The provisions of the Housing Transactions Act concerning the sale of a new apartment apply to situations where a founding shareholder sells an apartment to be taken into use for the first time. This can occur during the construction phase or afterwards. Furthermore, these provisions are applied when a business operator otherwise sells an apartment to be taken into use for the first time after new construction or repair comparable to new construction.
The housing Transaction Act includes provisions for the protection of the buyer in cases where a consumer buyer purchases an apartment during the construction phase. In chapter 2 of the Housing Transactions Act, the consumer buyer is protected by provisions concerning security documents, guarantees, and share certificates, among others.
In the sale of new apartment, it is important to note that the seller is obligated to provide both during-construction and post-construction phase guarantees to secure the buyer’s position. Provisions relevant to the buyer’s right to rescind and claims for damages also include regulations on the seller’s delays and the estimated completion time of the apartment, as well as regulations regarding the seller’s bankruptcy.
For new apartments, defects are categorized under general defect provisions, defects related to information about the apartment, economic defects, and legal defects. Under the general defect provision, an apartment has a defect if it doesn’t conform to the contract, building regulations, or health requirements. According to this provision, an apartment also has a defect if the construction hasn’t been carried out according to good construction practices, if the material used are of poor quality, or if the apartment otherwise doesn’t match what the apartment buyer had justifiable reason to expect.
Misrepresentation occurs when inaccurate information about the apartment is given, when information required by housing marketing regulations isn’t provided, or when information about a specific aspect is withheld. Similarly, misrepresentation occurs if the seller hasn’t provided necessary specific information about the apartment’s materials or devices or has withheld such information or has provided false information about the apartment’s surroundings or services.
In the sale of new apartment, an economic defect occurs if the seller provides incorrect information about financial obligations, fails to provide information according to housing marketing regulations, or otherwise fails to provide other information that the buyer could justifiably assume to receive. A defect is also present if the financial condition of the limited liability housing company is worse than required by the current financial plan.
Relevant to the buyer’s rights in cases of defects in the sale of a new apartment are the significance and content of warranties provided by the seller, especially regulations regarding annual inspections. The buyer must ensure that they report defects observed during the annual inspection. The buyer must ensure that they report defects observed during the annual inspection, under the risk of possibly losing their right to claim defects. Otherwise, the buyer must report defects and related claims within a reasonable time after discovering the defect or after they should have discovered it. Chapter 4 of the Housing Transactions also contains provisions regarding error correction.
The buyer has the right, according to chapter 4 of the Housing Transaction Act, to demand a reduction in price or rescission of the contract. Additionally, the buyer has the right to compensation for damages suffered due to defects in the apartment. Compensation for damages may also cover personal and property damage caused by defects.
Building contractors and developers have a ten-year liability period for defects relating to the execution of the construction work.