Mar 23, 2024
Incorrect Information in Home Purchase – Rights Under the Alienation Act § 3-8
When you, as a consumer, buy a home in Norway, you are protected by the Alienation Act. This law regulates your rights if the seller has provided incorrect information about the property.
This article highlights what Alienation Act § 3-8 says about incorrect information, and what rights you have as a buyer in such a situation.
What does Alienation Act § 3-8 say?
Alienation Act § 3-8, first paragraph, states that the property has a defect if the "circumstances of the property" do not match the information the seller has given to the buyer.
This applies to information given directly to the buyer, in an advertisement, sales prospectus, or through other marketing on behalf of the seller.
What is meant by "circumstances of the property"?
This includes actual conditions of the property that may be important to the buyer, such as:
The condition and standard of the property
Area and size
The property's technical condition, such as hidden defects and deficiencies
Potential rot, mold, or moisture damage
Public legal status, such as zoning plans or conservation decisions
Neighborhood and environmental conditions
Information about such conditions must be correct. The paragraph applies both to positive information provided and the lack of information about negative aspects the buyer could expect to receive, cf. § 3-7.
A property can have a defect under § 3-8 even if the seller has not actively given incorrect information but has withheld important information.
Consequences if the information was incorrect
For incorrect information to constitute a defect under § 3-8, there are two conditions that must be met:
The information must be incorrect. This is based on an objective assessment - the seller's good or bad faith is not decisive. Information the seller believes to be correct can also be incorrect.
The information must have "influenced the agreement", cf. § 3-8 second paragraph. This means that the information was a motivating factor for the purchase or the terms of purchase. If the buyer did not emphasize the information or would have entered the agreement on the same terms even if correct information was provided, there is no defect.
The burden of proof that the information has influenced lies primarily with the buyer, but the Supreme Court has established that there is a presumption of influence if the information was likely to be purchase-motivating, cf. Rt. 2003 p. 612.
Buyer's claims against the seller
If the conditions under § 3-8 are met, and there is thus a defect due to incorrect information, the buyer may assert defect claims against the seller under the Alienation Act chapter 4:
Price reduction under § 4-12: The buyer can demand a price reduction to restore the balance of the agreement. The price reduction is usually set to the costs of remedying the defect.
Termination under § 4-13: If the defect is significant, the buyer can demand to terminate the agreement. The buyer can then declare themselves released from the contract, with both parties returning the performances. In assessing whether the defect is significant, emphasis should be placed on the defect's importance to the buyer and whether it is reasonable to say they would have entered the agreement if correct information was provided.
Compensation under § 4-14: The buyer can claim compensation for direct losses due to the defect, such as repair costs. Compensation for indirect losses requires that the seller has been negligent. To receive compensation, economic loss must also be demonstrated.
As a buyer, you have strict complaint deadlines under § 4-19. Note that the Contract Act's rules on invalidity due to fraud (§§ 30, 33) may also apply if the seller has deliberately provided incorrect information to promote the agreement.
Summary
Alienation Act § 3-8 gives you, as a homebuyer, strong protection against incorrect information from the seller. If the information was incorrect and influenced your purchase decision, you can assert several claims against the seller. However, the rules on incorrect information raise many legal and evidentiary questions in practice.
Therefore, it is important to seek professional assistance to secure your rights as a buyer. At Sterk Law Firm, we have extensive experience assisting buyers in defect disputes under the Alienation Act. Our attorneys specializing in property law can assess your case and provide you with close follow-up throughout the process.
Are you experiencing incorrect information in home buying? Contact us for a non-binding conversation. We ensure you receive the advice and assistance you need.
