Real Estate 2020

Last Updated April 14, 2020


Law and Practice


Advokatfirmaet Wiersholm AS is one of Norway's leading and largest law firms, with more than 180 lawyers and 80 other employees based in Oslo. The firm combines excellent legal competence, commercial understanding, industry knowledge and drive to assist clients in important and demanding matters. Through an international approach and network of law firms, the firm is able to provide the best advice to clients – anywhere in the world. The firm supports any type of commercial, corporate and residential real estate project – regardless of size and complexity. Real estate clients include prominent national and international companies. In recent years, the firm has worked for Amazon, Facebook and CBRE, as well as local players like Ferd, which the firm assisted in the acquisition of the NRK plot in Oslo, which will become one of the largest real estate development project in Norway going forward.

Norwegian real estate law is mainly governed by written legislation. As examples of important written real estate legislation, the Norwegian Tenancy Act of 1999 and the Norwegian Alienation Act of 1992 must be mentioned. There are also several public acts and provisions that govern the use and development of real estate, eg, the Planning and Building Act of 2008.

Activity in the Norwegian transaction market has remained high, and real estate is continuously experienced as a stable and attractive asset class. This is mainly due to relatively open access to credit in most real estate sectors, as well as Norges Bank's decision to keep interest rates low.

Figures from property market analysts show that the 2019 volume was the strongest since 2015. The largest real estate transaction in 2019 was DNB Livsforsikring's acquisition of DNB's headquarters in Bjørvika for close to NOK4.5 billion from SBB. Several other large office properties in Oslo have also been sold over the past year. Union Real Estate Fund II purchased the entire "Valle" project from NCC Property Development for approximately NOK1.8 billion and DNB Scandinavian Property Fund purchased the new office building Vitaminveien 4 at Storo from Skanska Commercial Development Norway for approximately NOK1.3 billion. The largest land acquisition last year was Selvaag Bolig's sale of the bulk of the company's land portfolio to Urban Property for NOK3.4 billion. The new year also had a good start with an agreed sale of the so-called "NRK plot" at Marienlyst in Oslo to Ferd for a minimum price of NOK3.75 billion.

Analysts report that syndication operators have been the most active buyer group in the Norwegian real estate market in recent years. This is also our experience. The syndicates also adapted to new (and tougher) interpretation of existing regulations, and we observe that, throughout 2019, they have been involved in most logistics deals while also investing heavily in offices. Funds and life assurance companies are also back in the market and are in particular buying into offices and logistics.

Currently (as of March 2020), market analysts are still pondering on the effects of the COVID-19 pandemic and the governmental decision to close borders, shut down schools and universities, as well as ban certain sectors such as gyms, hairdressers ,etc. Hopefully, the effects will be temporary, and the market will regain activity during the second half of 2020.

Proptech has been on the rise in Norway since 2017, now sparked by successful companies like Spacemaker and Disruptive Technologies. Norway is a forerunner when it comes to the use of technology. The real estate industry is, in particular, using smart building technology in new developments and using smart planning tools. There are several ongoing projects with the aim of digitalising asset management, and surveying is becoming ever more automated.

The industry as a whole is embracing new technology and it is highly likely that this will have a significant impact on the real estate market in Norway the next 12 months.

A number of amendments to the Alienation Act, which applies to the purchase and sale of real estate, are expected to enter into force in 2020. The majority of the provisions in the Alienation Act are only mandatory for consumer purchases, therefore, the proposed amendments will only affect the commercial property market to a limited extent.

New regulation concerning financial assistance has been implemented as of 1 January 2020. Many questions the amendments, that despite the overall intention to simplify restrictions, in reality, will complicate settlement procedures and security arrangements in the commercial real estate market. A clarification and possible exemption for real estate transactions would be of great importance, however, no such amendments are in process.

Besides the acquiring of the ownership interest to the real property (ie, ownership to a cadastral unit and the buildings or other edifices), one can also acquire limited rights to a real property. This includes lease and ground lease (or leasehold) rights as well as various easements (eg, access rights and hunting rights).

The Alienation Act is the general law with respect to transfer of ownership to real estate. This law applies to transfer of all types of real estate except from transfer of domestic property homes under construction from a professional contractor to a consumer, for which a separate act will apply.

There is a land registry in Norway in which title to real estate can be registered, and the Land Registry Act (tinglysingsloven) governs this registry and the legal effects of obtaining title to a property (which in short is that a title holder is protected from third parties' creditors).

