This is how the right of pre-emption works when buying a home.
Joda, the housing team can deny you this
Have you heard about preemptive rights?
It exists in housing cooperatives and operates in such a way that members of the housing development company can enter into the agreement that the buyer and seller enters into.
– Right of pre-emption entitles you to purchase a condominium for the same price as the highest bidder, without having to participate in the bidding round, “explains Line Bjerkek, Attorney General at the Norwegian Housing Development Association’s National Association of NBBLs..
Nevertheless, be aware that you must buy the property for the same price as the highest bid and the scheme does not involve any price reduction for members.
– Your advantage as a member is that you do not have to bid through a betting round, says Bjerkek.
Drop bidding round
With preemptive rights, you can wait until the seller has accepted the bid before entering the agreement.. This meant that you have longer seniority in the housing development team than the original bid winner.
– That is, even if you win the bid round, someone else can come and take over your bid without paying more money, “says Carsten Pihl, consumer adviser at the Norwegian Real Estate Association.
And what is a housing company?
It is a cooperative company that builds, translates and manages homes for its members. An example of housing construction is OBOS.
Use of pre-emption right
– Pre-emptive rights are settled according to statutory deadlines, and the Housing Act provides two possibilities. Clarification in advance, or in advance, explains Bjerkek.
She informs that in advance of the advertisement it is announced on the housing development website that the relevant housing is planned sold. The beneficiaries who are interested in the property must sign up within a minimum of five working days. Housing sales are then carried out with bidding round, and potential bidders can then know if someone has announced their interest. Once the bidding round has ended, the seller must contact the housing company and state the price and terms.
The housing company will only have 5 days to clarify if those who have shown their interest will buy the property at the pre-emption right at the current price.
– In the event of cancellation, the sales details will be sent to the housing company, and they will then have a 20-day deadline to advertise and clarify whether the right of pre-emption is to be used by a member, says Bjerkek..
Longest seniority applies in both cases.
Recommends everyone to be a member
According to Bjerkek, 1 of 5 homes in NBBL’s membership were purchased with pre-emptive rights in 2015.
Numbers from OBOS show that 1 out of 3 OBOS apartments were taken on pre-purchase.
– Pre-emption rights are a big advantage and everyone is recommended to become a member, says Bjekek.
Membership in housing construction companies is open to all, at a reasonable price.
– It’s a good investment for future purchase of housing. Some housing cooperatives have housing companies in several parts of the country, so membership can provide good flexibility, she states..
Several housing cooperatives also collaborate on the use of seniority.
Bjerkek also states that it is also possible to transfer membership between family members. For example, you can transfer seniority from your parents.
– You can not have longer seniority than your age.
Get Affected to Seller – Purchased for Bidders
In practice, the pre-emptive right does not mean so much for the seller as long as you are able to achieve the best price. The housing company and the real estate agent take care of everything practical.
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– For the seller, the disadvantage is that there may be fewer in the bid round. This may cause the price may not be as high as in a regular bidding round, “said Pihl.
He also emphasizes that for buyers who come from outside, it’s obviously a disadvantage if the home you thought you had bought is being taken over by someone else in pre-emptive right.
Bjerkek agrees with Pihl, and says that it may be bad to lose the property at a price.
However, everyone can sign up for a residential building, there is no exclusive right, she explains. The buyer should be well-informed about the right of pre-emption in the sales process, so it will not be a surprise.
– The procedure is highly predictable, and all parties will receive good guidance along the way, related to the use of pre-emptive rights, Bjerkek concludes..
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