental apartment. In court, the broker confirmed that she had “probably read the documents a little quickly”.
– According to the court’s assessment, one of the broker’s most important tasks is to carefully check information about the property to be sold, writes district court judge Thomas Johansson.
The court comments on the seller’s responsibility as follows:
– According to the court’s assessment, it has not been sufficiently proven that the seller knew this information, but the court believes the seller should have known this. It is the seller who has converted the garage into an apartment. Even though he has left the job to professionals, he was proactive. The seller should therefore have familiarized himself with what he applied for and what the municipality gave permission for.
When it comes to the tax shock on the municipal costs, the court considers that the seller neither knew – nor should have known – that Ullensaker municipality would almost double the taxes from one year to the next.
– The seller lived abroad, it is not probable that he received information about this from the municipality before the sale. The seller cannot be expected to follow the media/newspapers etc. to see what is happening in the municipality in the future. The court also does not believe that the broker has a duty to check what the municipal/state fees/taxes on a property are expected to be in the years ahead beyond the information the broker receives from the seller and the municipality via the so-called “broker’s package”, points out the court’s administrator.
Home buyer granted price reduction of half a million after finding this
Do you have this ancient ornamental plant in your garden? Then you’re in trouble if you’re going to sell, shows a recent decision in the Financial Appeals Board.
After an overall assessment, the court has come to the conclusion that the deficiencies amount to just under NOK one million, which is approx. 15 percent of the purchase price. This includes the financial loss the buyer suffers because he cannot rent out and the cost of returning the rental unit to an approved condition. The court has also included defects in heating cables.
Along the way, the buyers have been paid NOK 900,000 plus interest by the seller and his transfer company.
– Can freely sell the home
The court does not find that the buyer’s statement that they have “lost all confidence in the seller and broker” is a decisive factor.
– The court agrees that there is a discrepancy between the buyers’ legitimate expectation and what they received. However, price reductions restore the imbalance. It was precisely the economic side of the rental unit that was important to the buyer – not that they needed extra space. The case has not had major practical or financial effects for the buyer, who has already been paid NOK 900,000 plus interest by the defendants.
The court adds as follows:
– If the buyer no longer wants to live in the home, he can freely sell the home. According to the information provided by all the brokers who testified, this is an easy-to-sell property in the center of Jessheim.
The Romerike and Glåmdal district court therefore does not agree that the buyer should be allowed to cancel the purchase.
– According to the court’s assessment, a price rejection will restore the imbalance and constitutes a sufficient reaction in this case. The buyer receives a significant price reduction that covers the financial loss by not being allowed to rent out. The buyer therefore does not miss out on the extra income the rental unit generated, and at the same time he does not have to rent out the unit. He avoids any challenges with tenants and the work surrounding this, the judgment says.
– In general, there must be a certain amount of time before the buyer is given the right of withdrawal. A termination will have major consequences for the seller because they no longer live in Norway. Some time has also passed between the agreement and the cancellation declaration. In the court’s view, a price reduction is a sufficient and reasonable response in this case, the court adds
The court thus sets the remaining sum in the judgment at NOK 100,000 including interest in favor of the buyer.
Punished for refusing to settle
But in the court’s view, there are weighty reasons for awarding the defendant – i.e. the sellers – partial coverage of the legal costs.
– The court attaches particular importance to a settlement offer that was made and recorded during the court mediation. The seller here offered the buyer NOK 1 million – the same as today’s verdict, writes the Romerike and Glåmdal District Court.
According to the judgment, the buyers must cover NOK 78,000 of the seller’s legal costs.
Legal representative for the buyers was lawyer Mathias Sejersted Bødtker v/lawyer Siham Himmich. The legal representative for the sellers was lawyer Lars Kåsine Eriksrud.
