Unpleasant surprises – along with a range of defects and deficiencies – can arise in connection with buying a house, both for buyers and sellers. That's why some sellers choose to take out a sælgeransvarsforsikring (seller's liability insurance), which covers the 10-year period during which the seller is legally liable for defects and deficiencies in connection with the house sale.
Read more about seller's liability insurance here.
What is a seller's liability insurance? A seller's liability insurance provides extra security if you sell your home. The seller has a statutory duty to be liable for defects and deficiencies – for up to 10 years after the sale of the property – and the seller's liability insurance covers the entire period during which the seller can be held liable.
What does a seller's liability insurance cover A seller's liability insurance covers defects and deficiencies that weren't noted in the tilstandsrapport (condition report) – and that also aren't covered by the ejerskifteforsikring (change-of-ownership insurance). This could, for example, be:
- Illegal sewer or utility connections (plumbing and electrical installations)
- Contamination of the plot, such as soil contamination or buried oil tanks
- Other illegal conditions in the building
However, the seller's liability insurance doesn't apply in cases of fraud or gross negligence
What's the difference between change-of-ownership insurance and seller's liability insurance? Change-of-ownership insurance covers only defects and deficiencies in the property itself. Seller's liability insurance covers defects and deficiencies both on the plot and in the property.
As mentioned, a seller's liability insurance covers the defects and deficiencies that aren't noted in the condition report and that aren't covered by the change-of-ownership insurance.
Is it a good idea to take out a seller's liability insurance? If the buyer finds issues and defects or deficiencies that aren't covered by the change-of-ownership insurance, you as the seller risk being sued – and that can become quite an expensive affair. It can be a good idea to take out a seller's liability insurance if, as the seller, you want greater financial security than the change-of-ownership insurance alone provides.
Who's on the buyer's side? Seller's liability insurance can be an advantage for both buyer and seller
Keep in mind that a seller's liability insurance doesn't remove the seller's liability. If the seller's liability insurance is taken out in connection with a property sale, it can give you, as the buyer, peace of mind should defects or deficiencies in the plot and the property later come to light. It can be unpleasant as a buyer to find yourself in a situation where defects and deficiencies are discovered in the property after the purchase agreement has been signed. That's why it's a really good idea to get a buyer's advisor whom you can have on your side throughout the entire purchase process.
