Forskningsringen 80 - vån 8/8

Following the purchase, the tenant-owner apartment must comply with what has been agreed between the buyer and the seller, and what the buyer is reasonably entitled to expect in light of the age, price, condition and use of the tenant-owner apartment. The rules regarding any faults or defects in a tenant-owner apartment are set out in the Swedish Sale of Goods Act, as a tenant-owner apartment is deemed to constitute personal property. However, in conjunction with cases involving examination of liability for faults and defects, inspiration is often taken from the rules that are set out in the Swedish Land Code. Some rules have also been established by way of practice following the examination by a court of law of cases involving liability for faults and defects.

The buyer’s inspection of the tenant-owner apartment is usually facilitated through the arrangement of a viewing of the apartment. If the buyer has performed an inspection prior to his purchase of the apartment, the buyer may not subsequently make claim for a fault or defect in relation to something which should have been discovered during the inspection. If the buyer discovers something during the inspection but is unable to draw any conclusion of his own regarding the matter in question, the buyer must proceed, for example by engaging the services of an expert, in order to fulfil his duty of inspection. In other words, the buyer may not subsequently make claim for a fault or defect in relation to something if it can be established that the circumstance in question would have been discovered if an adequate inspection had been carried out.

The buyer should also bear in mind that the seller is not liable for any faults or defects which the buyer should have anticipated or expected. If, for example, a fault were to arise with regard to one of the major appliances in the apartment, this may be something which the buyer should have anticipated considering the age and estimated useful life of the appliance in question. The buyer’s duty of inspection does not just apply to the actual tenant-owner apartment; it also applies to conditions surrounding the tenant-owner association. For example, the buyer should check whether the association has any plans to carry out major renovations, intends to increase its fees, etc. Contact with representatives of the association should therefore form part of the buyer’s inspection, as well as a review of the association’s statutes and latest annual report.

In order for the seller to be liable for a claimed fault or defect when the tenant-owner apartment is sold ”as-is”, the circumstance in question must entail that the tenant-owner apartment is in significantly worse condition than what the buyer could reasonably have expected considering the age, price and use of the apartment as well as other relevant circumstances. In other words, selling the tenant-owner apartment ”as-is” can be described as a form of limitation of liability on the part of the seller.

However, the seller has an obligation to provide the buyer with information concerning material conditions in relation to the tenant-owner apartment. Consequently, even if the tenant-owner apartment is sold ”as-is”, the seller may be deemed liable for a fault or defect if it is found that the seller, prior to the purchase, has withheld information about circumstances of importance to the buyer. If the seller has in this way acted in a manner contrary to good faith and honour, the seller may not object to the buyer’s claim on the grounds that the buyer has failed to fulfil his duty of inspection. It is therefore in the seller’s own best interests to inform the buyer of any faults or defects, or any symptoms of faults or defects, which the seller is aware of or suspects. Circumstances included in the information provided to the buyer by the seller prior to the purchase cannot normally subsequently be claimed by the buyer to constitute faults or defects.

Furthermore, the seller is liable for any commitments made by the seller. A commitment made by the seller may also entail a reduction of the buyer’s duty of inspection in relation to a certain condition or circumstance. However, general laudatory comments or statements of a general nature by the seller are not deemed to constitute commitments.

The above information describes, in brief, the allocation of responsibilities and liability that applies between the buyer and the seller under Swedish law. However, freedom of contract applies in relation to the issue of allocation of responsibilities and liability, which means that the parties to a contract may agree on some other allocation of responsibilities and liability than that which is described above. For example, the seller may disclaim liability through the inclusion of a disclaimer of liability clause in the contract, or the parties may agree on a clause regarding the arrangement of latent defects insurance for the property concerned.