The new Danish Real Estate Agents’ Act will come into force on 1 January 2015. The title of the act is ”Act on Real Estate Transactions etc.” and was passed by the Danish Parliament on 20 May 2014.
The existing Real Estate Agents’ Act came into force in 1994 and has since been amended several times. This has resulted in a high degree of detailed regulation and the risk that both real estate agents and consumers find it difficult to grasp the many provisions.
The purpose of the new act is to improve the consumer protection and consumer information in the area, relieve the real estate agents of administrative tasks and create the possibility of a more efficient real estate market. The new act is still a consumer protection act aimed at contributing to the transparency, efficiency, security and safety for the consumers in connection with real estate transactions. This article will describe some of the provisions in the new act.
Reduction in the field of application for the Act
The current Act applies to commercial offers and sales of real property, commercial transactions relating to the sale and purchase of real property and other commercial advice and assistance relating to the sale of real property. The field of application for the new Act has been reduced and as a rule, procurement of buyers is no longer comprised by the Act. The purpose of this amendment is to clarify the fact that the real estate agent is the seller’s representative. However, procurement of buyers will remain comprised by the Act to some extent, e.g. information about financial or personal interests regarding the consumer’s choice of financing, insurance etc. as well as valuation of the property, see chapter 6 of the new Act.
Real estate agent fee and maturity period for the listing agreement
The current Act has placed limitations on when and how a real estate agent is entitled to fee and a real estate agent can only demand a fee based on results, as per account rendered or as a combination hereof. Furthermore, under the current Act the real estate agent must specify all services and their costs in the listing agreement with seller. These provisions are not carried through to the new Act where the real estate agent will be entitled to the fee which has been agreed with seller and only the basis for calculation of the fee must appear from the listing agreement.
The new Act also relaxes the provisions governing the maturity period for the listing agreement. Under the current Act, the listing agreement must be renewed after 6 months, but under the new Act it is possible to enter into a listing agreement with an indefinite maturity period with the exception that if a result-based fee has been agreed and seller must pay a fee to the real estate agent upon termination of the agreement, the maturity period can be no longer than 6 months.
Real estate agents’ duty to inform
Under the current Act, the real estate agent is bound by a relatively extensive duty to inform and this duty is reduced in the new Act. Under the new Act, the real estate agent is, among other things, no longer entitled to prepare or have financing proposals prepared for the buyer. Furthermore, it will under the new Act be voluntary for the real estate agent to calculate gross and net costs for the buyer and if the real estate agent chooses to do this, it must be based on a standard financing proposal.
Please note that there are special rules in Denmark governing foreigners’ purchase of real property. You are most welcome to contact us for any clarification on this subject. Please feel free to contact attorney at law Stina Palmberg on spa@lundelmersandager.dk.