This article focusses on buying real estate for private residential purpose. Commercial real estate transactions are usually made as transfer of shares, meaning that the property is owned by a company and the ownership of the company is transferred through the shares in the company. This procedure is made mainly for tax purposes and is not the subject for this article.
Questions regarding Swedish real estate matters is happily answered by the author: Jonas.Frydenberg@Sylwan.se
Types of housing
In Sweden there are three main type of housing. In addition to the three most common forms of housing, there are other kinds of housing arrangements. Such as lease, which means that you own the house but not the land on which the house stands, and you rent from the landowner. Lease contracts for housing is not permitted so sell, which has given the effect of an extensive and high valued black market for this type of apartments in the main cities. Lease contracts for commercial purposes is however allowed to sell.
You own a piece of land, including every natural equipment that is attached to the ground, such as trees, soil, plants, manure. The buy also includes other things that are attached to the ground and is applied for permanent use, such as houses, fence and flagpole. Moreover, accessories to building is also included, such as windows, doors, wardrobes, the cooker, fridge, freezer, the heater, washing machine and tumble dryer. This is the principal rule and the seller may make exceptions from this.You will essentially make decisions and assume responsibility for everything to do with your property. Property is regulated in the Swedish Land Code (Jordabalken).
Condominium “condo” (Ägarlägenhet)
You live in an apartment owned by yourself. As with property you will essentially make decisions and assume responsibility for areas. The purchase includes accessories to building such as windows, doors, wardrobes, the cooker, fridge, freezer, the heater, washing machine and tumble dryerCondos are also regulated in the Swedish Land Code. This type of housing is yet very unusual in Sweden and was made possible in recent time.
Housing cooperative apartment (Bostadsrätt)
You live in an apartment and are a member of a housing cooperative association. You don’t own the building, its owned by the housing cooperative association. The membership in the association gives you the right to the apartment. The apartment is usually located in an apartment building, but can also be a separate buildings.The housing cooperative association are responsible for the maintenance of the outer of the building and the common areas.You pay a monthly fee to the association for your proportional wear and tear of the building and common areas. The fee normally includes your use of water and heatingYou only have the right to make decisions about matters within your own walls and are responsible for all maintenance and installations, including kitchen and bathroom.
The buy of a Housing cooperative apartment includes basic equipment for the apartment, such as windows, doors, wardrobes, the cooker, fridge and freezer. Washing machine and tumble dryer can be included, but normally there is a joint laundry room in the building.
How do you buy?
Housing transactions in Swedes are rarely made without involving a real estate agent. There is only need for one estate agent since the Swedish Estate Agents’ Act states that the estate agent must be a free an unbound middleman. All estate agents are university educated and must be registered with a governmental supervisory authority, the Swedish Estate Agents Inspectorate. The estate agent is responsible for creating the documents needed for the transaction. It is therefore no need for more than one estate agent and usually no need to involve lawyers or solicitors.
The estate agent is responsible for marketing the object and bringing together buyer and seller. The estate agent must provide the buyer with all necessary information about the buying process and make sure the seller tells everything he/she knows about the object that can be if importance for the buyer. The estate agent is also responsible for making sure that the buyer is aware of his/her obligation to investigate the object for errors.
The buying process usually follows a given scheme. First there is the viewing, followed by the bidding procedure, the contract and finally; the date of taking possession.
The most common form is known as an open viewing. The estate agent announces when the viewing will take place in the advertisement and invites all potential buyers to visit the object. There is also possible to book individual viewings with the estate agent, both before and after the time for the open viewing. This can result in the object being sold before the open viewing.
The bidding procedure
Bidding procedure is common and normally takes place after the viewing. Parties are however able to submit bids at any time, and the seller can choose to accept a bid and sell the property even before the viewing.
A bid in Sweden is not legally binding for the person submitting it. The bid is not binding until both the buyer and the seller have signed a purchase agreement. Nor is the seller obligated to sell at a certain price, but they can choose to pull out of the sale at any stage of the process up until the signing of the agreement. The seller can also choose to sell the property to a bidder who has not submitted the highest bid. Do be aware that this is only the case for real estate and housing transactions. A bid is in other cases normally binding according to Swedish law.
The estate agent is obligated to pass on all bids to the seller. The estate agent must also maintain a list of all bidders and the bids placed. This list is made available to both parties after the buy.
All three types of housing can only be transferred due to a written contract. Oral agreements are not legally binding.
The contract outlines when thepayment is to be made, what is to be included in the purchase, guarantees, cleaning, conditions for a mortgage or an inspection. In the case of Housing cooperative apartments always a condition that the buyer must be approved by the association and become a member of it. The contract must be signed by both buyer and seller. If the seller is married and the spouse is not a co-owner of the object, there must also be a written consent from the spouse. This can also be the case if the seller has a partner and the object are the partners mutual residence.
When signing the contract, it is customary for the buyer to pay a 10 % earnest. This is also outlined in the contract. The rest is paid on the date of taking possession.
The period between contract and taking possession is the time for making preparations. Foremost the seller must leave the object and the final cleaning takes place. Final cleaning normally is taken care of by a professional and paid by the seller. The buyer is responsible if anything in the object stops working because of normal wear and age in the time between the contract and he date of taking possession. The sellers are on the other hand responsible if anything stops working or deteriorates significantly as a consequence of the seller’s negligence or because of an accident.
Date of taking possession
The date of taking possession is the day on which the buyer makes the final payment to the seller. The seller will then hand over the object with keys etc. The taking possession usually takes place at the bank or at the estate agent office. When the payment is made the estate agent will make a receipt. If the object is a Housing cooperative apartment this is the final step and there is no more to be done.
If the object is a Property or a condo a bill of sale (Köpebrev) needs to be issued. This document will state that the buyer has made his/her payment to the seller and the buyer is now the right owner of the Property or the Condo. The bill of sale then needs to be forward to the Land Registrations Authorities (Lantmäteriet). By doing so the transaction is made public and the transfer acknowledged by the state. The procedure is called Lagfart and is required to be able to make mortgage. The registrations usually take from two weeks up to three months and comes with a fee of 1.5% of the price of the Property or the Condo. The buyer is obliged by law to register the transfer. If the buyer wants to make a mortgage this comes with a fee of 2 % of the mortgage sum.
All buyers are required to make a thorough investigation of the object before signing the contract. Modern contracts often stipulate that the buyer may do this up to two weeks after signing the contract. If the object later shows error that couldn’t be detected during the buyer’s investigation, or otherwise assume according to the state of the object, the buyer can hold the seller responsible for the error. Regarding Housing Cooperative Apartments, the seller’s responsibility stretches up to two years. If the object is a Property or Condo the seller has a ten-year responsibility for hidden error. Litigations in this type of matters is very common, especially regarding bathrooms in all types of objects.