Even if it is both possible and, normally, highly advisable, neither the Alienation Act nor any other legislation obliges any of the parties in a real estate transaction to register the title to the property in the land registry.   

A transfer of title is carried out by the title transferor (eg, the seller) issuing a title deed (skjøte) to the title transferee, which is subsequently forwarded to the Norwegian Mapping Authority (kartverket), which will register the transfer. As stated, the transfer of title is not compulsory, thus not all property transactions are recorded. Upon transferring the title, one will have to pay a 2.5 % stamp duty. The stamp duty is calculated on basis of the sales value of the property at the time of registering of title.

In the professional real estate market, transfer of shares in a single purpose vehicle (SPV) is the most common way to carry out real estate transactions in Norway. Real estate due diligence therefore normally includes a legal due diligence targeting any issues related to corporate, financial, real estate (both private and public) and environmental law, a technical due diligence of the state of the property and buildings on the property, and finally a financial due diligence of the SPV.

Norwegian real estate is often sold "as is" with no warranties from the Seller. In such cases, the Seller will only be liable if they have withheld information, if they have provided the buyer with inaccurate information and/or if a material breach of contract has occurred. 

In commercial real property transactions, seller warranties are quite common. In such cases, the seller typically warrants:

  • ownership and title;
  • that the property is not subject to unknown encumbrances (including monetary encumbrances);
  • that the property is leased out in accordance with an existing and valid lease agreement;
  • that no claims or rights limit the use or utilisation of the property beyond what follows from the land registry and/or the applicable zoning regulations; and
  • that all written orders from any government authorities in relation to the property have been paid or otherwise complied with.

As Norwegian real estate is usually transferred indirectly through asset transfers of single purpose vehicles (SPV), the seller also typically provides warranties with respect to:

  • ownership to and encumbrances on the transferred shares;
  • the incorporation and existence of the SPV;
  • the SPV's annual accounts;
  • the tax and VAT handling;
  • the ownership of the assets (other than the property) listed in the SPV's balance sheet; and
  • that the SPV is not party to any legal proceedings or other legal dispute.

Norwegian law has no direct parallel to the English "misrepresentation" concept. The closest parallel to the concept is contractual clauses regarding the liability of a seller who have withheld information or given inaccurate information. 

This is not applicable in this jurisdiction.

As the new owner of the property, the buyer will be liable against public authorities for any pollution or contamination. Whether or not the buyer may carry forward costs/claims to the seller will depend on the contract between them, and typically if the seller has withheld information or given inaccurate information. If the consequences are severe, a buyer will possibly also have a claim towards the seller based on "material" breach of contract.

The applicable zoning plan (or municipal master plan if no zoning plan exists) will have a specific regulation of the permitted use of a real estate parcel. In cases of doubt, this regulation will be subject to interpretation. 

It is possible to enter into specific development agreements with public authorities and, in many cases, such development agreements must be entered into before a specific project can be initiated. The public authority will typically use these agreements to ensure that important infrastructure and/or recreation areas are established in accordance with the zoning plan.

The authorities, or a private developer with the assistance of the authorities, can expropriate property for the purpose of building roads, schools, transport facilities, etc, although this right is subject to restrictions. A property can only be subject to a compulsory purchase following a court of appraisal's overall evaluation of the advantages and disadvantages. The buyer must pay the market value for the expropriated property, as determined by the same court.

Asset Transfers

With regard to asset transfers, any capital gain from the realisation of real estate is subject to a capital gains tax, currently at a rate of 22%. Transfer of title to real estate is also subject to a stamp duty at a rate of 2.5%. The stamp duty is a gross tax levied on the person or entity acquiring the property.

The transactions costs are usually split between the seller and the purchaser, so that each carries its own costs.

Share Transfers

For limited liability companies or equivalent companies, any gain or loss from the realisation of shares is usually encompassed by the participation exemption method. This implies that any capital gain is tax exempt, whilst there will be no right to deduct any loss.

For shareholders that are natural persons, any capital gain from the realisation of shares is taxable as ordinary income, currently at a rate of 22%, whilst any loss is correspondingly deductible against ordinary income. The tax base shall be upwards adjusted by a factor of 1.44, thus implying an effective tax rate of 31.68%. The gain or loss from the realisation of shares is calculated as the difference between the sales consideration and the tax input value (normally the cost price on the part of the shareholder, including any acquisition costs).

