70 | Investor Guide to Europe 2014
•
Any security interest over real property must be in accordance
with the provisions of the Norwegian Mortgage Act of 1980
in order to obtain legal protection and to be enforceable. This
requires i.a. a written mortgage agreement identifying the
amount to be secured.
•
Most rights to a real property in Norway may be mortgaged
and there is no limit on the number of mortgages that may
be created over the same right to a property (e.g. ownership,
lease, land lease etc.).
•
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).
Î
Pre-emption right
(forkjøpsrett)
•
Is the statutory option provided to certain public authorities
and private parties to substitute the acquirer of a real property.
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 coo-
peratives 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.
Î
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 clari-
fications 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 agree-
ment 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.
Î
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 pro-
perty 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 free-
dom 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 a separate closing
agreement, e.g. regulating the payment of the purchase price,
the transfer of ownership to the property and 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.
Î
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 duly on behalf
of the owner and title holder of the real property, 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, 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 free-
dom 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 stan-
dard 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.
