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• As a main rule a mortgage obtains priority on a first-
registered best-priority principle, but it is possible to register
a mortgage with a higher priority than previously registered
mortgages (consent required).
Pre-emption right (forkjøpsrett)
• Is the statutory and/or (as the case may be) contractual
option to substitute the acquirer of a real property or the
shares of a property owning company. Also, municipal
authorities sometimes condition easements with pre-emption
rights in favour of the municipality.
• The most practical examples is the municipal pre-emption
right regarding apartment buildings (i.e. more than half of the
floor space is furnished for habitation and contains at least
five dwellings), the pre-emption right for members of housing
cooperatives upon the sale of a coop share and the pre-
emption right for the lessee of a commonhold unit.
ACQUISITION PROCESS:
KEY STAGES
• Foreign investors wishing to carry out real estate transactions
do not need any prior authorisation.
Negotiations
• A Norwegian real property transaction will often start with
the exchange of a written offer and bid, normally made on
the basis of information provided in a prospectus made by a
commercial real estate agent. A tendency we are seeing more
frequently is that the parties sometimes recapitulate the most
important terms and conditions in the form of a term sheet
(or similar as regards content).
• Following the bidding process, further negotiations and
clarifications between the parties lead to the signing of the
sales and purchase agreement. Most transactions are subject
to a satisfactory due diligence review of the target property
(and company), as well as financing satisfactory to the buyer.
• Foreign investors should be aware of the fact that under
Norwegian law, a legally binding agreement can be made
verbally, without a signed sales and purchase agreement. It
has been established through case law that a legally binding
agreement may have been established if the parties have
agreed on material matters such as identifying the property in
question, the purchase price and the takeover date even if no
contract in writing has been made or entered into. This would
normally constitute a binding agreement, unless otherwise
specifically agreed.
• As a result of this, commercial parties usually agree that
negotiations are subject to a completely agreed and signed
contract.
Standard form sale and purchase – and closing agreement
• Commonly recognised standard agreements developed by
the (Norwegian) National Federation of House Owners, the
Forum for Business Real Estate Agents and the Commercial
Property Association are often applied as basis for
commercial real property transactions, however they are
in most cases customised to reflect the particulars of the
individual deal.
• There are well established standard agreements regarding
a variety of transfers, such as forwards (uncompleted
buildings), share transfer (sale of shares in a single purpose
vehicle holding title) and asset transfer (sale of the real
property itself). Provided that both parties are professional,
they have full freedom of contract without any statutory
limitations. The Transfer of Property Act of 1992 serves as
non-mandatory background law for commercial transactions,
and the provisions of the Act will apply unless otherwise
agreed between the parties.
• The standard agreements also include separate closing
instructions, e.g. regulating the payment of the purchase
price, the transfer of ownership to the property and (if
required) a restrictive covenant (curtailing the disposal
of land) as well as a mortgage in favour of the real estate
agent being responsible for the settlement will normally
be registered in order to prevent the vendor from selling or
mortgaging the real property to the detriment of the buyer.
Deed of transfer
• Is the deed according to which the title to a property is
transferred from the seller to the buyer. As a main rule the
deed of transfer is only required to be signed by the current
owner and title holder of the real property (e.g. the vendor),
however the signatures are required to be witnessed or duly
certified (e.g. by a lawyer). 2.5% stamp duty will apply upon
registration (see also below).
• The deed of transfer may be registered in the Norwegian Land
Registry by the Norwegian Mapping Authority.
COMMERCIAL LEASES
• Lease of accommodation against consideration is governed
by the Norwegian Rent Act of 1999, which sets out the
background law, and, with a few exceptions, is non-mandatory
between professional parties. The provisions of the Act apply
if the parties have not agreed otherwise. The main focus of
the Act is to protect the lessee as the presumed weaker party
and as a result the Act is generally lessee-friendly. As such,
the lease of buildings used for commercial purposes for all
practical matters is subject to freedom of contract without
any substantial statutory limitations.
• Commercial leases in Norway are regularly based on standard
form agreements, adapted to fit individual situations. As the
standard form agreement both directly and indirectly deviates
from and prevails over the non-mandatory regulation of
the Norwegian Rent Act, it is generally known to be lessor-
friendly.
• The right to lease may be registered and mortgaged with the
consent of the landlord.
Rent adjustment
• Rent is usually adjusted yearly in accordance with 100 %
of the change in the Norwegian Consumer Price Index, as
published by Statistics Norway (Statistisk Sentralbyrå).
• The Norwegian Rent Act of 1999 provides legal basis for
requiring adjustment of the rent if such adjustment is not
regulated in the lease agreement between the parties.
Expiration of the lease term
• According to the Norwegian Rent Act of 1999, a lease
agreement is either fixed-term or indefinite.
• A fixed-term lease agreement expires without prior notice
upon the end of the agreed lease term. A fixed-term lease
agreement becomes indefinite if the lease continues past
three months after it has expired.
80 Investors Guide to Europe 2015