Purchase of permanent habitation/residence and summerhouse in Denmark

A. Definitions

housing can be more or less exquisite

An all year residence will as a main rule be a villa/house, an owner occupied flat (ejerforening), a terrace house or an apartment in a housing cooperative (andelsboligforening).

In all year residences, you are under obligation to register at the local municipality and from the registration you will, all things being equal, be under obligation to pay income tax etc. in Denmark.

B. Conditions for purchase of all year residence

I refer you to read the Ministry of Justice’s website

Please be aware that there are different rules for EU-citizens compared with citizens from other countries.

The main Act is the Purchase Law with the Government Order and especially clause 1. If you do not fulfill the conditions, you can apply for the ministry’s approval.

C. The actual purchase

Mainly intending buyers have a look at websites and especially the different real estate agents. You can Google a specific area and then the real estate agents offers will show or you can have a look at www.boliga.dk.

It is not often that properties are not sold through real estate agents.

D. Investigations and negotiations (!)

You can get quite red faced trying to
purchase property in Denmark.

The negotiating of a purchase price and purchase conditions is carried out – I hope – like in other countries and of course, the buyer in my opinion will have to look at the market in an area and see what the price per square meter is and then compare different items.

If you buy a villa/terrace house the main rule is that a special authorized consultant on behalf of the seller will have had a thorough look at the house and specify the condition of the property in a home condition report where eventual defects are defined as K1, K2 and K3. The seller will alongside this report in connection with the signing of the sales agreement as part of the documents in the purchase hand over an offer from an insurance company – a change of ownership insurance.

I normally advise buyers to hire their own consultant to go through a building, as there always is a risk that defects will not be detected.

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If you buy a condominium or apartment in a cooperative the focus is usually on the maintenance standard of the total building and of course if there in the apartment are improvements, which presupposes approval from the municipality or the condominium union etc. In such unions, external maintenance is as a main rule for the union to carry out. These unions also have a yearly financial account. If the condominium union has a joint ownership loan – typically in a bank- this loan shall figure in the financial account.

E. Getting into negotiations about the actual purchase

Usually you will have to call the real estate agent and make an appointment to see the property or there will be a so-called open house, where you just show up.

If you are interested in the property, then you will have to ask the real estate agent to draw up a sales contract. All the conditions for the purchase will be in this contract with enclosures. Please be aware if there are individual conditions – that you have a right to hire out, keep a dog etc. – or if there are movables, you wish to take over, these conditions shall be part of the sales contract.

Please be aware that a buyer of a Danish property that has been rented out is under obligation to fulfil the repayment of a deposit and a rent payment that is not in compliance with the housing legislation.
It is essential that there in the sales contract is a reservation for your lawyer’s approval and your bank’s approval. The reservation concerning the lawyer’s approval has a higher priority than the provision giving the right to annul the sales contract.

F. Right to annulment

This right is a consumer right and only for private persons purchasing a property. The right of annulment is maximum 6 weekdays after seller and the purchaser have signed the sales contract. There is a cost amounting to 1 % of the purchase price that the buyer shall pay when the annulment right is invoked.

G. Deposit

When there is a finalized sales agreement, it is part of the Danish real estate agent’s standard contract that the buyer shall transfer a deposit to the real estate agent’s account. If the purchase by reasons that cannot be attributed to the purchaser is not carried out, the deposit will be paid back.

H. Settlement of the remaining purchase amount

  • The main rule in Denmark is that the buyer’s bank issue a bank guaranty for the rest of the payment and this guaranty is on the takeover date, replaced on a cash deposit on an Escrow account in the seller’s bank. This Escrow account stands until the deed is registered without any remarks from the registration judge. Before the release of the total purchase amount, the deed must be without any annotations from the registration office/judge.
  • If you do not have possession of the cash purchase amount, you have to apply in you bank for a mortgage. As stated about it is as a main rule one of the conditions for a purchase that the buyer’s bank also approve the financing of the purchase of the property.

I. Digital deed

All deeds are registered electronically and carried out by using what we call NemID. If the buyer does not have a NemID, a power of attorney can be issued to the lawyer.

The lawyer draws up a test deed, but it is not obligatory to have a lawyer doing this.

J. Completion statement

Either the real estate agent or the buyer’s lawyer will draft this and if the balance is in the seller’s favour, the balance will have to be paid on demand or if the balance is in the buyer’s favour, the balance will be set off against the cash deposit.

K. Purchase of summerhouse in Denmark

Purchase of Danish property is kind of a theatre

I refer the reader to have a look at the website https://www.eu.dk/da/spoergsmaal-og-svar-folder/kan-tyskere-og-andre-eu-borgere-koebe-sommerhus-i-danmark. The question that is raised here is: can a German or an EU citizen purchase a summerhouse in Demark and the swift answer is no!

The explanation for this is that Denmark obtained the right – when joining EU – to uphold a special Act concerning foreigners right to purchase a summerhouse in Denmark. A foreign purchaser shall obtain a special permit from the Ministry of Justice and only applicants with a very strong attachment to Denmark obtain this permit. From the statistics it seems that Norwegians stand a good chance!