There can be quite a few pitfalls when buying a home that, as a buyer, it's important to steer clear of before you sign the purchase agreement. Unpleasant surprises can turn up as hidden defects.
Defects (fejl og mangler) when buying a home are considered deficiencies that can affect the purchase decision. Use a professional legal advisor and avoid unpleasant surprises.
Learn more about hidden defects here.
Below you can read about:
- What "defects" (fejl og mangler) covers
- How long the seller is liable for defects
- Things to remember about buyer's liability insurance (ejerskifteforsikring)
- Defects in an owner-occupied flat or house
- Avoiding unpleasant surprises
What does "defects" cover? You may have heard the term "fejl og mangler" (defects), whether you're a buyer or seller. Defects cover the conditions that impair the home's condition and function, and that don't match the agreement or information you received from the seller or the seller's estate agent.
That's why, as a buyer, you should always thoroughly inspect the home before entering into a purchase agreement — this is where the buyer's duty to investigate (undersøgelsespligt) comes into play. It's important that the defects you discover are also assessed as a defect in the legal sense. Any defects you discover can be factored into negotiations on both price and terms, which can ultimately benefit you and result in a price reduction.
There can be defects when you buy a home, but there's a difference between hidden and visible defects. Nor are you entitled to have all costs or conditions covered.
Here are some examples of what can be considered defects
- Illegal electrical installations
- Illegal drainage
- Mold
- Illegal or missing wet-room membrane
- Subsidence damage
Because buying a home is one of the biggest investments of your life, it's essential that you have thorough knowledge of the home before signing a purchase agreement. If everything isn't accounted for, it can have consequences for your finances.
The seller also has a duty of disclosure (oplysningspligt) — a duty in good faith to inform the buyer of defects in the property that the buyer should have known about. If the seller fails to meet this duty, they risk being held liable for damages. The seller may be covered by seller's liability insurance (sælgeransvarsforsikring), which doesn't exempt the seller from liability but simply covers any costs through their insurance, depending on the scope of the coverage.
How long is the seller liable for defects? The seller has 10 years of liability for hidden defects in the home, starting from the day the home is handed over. However, the seller can waive this liability by using what's known as a home inspection scheme (huseftersynsordning).
When using the scheme, the seller is obligated to do the following:
- Provide the buyer with a valid electrical installation report and condition report (tilstandsrapport)
- Offer buyer's liability insurance (ejerskifteforsikring), obtained by the seller
- Offer to pay half of the cheapest quote for buyer's liability insurance (with basic coverage)
- Disclose the legal implications (as stated in the purchase agreement)
Things to remember about buyer's liability insurance. With buyer's liability insurance (ejerskifteforsikring), any damage that can be categorized as a hidden defect can be reported to the relevant insurance company, which will then assess whether the damage is covered. Whether you've taken out the insurance yourself or accepted the one the seller may have offered, the insurance can cover a range of hidden defects — that is, defects not mentioned in the condition report or the electrical installation report.
However, the seller must pay half of the insurance premium on the originally obtained quote, as a one-time payment.
Keep in mind that the insurance only covers damage that existed on the day of handover. If the damage instead occurs after you've received the keys, it will fall under the home insurance you've taken out.
If you choose not to accept the seller's offer of buyer's liability insurance, you're left alone with the risk and the seller's duty of disclosure. The seller's duty of disclosure is based solely on the seller acting in good faith and loyally towards you as the buyer. That means that, as the buyer, you would then bear the full risk and cost if challenges with hidden defects were to arise after the handover of keys.
Remember that buyer's liability insurance does not cover items already listed in the condition report or the electrical installation report.
You will not receive the seller's contribution to the buyer's liability insurance premium if no such insurance is taken out.
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Minor issues. Significant defects should be interpreted as deficiencies expected to influence the buyer's purchase decision. Minor issues are considered conditions that are to be expected and that the buyer should tolerate. According to case law, the threshold for what counts as minor varies between 2-7% of the purchase price, with a minimum loss of kr. 5,000 per instance of damage.
Defects in an owner-occupied flat or house
The home inspection scheme (huseftersynsordning) is not used when trading owner-occupied flats. This is because it can be difficult to carry out a building survey of the entire property and all associated flats. Sellers of flats therefore carry 10 years of liability for hidden defects in the flat, in addition to the seller's usual duty of disclosure.
Get the right home advice so you avoid unpleasant surprises. As a buyer, you bear a certain responsibility for inspecting the home for visible defects. That's why it's important that, before signing a purchase contract, you get a clear picture of the home's condition.
It can be worth its weight in gold to contact a building technical advisor, who can help and advise you in assessing the home's condition and what costs might be involved in renovating or repairing individual issues.
Buying a home is a big step and a major financial investment, so independent home advice will give you the best terms, helping you avoid the pitfalls of buying a home as much as possible and get through the purchase with peace of mind.
At Bomae you get independent home advice that will always be on your side and look after your interests.
You can read much more about how to avoid unpleasant surprises after the purchase agreement has been signed here.