There is no stamp duty or transaction tax, or any other duties or taxes, in connection with subscription for, or transfer of, shares in Norwegian companies, whether for individual shareholders or for the company.

The Norwegian real estate market is also popular with foreign investors. However, the trend over the past year has been that several of the international operators are selling properties purchased in the period 2014 to 2016. As a result of a record weak Norwegian currency exchange rate over the last months, combined with low interest rates and a stable political system, this might soon turn the other way around. There will most likely substantial effects experienced as a result of the COVID-19 outbreak, but it is too early to predict the extent of these effects.

In general, there are no specific restrictions for foreign operators when purchasing property in Norway. As a general precaution, however, foreign investors in Norway should always seek specific tax advice prior to making the final investment decision.

Acquisitions of commercial real estate are, generally, financed through bank loans or bond loans in combination with equity.

Security is always granted over the acquired property and the shares in the SPV owning the acquired property. Due to recent amendments to the Norwegian Limited Liability Companies Act, effective as of 1 January 2020, the SPV will generally be permitted to grant financial assistance in connection with the acquisition, including guaranteeing the acquisition debt and granting security over its other assets (if any). Depending on the acquisition structure, the acquirer will in certain circumstances be required to grant other security, eg, over intercompany loans made to the SPV.

There are currently no restrictions on granting security over real estate to foreign lenders, nor on repayments being made to a foreign lender under a security document or loan agreement.

Security over real estate is perfected by registration in the Land Register, for which the registration fee is currently NOK585 per document. When enforcing security over real estate, minor enforcement fees will be payable to the enforcement authorities.

Under Norwegian law, an entity can grant financial assistance in connection with the acquisition of shares in such entity or its parent company, within the limits of its distributable reserves. The limitation regarding distributable reserves does not apply if the acquirer is domiciled in an EEA country and will become part of the same corporate group (within the meaning of the Limited Liability Companies Act (konsern)) as the target company, or if a corporate group (within the meaning of the Companies Act) is formed by the acquisition.

The financial assistance must be based on commercial terms and conditions, which in addition to other terms usually will involve the payment of a guarantee commission by the acquirer to the entity granting the financial assistance.

The decision to grant financial assistance must be approved by the general meeting of the grantor. The board of directors must carry out a credit assessment of the entity receiving the financial assistance, and prepare a board statement on the financial assistance. The Limited Liability Companies Act sets out minimum requirements for the contents of such board statement.

In addition, the board of directors needs to sign a declaration confirming that it is in the grantor's interest to grant the financial assistance and that the Companies Act's requirements regarding sound equity and liquidity will be maintained. The board statement and declaration need to be filed with the Norwegian Business Register (Foretaksregisteret) before the financial assistance can be granted.

In a default scenario, security can be enforced in accordance with the terms of the relevant loan agreement. As mentioned in 2 Sales and Purchase, the most common way to acquire commercial real estate is by transfer of shares in the SPV that owns the property, and that security is granted over the shares.

In a default scenario, the preferred route would be to enforce the share pledge instead of the mortgage. If security over the shares is granted by way of financial collateral, the enforcement will not be subject to the requirements of the Norwegian Enforcement Act, and the lender can freely dispose of the shares without delay.

Enforcement over real estate is carried out through the public enforcement authorities in accordance with the provisions of the Norwegian Enforcement Act. The lender, in its capacity as mortgagee, can demand a forced sale or forced use of the property. The courts will decide whether a forced sale will be carried out by way of an administrator's sale (typically through a broker) or by way of auction through the enforcement authorities.

Provided that the lender has secured a perfected first priority mortgage over the real estate, no further actions are required in order to give priority to the lender's security interest over the interests of other creditors. A transfer of title to the property will trigger a stamp duty of 2.5% of the property's sales amount. 

Subordination of existing debt to newly created debt requires an agreement between the respective creditors. Although binding on the parties to such agreement, a subordination of priority by the first mortgagee in favour of the second mortgagee should be registered against the property with the Land Register in order for the change in priority to enjoy legal protection against third parties.

Unsecured debt generally ranks pari passu with other unsecured and unsubordinated liabilities. Certain claims will automatically take priority over existing liabilities, such as tax claims and estate fees and expenses in the event of a bankruptcy.

A lender will not become liable under environmental laws solely by holding security or enforcing security over real estate.

