08-02-2023
Overview of the case
In December 2020, our two clients sold their cooperative housing in Frederiksberg with transfer of ownership per March 1st, 2021.
The cooperative housing consisted of two floors and was located in an attractive property in the middle of Frederiksberg. The co-operative home was therefore - not surprisingly - sold in just a few days, and all parties were initially happy after the deal was concluded.
In 2009, our clients had bought the co-op's ground floor apartment, which had been completely renovated prior to that purchase. Subsequently, our clients had also acquired the cooperative housing's basement flat with the intention to merging the two flats, and the requirement of merging was thus also apparent from the basis of the agreement for the sale between the parties.
However, shortly after taking over the co-operative housing in March 2021, our clients received a longer statement from the buyers, which listed several different conditions that were invoked as either deficiencies or as errors in the prepared assessment report, as the buyers believed that certain improvements were wrongly included, and that sufficient deductions had not been given for poor maintenance of the co-operative housing. They argued that an overprice had been paid for the co-operative housing.
Following this the buyers had DKK 200,000 of the purchase price withheld from the administrator to cover these deficiencies. Since our clients could not acknowledge the buyers' objections, they contacted our office, which in April 2021 filed a lawsuit against the buyers claiming the release of the withheld amount as well as payment of interest from March 2021.
During the pendency of the case - and after holding an inspection and assessment in the case - the buyers asserted even more claims, and before the trial in court in June 2022, 16 different claims were made against our clients, which in total amounted to just over DKK 663,000.
The trial
During the trial we filed a motion to dismiss each of the plaintiff´s claims on behalf of our clients.
The reasoning for this was of course different for the many different claims, but a general argument from our side was that, in general, it was a question of visible conditions which the buyers had been aware of both via the assessment report, but also during their two inspections of the cooperative housing prior to the purchase. Finally, our clients had also mentioned several of the conditions in their sales advertisement, which they had managed to recreate via DBA.
We then argued that the buyers could not have had a justified expectation that the cooperative housing was in a better condition than what was the case - to which it was also noted that the cooperative housing was also not in such a condition at the time of the transfer that there was any basis for giving a deduction for poor state of maintenance according to Section 5, subsection 1 of the Cooperative Housing Association Act (andelsboligforeningslovens § 5, stk. 1)
Furthermore, an improvement of these deficiencies to that extent of which the appraiser in their appraisal had estimated the cost of improvement to be, would put the co-operative housing into a newly renovated condition, which would result in a considerable improvement of the co-operative housing. The buyers would then be able to include the improvements in a later sale and thus achieve a considerable enrichment at the expense of our clients.
Finally, according to the association's established practice, a clause was included in the transfer agreement which stated that "
the general state of maintenance of the apartment could not be blamed as a fault or deficiency." Several of the claims should thus already be rejected pursuant to this clause.
The verdict
Already after the presentation of evidence during the trial in court, the buyers waived part of their claim, which is why their total claim, before the case had to proceed, was reduced to DKK 531,039.
As the headline reveals, the Court of Frederiksberg chose rule in favour of our clients, resulting in the total withheld amount had to be released to our clients with the addition of interest from March 16th, 2021, when the amount should have been released.
At the same time, our clients were acquitted of any of the plaintiffs’ claims.
It appears from the judgment's premises that precisely the fact that the buyers were familiar with the various conditions and the general condition of the cooperative housing prior to the purchase was decisive for the outcome of the judgment.
The court also emphasized that the buyers had inspected the cooperative housing twice before the purchase, that they were familiar with the content of the assessment report, the content of the sales advertisement and the clause in the transfer agreement referred to above.
We are of course very satisfied with the outcome of the case and also find that the decision is both correct and to be expected.
Many buyers of co-operative housing take advantage of the option to have a part of the purchase price withheld to cover errors or defects, but this option should of course not be used with intention to obtain a subsequent reduction in the purchase price for conditions that the buyer was already aware of when they chose to buy the cooperative housing.
After a 14-month trial, our clients can now finally put the matter behind them, and we wish them both the best of luck with the outcome of the trial.
The case was led by assistant attorney Kristina Karstensen.
Date: 24.08.2022, 03.02.2023
Author: Kristina Karstensen
Translator: Asger Søderberg
