Homebuyer had not lost the right to invoke defects

In the seller’s disclosure form, two home sellers stated that there had previously been mice in the property and that certain work on the property had been carried out by unqualified persons. After taking possession, the buyers engaged an expert who discovered damage caused by mice as well as defects in the property’s exterior cladding and garage walls.

The buyers sought rescission of the purchase agreement. They succeeded before the District Court, but not before the Court of Appeal. Since the buyers had received information giving rise to concern, the Court of Appeal held that it was reasonable to require them either to investigate the property further or to make reservations when purchasing it.

The Supreme Court held that there were no grounds for barring the buyers’ defect claims on the basis that they had failed to investigate the property sufficiently. Although the buyers knew that there had been mice in the property and that unqualified work had been performed, they were not aware that these circumstances had resulted in actual damage. In the Supreme Court’s view, such general risk-related information could not, in itself, trigger a duty to conduct special investigations, thereby transferring the risk of hidden defects to the buyer. Any other conclusion would create an opportunity to circumvent the allocation of risk intended by the Norwegian Parliament when it amended Section 3-9 of the Alienation Act (Avhendingslova) in 2022, removing the possibility of selling residential property to consumers on an “as is” basis. There were no visible signs of damage that the buyers should have discovered during the ordinary viewing of the property.

The judgment of the Court of Appeal was therefore set aside. Upon rehearing, the Court of Appeal would have to reconsider the issue of rescission.

The judgment provides guidance on the scope of the buyer’s duty to investigate under Section 3-10 of the Alienation Act and on how that provision should be interpreted and applied following the 2022 legislative amendments.

Source: Supreme Court