In order to enjoy legal protection, security over real estate needs to be registered against the property in the Land Register. In general, a duly perfected security interest will not be made void if the borrower becomes insolvent. However, security is subject to a three months' hardening period, whereby the security can be set aside if granted less than three months prior to the opening of bankruptcy proceedings and the security has been granted for existing debt (ie, debt incurred prior to agreeing to grant security), or the security was not duly perfected without unreasonable delay after the debt was incurred.

If granting of security unfairly favours one creditor over other creditors and the borrower's financial situation was week or was severely weakened by granting the security and its financial situation was known to the mortgagee, the hardening period is extended to ten years. 

Most new loan agreements entered into will include mechanisms to deal with LIBOR replacement, generally along the same lines as proposed by LMA. For existing loan agreements that do not regulate LIBOR replacement, the parties will need to agree to relevant amendments to their loan documentation to implement a new benchmark rate and relevant provisions.

In the absence of an agreement between the respective parties, lenders are expected to fall back on cost of funds calculations until an agreement is reached or the relevant loan is refinanced.

The legal framework for strategic planning and zoning follows the Planning and Building Act. However, the main objectives and guidance are largely following governmental policy.

The planning and zoning process is governed by state guidelines, municipal master plans, zoning plans, and detailed zoning plans:

  • state guidelines are used in order to implement the national government broader objectives for real estate development on the local zoning;
  • the municipal master plan will set out binding guidelines for the zoning within a specific municipality, often illustrated on a detailed map;
  • the zoning plan will give more detailed provisions for specific area of the municipality, if not detailed well enough in the municipality plan; and
  • the detailed zoning plan will give detailed provisions for the use, protection and design of areas and physical surroundings.

A building permit is required in order to construct new buildings or do significant refurbishments in existing buildings. Usually internal works that do not affect load-bearing walls or change the fire strategy will not require a permit. 

The relevant zoning plans will contain the provisions that the building application shall follow and the applicant has the right to have the application approved, if it is compliant with the zoning plan and relevant legislation.

The control of the regulation and zoning process is performed by the relevant municipality, within the government guidelines and legal framework set out by law.

A building application needs to be submitted to the planning and building authorities in the relevant municipality. The application needs to be signed by the owner and one has to set up a responsible applicant (ansvarlig søker), who will be responsible for the building project being performed compliant with relevant rules and regulations.

Third parties, ie, neighbours, relevant interest groups and various government functions, including the Cultural Heritage Office, have the right to participate and object.

The applicant, neighbours and other with a relevant interest in the project (klageberettiget), will have the right to appeal the decisions made by the municipality. The appeal is to be sent to the relevant municipality. If the decision is not overturned, will be sent to the County Governor (Fylkesmannen). The County Governor has the right to overturn the decision made by the municipality.

Often, a developer is obliged to contribute to the area development by provisions in the zoning plan (rekkefølgebestemmelser). In many cases the obligations will be to build on municipality/third-party property (for example a new road, a new park or a new subway-station) and a development agreement (utbyggingsavtale) with the municipality and other land owners would be necessary.

Typically, one would also enter into agreements with government owned utility providers.

The developer will upon completion have to apply for a certificate of completion (ferdigattest). If there are minor deviances, a temporary permit of use could be granted (midlertidig bruksttillatelse) with set time limits to complete remaining issues. If a certificate of completion or a temporary permit is not obtained, it is illegal to commence to use the building.

If the building is taken into use without a permit, the authorities could demand use to cease and to impose fines, etc.

The different types of Norwegian entities that are available for investors to hold real estate assets are:

  • general partnerships such as DA/ANS (ansvarlig selskap) where the owners are personally liable for the company's obligations;
  • limited liability companies (AS or aksjeselskap) where the owners are not personally liable for the company's obligations; and
  • limited partnership entities where only one of the owners are personally responsible for the company's obligations (KS or kommandittselskap).

We normally see that real estate investors use limited liability companies. The minimum cost for establishing a limited liability company is NOK30,000 (which is the lowest share capital such a company must have at all times).

The main feature of limited liability companies (aksjeselskap) is that the shareholders' liability is limited to the share capital. Limited liability companies are as subject encompassed by the participation exemption and exempt from wealth tax (which is levied on the individual shareholder). 

Partners in general partnerships (selskap med begrenset ansvar) are jointly liable for the partnership's liabilities. The net income of the partnership is allocated to the partners and the partners are taxed for their pro rata ownership of the partnership's net income. General partnerships are as such not a tax subject under Norwegian law, but a transparent entity and not encompassed by the participation exemption.

