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Pre-emption right
• The tenants of residential leaseholds have mandatory
pre-emption rights for properties with a minimum of 13
residential tenants. This threshold is lowered to a minimum
of 6 residential tenants if the property contains residential
tenancies only (as opposed to business tenancies). The
pre-emption rights are mandatory and applicable in case of a
transfer of the property or in case of change-of-control of the
owner company (but not in case of change-of-control in the
parent company of the property owning company).
• Other pre-emption rights by agreement must be registered in
the Land Registry in order to be protected against third party
rights.
ACQUISITION PROCESS:
KEY STAGES
• The Danish purchasing restrictions render it practically
impossible for most foreign investors to make direct
purchases of Danish real property without permission from
the Ministry of Justice. Thus, investors generally choose
to establish a Danish legal entity to hold the property in
question.
Negotiations
• In most transactions only the real estate agent, the parties
and the parties’ finance providers and lawyers would be
involved. A heads of terms agreement and a non-disclosure
agreement may be negotiated and concluded. This is unusual
for smaller deals, though.
• Having identified the targeted property the prospective
purchaser receives a bundle of property related documents
from the real estate agent or the seller’s lawyers. Often, the
parties already informally agree om main terms such as
price, hand-over date etc. at this early stage. The prospective
purchaser, its lawyers, and other relevant advisers conduct
a due diligence investigation and request relevant additional
information. The purchase agreement is negotiated between
the lawyers of the parties taking into consideration the
findings of the due diligence investigation, and the purchase
agreement is concluded.
Conditional purchase agreements
• A conditional purchase agreement is drawn up instead of an
absolute agreement if certain conditions remain unsettled
before the transfer can be completed. A conditional title deed
can be registered with the Lard Registry.
• A conditional purchase agreement provides for the terms
and conditions of the sale whereas the final transfer remains
subject to the fulfilment of certain conditions.
Payment of purchase price
• Typically when the purchase agreement is signed the
purchaser makes an escrow deposit or provides a bank
guarantee for the full purchase price. In deals involving
larger, financially sound purchasers it may be agreed that no
deposit or guarantee needs to be made or issued. Instead the
purchase price is paid in full on the hand-over date.
Deed of sale
• Is the title deed according to which the ownership of a
property is transferred from the seller to the buyer.
• The seller and the purchaser digitally sign the absolute title
deed. The deed will be submitted to the Land Registry for
registration. A conditional title deed is drawn up instead of
an absolute title deed if certain conditions remain unsettled
before the transfer can be completed.
• In general all sales are registered with the Land Registry, and
a sale must be registered in order to be protected against
third party rights. The seller clears mortgages and other
registrations as agreed.
COMMERCIAL LEASES
• The Danish Business Lease Act governs most aspects of
business lease agreements (leases of buildings used for
commercial purposes). The Act is generally considered well
balanced, though a number of sections in favour of tenants
are mandatory.
• Most provisions of the commercial leases may be freely
agreed by the parties, such as the initial rent (which can be
fixed or variable) and the duration.
• A purchaser of a property with leaseholds should ensure a
right to hold the seller responsible, in case the tenant at a
later stage puts forward claims stemming from the seller’s
ownership period.
Duration: term of the lease
• In Denmark, business premises are generally leased on a
minimum term during which the lease is non-terminable
unless the contract is breached. The period of non-
termination varies a lot depending on the type of leasehold
and the investment made by the landlord to prepare the
leasehold for the tenant, but is typically twice as long for the
landlord as for the tenant.
• Unless otherwise provided, the tenant may terminate
the lease with a 3 months’ notice, and unless otherwise
provided there is no automatic termination of a commercial
lease: it may only be terminated by notice of termination in
accordance with the mandatory rules in the Business Lease
Act or with the agreement.
Transfer of business
• Under the Business Lease Act the tenant may assign the lease
agreement to a third party within the same line of business,
unless the landlord has weighty reasons to object to such
assignment, e.g. due to the third party’s lack of experience
or its financial situation. Subleases are not permitted. The
sections of the act about assignments and subleases are
mostly derogated by agreement.
Energy Label
• Since 1 July 2009: in case of any new commercial lease
agreement, the landlord must provide an Energy Label and
an Energy Plan to the tenant. These documents contains
information on the property’s current energy status, energy
consumption (e.g. water and heat), and sets out objectives for
improving the building’s environmental performance.
Evolution of the rent during the lease
• Most often an indexation clause has been agreed between
the parties, so the rent increases every year according to the
net price index, but with a minimum increase of, say, 2 or 3 %.
Sometimes, a maximum increase is also agreed. Apart from
that the landlord is practically always allowed to increase the
26 Investors Guide to Europe 2015