A property outside Stavanger was sold in 2023. The sales particulars stated that a major road project was planned in the vicinity. The project included, among other things, expanding the E39 from two to four lanes and constructing a new access road. The buyers argued that the sellers had withheld information about the road project, particularly information concerning the access road. They therefore sought to rescind the purchase on the grounds that the property had a material defect. The Court of Appeal ruled in favour of the buyers.
A key issue was whether the claim for rescission had been made in time. Under section 4-13, second paragraph, of the Norwegian Alienation Act, it is not sufficient merely to give notice of a defect. The buyer must also demand rescission within a reasonable period of time.
When the case was heard by the Supreme Court, the Court held that the claim for rescission had been made too late. The time limit begins to run when the buyer knew or ought to have known of circumstances making it realistic that rescission could be justified. The buyer must have had sufficient reason to assess the factual circumstances relevant to whether the defect was material. It is not, however, a requirement that the buyer has obtained a legal assessment.
The starting point and length of the time limit must be considered together. The length of the period depends on a specific assessment of the nature of the defect and the interests of both parties. No absolute time limit can be established, but three months will normally be sufficient. The Supreme Court did not expressly determine when the claim for rescission was made in this case, because it had in any event been submitted more than three months after the time limit began to run.
The Supreme Court found that the sellers had not acted with gross negligence. The provision in section 4-13, second paragraph, second sentence, of the Alienation Act, which provides that no time limit for giving notice of a defect applies in certain circumstances, therefore did not apply.
Because the time limit for demanding rescission had expired, the Supreme Court set aside the judgment of the Court of Appeal.
The judgment provides guidance on the interpretation of the notice requirement under section 4-13 of the Norwegian Alienation Act.
Source: Supreme Court