Pursuant to Norwegian corporate law, it is a requirement for limited partnerships that at least one partner holds a minimum ownership percentage of 10% and is fully liable for the partnership's liabilities (the general partner). The other partners (limited partners) only have a limited liability for the company's liabilities. Apart from this specific aspect, limited partnerships are, in general, treated similarly to general partnerships.

For limited liability companies, the minimum share capital is NOK30,000. For a DA/ANS, there are no requirements for minimum capital. For limited partnerships, each limited partner must deposit at least NOK20,000.

No specific governance requirements apply to limited liabilities, general partnerships or limited partnerships used to invest in real estate.

The annual entity maintenance and accounting compliance costs for real estate investment vehicles depend on the specific company and the specific real estate. However, the cost should be very limited if there is just one tenant and no specific issues to handle.

Other than "normal" lease agreements under which a tenant is given a right to use (parts of) the landlord's real estate, there is a Norwegian concept called ground-lease (tomtefeste) under which a tenant is leasing the real estate below a building or other construction owned by the tenant themselves. 

Most of the commercial leases in Norway are based on standard templates provided by the commercial real estate agent association, thus being called the "broker standards" (Meglerstandarden). Several versions of these templates exist, and these can be grouped in the following:

  • lease of new or newly rehabilitated premises (which have specific regulations with respect to the building project prior to handover);
  • "as/is" lease (the most used lease where the premises are leased out as/is); and
  • "triple-net" lease (where all obligations regarding maintenance/restoration, taxes and building insurance are the tenants' responsibility).

The main rule in Norwegian law is that all lease terms must comply with the Norwegian Tenancy Act. However, professional landlords and tenants may deviate from several of these provisions (and the widely used standard template "Meglerstandarden" also deviates from the Tenancy Act on several items).

The typical length of a lease term (eg, extension options) varies between one to two years for short leases, around five years for medium length leases and from ten up to 20 to 25 years for long leases. The far end of the long-term leases are typically entered into by industrial corporate entities or governmental bodies.

The obligation of maintenance and restoration usually implies that the landlord is responsible for exterior maintenance and restoration of technical installations, while the tenant is responsible for internal maintenance and maintenance of technical installations. However, in some cases, the parties will agree on barehouse/"triple-net" terms, which will normally imply that the tenant is also responsible for exterior maintenance and restoration of technical installations.

The frequency of rent payment varies between monthly, quarterly and annual payments.

Section 4-3 of the Tenancy Act states that both parties may require a regulation of rent to market level if no rent adjustments have taken place during the last two years and six months. Parties usually deviate from this section, and the rent under Norwegian leases will normally be adjusted on an annual basis, proportionate to the development (or sometimes only to the increase) in the Norwegian consumer price index. It is normal that leases include a provision that prevents the lease from becoming lower than the initial rent in the event of negative development of the CPI.

If the parties fail to agree on a new rent level, the rent must be determined by the Norwegian courts (or by arbitration if agreed upon). If one of the parties uses its right, under Section 4-3 of the Tenancy Act, to adjust the rent to market level, and the parties cannot agree on the market level, an appraisal committee (takstnemd) shall determine the new rent level (see Section 12-2 of the Tenancy Act clause 12-2).   

The main rule is that the rent is not subject to VAT. However, the landlord may be entitled to (and will often submit) voluntary registration as a VAT subject in the VAT Register, and VAT will in such case be added to the rent. The tenant will be entitled to full or partial deduction of VAT.

Unless the parties have agreed to other specific costs, only rent will be payable by the tenant at handover.

The landlord pays for the cost of maintenance and repair of areas used by several tenants, but may transfer these costs to the tenants through the common costs (which may be added to the rent).

Utilities and telecommunications serving several tenants are paid by the landlord, but the landlord will, in general, transfer these costs to the tenants through the common costs (which may be added to the rent).

Property insurance will, in most cases, be paid by the landlord, which will also be the person/entity subject to the property insurance. The insurance will typically cover damage to the property, the landlord's liability and any loss of rent. If the parties have agreed on a barehouse/"triple-net" lease, the property insurance may be entered into and covered by the tenant directly. 

The leased premises must be used in accordance with the agreed purpose and with due care. Public law may also limit the allowed use of the property, and a lease agreement will typically include a provision that obliges the tenant to use the premises in accordance with such public law. In some situations, private law can also limit the use of the leased premises. A typical example is the neighbouring law.

