Rescission of a Housing Transaction
Rescission of a housing transaction may be possible if a defect appears in the apartment that causes the buyer significant detriment and no other remedy can be considered reasonable. However, rescission of a housing transaction is an exceptional measure, and the conditions for it are assessed on a case-by-case basis.
When does the buyer have the right to rescind the transaction?
The buyer has the right to rescind the transaction if the defect causes significant detriment and no other remedy can be considered reasonable. Different rules apply to the sale of a new apartment and the sale of a used apartment, but in both cases the buyer has the right to rescind the transaction if the defect is material.
What are the conditions for rescission of a housing transaction?
The transaction may be rescinded if the nature and extent of the defect are such that, had the buyer been aware of the defect, they likely would not have entered into the transaction at all, even at a reduced price. The buyer has the right to demand rescission if the defect causes significant detriment and no other remedy can be considered reasonable.
The seller may also avoid rescission if the defect can be remedied without significant detriment to the buyer.
Consequences related to rescission
Rescission of the transaction involves several legal consequences. If the transaction is rescinded, the buyer has the right to receive the purchase price paid back. The buyer may also claim compensation from the seller if the seller has acted negligently. The provisions differ somewhat between the sale of shares in a housing company and the sale of real property.
Right to rescission and a reasonable price reduction
Rescission is not the only possible remedy. If the conditions for rescission are not met or if the buyer does not wish to rescind the transaction, the buyer may have the right to a reasonable price reduction. Often it is advisable for the buyer to primarily demand rescission and, secondarily, a price reduction.
Rescission in the sale of a used apartment and a new apartment
In the sale of a new apartment, the buyer has the right to rescind the transaction if the defect is material and the seller has not been able to remedy it within a reasonable time. In the sale of a used apartment, rescission can only be invoked if the defect causes significant detriment to the buyer and no other remedy can be considered reasonable.
Why choose Asianajotoimisto Niemi & Puhakka Oy?
Asianajotoimisto Niemi & Puhakka Oy is an experienced and reliable partner in legal matters relating to rescission of housing transactions. Our expert team provides comprehensive legal advice and support for both buyers and sellers.
- Expertise and experience – We have solid experience in handling housing transaction disputes and a deep understanding of the legislation.
- Tailored solutions – Each case is individual, and we always seek the best possible solution for our client.
- A reliable partner – We keep our clients informed throughout the process and ensure that your rights are safeguarded in the best possible way.
Contact us
Rescission of a housing transaction is a multi-stage and legally challenging process.
At Asianajotoimisto Niemi & Puhakka Oy, we are ready to assist you in all legal questions relating to housing transactions.
Contact us and book an appointment for a consultation – we ensure that your rights are upheld and that you find the best solution for your situation!
Frequently Asked Questions
When can the buyer rescind the transaction?
The buyer may rescind the transaction if a material defect appears in the apartment, causing significant detriment to the buyer, and no other remedy can be considered reasonable. The housing transaction may be rescinded if the defect is so significant that using the apartment for its original purpose is not possible. A defect entitling the buyer to rescission is one that makes it impossible to use the apartment or causes the buyer significant financial loss.
How does rescission of a housing transaction work?
Rescission of a housing transaction is carried out as a legal process in which the materiality of the defect and the buyer’s right to rescind the transaction are assessed. The process often includes negotiations with the seller as well as possible legal measures.
What happens if the seller does not agree to rescission?
If the seller does not accept rescission, the buyer must seek a legal resolution. In that case, the matter may proceed through court mediation or be brought to court. The court will assess whether the defect is sufficiently material to justify rescission.
Can the seller claim compensation if the transaction is rescinded?
If the transaction is rescinded after the apartment has been transferred into the buyer’s possession, and the buyer has gained significant income or benefit from the apartment, the buyer must pay the seller reasonable compensation for this. If the condition of the apartment has deteriorated during the buyer’s possession more than what can be considered normal wear and tear, or if the apartment has been damaged during that time due to negligence on the buyer’s part, the buyer may not rescind the transaction unless the buyer compensates the seller for the decrease in value caused for that reason.
How quickly is rescission possible?
The timeline for rescission depends on several factors, such as the progress of negotiations, cooperation between the parties, and any possible legal proceedings. If the parties reach an agreement, rescission may take place quickly. Legal proceedings, however, usually take several years unless a settlement is reached during the process.
What can the buyer claim if the transaction is rescinded?
The buyer may demand repayment of the purchase price, as well as compensation for necessary or beneficial costs that the buyer has incurred in the apartment. In addition, in cases of the seller’s negligence, the buyer may claim compensation for other expenses and costs incurred as a result of the transaction. These may include, for example, substitute accommodation costs if it is not possible to live in the defective apartment.
What options are there if the transaction cannot be rescinded?
If rescission is not possible, the buyer may have the right to a price reduction, or in the sale of a new apartment also to corrective measures by the seller. Legally, it will be assessed whether the defect can be remedied in other ways that are sufficient for the buyer without rescission.
What should I do if I suspect a hidden defect in the apartment after the transaction?
If you suspect a hidden defect, it is recommended to obtain a technical inspection and an expert statement. For example, structural defects or defects harmful to health may be grounds for rescission or a price reduction. If the seller did not know about the defect before the transaction, it is a so-called hidden defect. If you suspect that the seller knowingly concealed the defect, it may be a disclosure defect. In all cases, contact a lawyer to assess possible measures.
Can rescission be prevented in certain situations?
Yes, in certain situations rescission cannot be carried out. For example, if the defect is minor and easily repairable without significant detriment, rescission may not be possible. Likewise, if the buyer was aware of the defect at the time of the transaction and accepted it, rescission will generally not succeed.