The tenant may not make any changes, including internal/installation work, of or to the Leased Object without the prior written consent of the landlord. As a rule, the landlord can withhold written approval at their own discretion. However, it is often agreed that a prior written approval shall not be withheld without just cause.

Since alterations to the premises require a prior written approval, the landlord can impose any type of condition to his approval. However, if approval can only be denied on just cause, the conditions must also be deemed as "just".

The Norwegian Tenancy Act does not apply to lease between hotels, hostels, guesthouses, boarding houses, etc, and their guests. All types/categories of real estate (in terms of buildings) are otherwise subject to the Norwegian Tenancy Act.

In case a tenant becomes insolvent, the bankruptcy estate shall within four weeks decide on whether it will enter into the lease or terminate the lease. During this period, the estate must cover the rent (which will have priority above unsecured claims).

If the estate enters into the lease agreement, the estate will be subject to the contractual terms of the lease. However, the estate will typically aim to sell the assets and business in the insolvent tenant together with the lease agreement, and will have such a transfer right regardless of any contractual provisions in the lease. The estate may also terminate the lease upon prior notice, regardless of the lease term provisions in the lease agreement. 

If the estate chooses not to enter into the lease agreement, it will represent a breach of contract that gives the landlord the right to claim compensation for losses and defaults. Unless the landlord has any security in form of a pledge or a guarantee, such claims are regarded as non-prioritised claims in the estate and coverage is normally unlikely. 

The tenant will typically provide a third-party guarantee towards the landlord for their contractual obligations under the lease. Normally, such guarantee will be provided by a financial institution (a bank guarantee) or by a parent company (parent company guarantee). The tenant may also provide other types of security (eg, an asset pledge), but this is more unusual than the guarantees.

A tenant has no right to occupy the lease object after the expiry or termination of a commercial lease. However, if the tenant does not vacate the premises upon expiry, and the landlord fails to send a request to vacate within a given time limit after expiry (three months according to law, but normally agreed to six months), the lease will be regarded as continued and as a continuous lease without a fixed term. The landlord will, in general, have a right to terminate such continuous leases with a three months' notice period.

The tenant may not assign the lease or sublease the premises without written approval from the landlord, unless otherwise agreed in the lease. In commercial leases, it is not uncommon that the tenant's right to assign and/or sublease its leasehold is conditional upon a written approval from the landlord, which can only be withheld on just cause (which typically is that the new tenant has a different VAT status or that the transfer will have economic implications for the landlord). 

Force majeure events might give the tenant and/or the landlord a right to terminate the lease. Insolvency will also imply a termination of the lease (unless the bankruptcy estate enters into the lease, see 6.15 Effect of Tenant's Insolvency). Only events that constitute a material breach of contract will otherwise normally give the parties a right to terminate the lease. A typical event can be a persistent and severe breach of contract by one of the parties (eg, lack of rent payment). 

There are no formal requirements for lease agreements under Norwegian law, nor are there any registration requirements. Lease agreements are normally not registered in the Land Register unless required by the lessee and accepted by the lessor.

The lessor's prior written consent is required if the lessee wants to register the agreement. Registration of a lease agreement in the Land Register currently costs NOK585 for paper-based submissions and NOK540 for electronic submissions. It is common for the lessee to cover the costs of registration, including the fee.

Under certain circumstances, the landlord can initiate a forced eviction before expiry of the lease terms. The legal provisions are included in Chapter 13 of the Norwegian Enforcement Act, and do in summary include the following circumstances: 

  • the tenant fails to pay the rent and the lease includes a specific provision stating that such breach of contract gives the landlord a right to forced eviction; and
  • if the tenant's breach of contract "obviously" gives the landlord a right to terminate the agreement.

The government, a municipal authority or other third parties cannot directly enforce the termination of a lease. However, if the government expropriates a property on which a lease agreement exists, the government will terminate the lease (but the tenant will be entitled to compensation for losses).

The most common price structures are fixed prices and unit prices. In smaller projects, hourly rates and cost of the work are also commonly used.

The most common contract types are design-build and design-bid-build. Design-build contracts include both design and construction under the same contract, meaning that the contractor is responsible for both design and construction. It is also relatively common that the contractor and the owner agrees that the contractor is responsible for any design made by, or on behalf of the owner before the agreement with the contractor is entered into. This will naturally affect the contractor's price.

Design-bid-build contracts only include only the construction for the contractor, and the owner will have a separate contract with the designer(s). This means that the contractor is not responsible for the design, only for the construction.

As a general rule, both the contractor and the owner will issue warranties (third-party sureties) for its own contractual obligations. These are normally limited to a certain percent, and will only be applicable for as long as the parties still have contractual obligations towards the other party. The limitation can be set aside if the contractor has acted wilfully or with gross negligence.

In addition, there are several limitations of the contractor's liability, such as time limitations for the owner to make defect-related claims and compensation limitations. Daily penalties in case of delays are limited to a certain percentage or a certain number of days.

In non-consumer contracts, the parties may agree upon any other limitations as they see fit. In consumer contracts, the parties may not agree upon any limitations that weaken the consumer's protection under the Consumer Act.

If the contractor does not achieve the completion date, the owner will be entitled to daily penalties from the contractor. This can also be agreed for certain milestones. The parties can also agree that the owner is not entitled to any daily penalties, unless the owner is a consumer (in such case, the Consumer Act will prevail).

It is most common to have warranties covering the parties' contractual obligations as described in 7.3 Management of Construction Risk. Depending on the contractor's financial situation, the owner will often demand additional security such as a parent guarantee or additional third-party sureties.

Both the designer and the contractor are permitted to stop and withhold its own performance until the owner pays. In addition, the owner must issue a warranty as described in 7.3 Management of Construction Risk, which will secure at least a certain percentage of the owner's payment. Encumbrances are not commonly used.

A project cannot be inhabited or used by the property owner or a tenant before the planning and building authorities have issued a provisional permission to use the project (midlertidig brukstillatelse). It should be noted that a provisional permission is limited by time and includes certain conditions.

When the construction project is complete, a certification of completion (ferdigattest) must be obtained by the owner/contractor in order to secure a continuing right to inhabit/use the project.

Purchase and sale of real estate are not subject to VAT (VAT exempt). This applies regardless of whether the real estate is for corporate/commercial or residential use. However, transfer of title to real estate is subject to stamp duty at the rate of 2.5% of the actual sales value of the property. The purchaser normally pays stamp duty. Share transfer of a real estate investment vehicle (SPV) does not trigger stamp duty. Furthermore, a merger or demerger with tax accounting and corporate continuation will not trigger stamp duty.

Sale of properties through sale of limited liability companies by a limited liability company or similar entity tax resident within the EEA should be exempt from capital gains tax and stamp duty. To the extent a shareholder intends to sell only one of several owned properties, it is normal to demerger the company and transfer the relevant property to a separate SPV, to be able to sell the property as a share transfer.

Municipal taxes are part of the ordinary taxes paid by each taxpayer resident in the relevant municipality.

Norway may impose withholding tax on dividends from a company tax resident in Norway to a shareholder who is not tax resident in Norway. Dividends distributed to shareholders domiciled abroad for tax purposes are in general subject to withholding tax at a rate of 25% of the gross dividends, unless otherwise provided for in an applicable tax treaty or if the distribution to the recipient is encompassed by the Norwegian participation exemption method.

Shareholders with tax domicile abroad with investments in a Norwegian limited company must comply with certain documentation provisions in order for a withholding tax at a lower rate than 25% to apply.

Real estate is object to tax depreciation. There are several different depreciation rates that apply to different parts of a property. For example, the tax depreciation rate is currently 2% for commercial buildings, 4% for warehouses and similar properties, and 10% for technical installations. Plots are not object to depreciations.

Advokatfirmaet Wiersholm AS

Dokkveien 1
0250 Oslo

+47 210 210 00
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Law and Practice


Advokatfirmaet Wiersholm AS is one of Norway's leading and largest law firms, with more than 180 lawyers and 80 other employees based in Oslo. The firm combines excellent legal competence, commercial understanding, industry knowledge and drive to assist clients in important and demanding matters. Through an international approach and network of law firms, the firm is able to provide the best advice to clients – anywhere in the world. The firm supports any type of commercial, corporate and residential real estate project – regardless of size and complexity. Real estate clients include prominent national and international companies. In recent years, the firm has worked for Amazon, Facebook and CBRE, as well as local players like Ferd, which the firm assisted in the acquisition of the NRK plot in Oslo, which will become one of the largest real estate development project in Norway going forward.

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Please select at least one chapter and one topic to use the compare functionality.