All property transactions must be recorded with the Land Registry. These registries fall under the operation of local city courts. Rights and interests associated with property must be registered in order to third parties require third parties to abide by previous agreements. The Danish Land Registry is electronic and open to the public.
Sellers are typically represented by an estate agent with buyer representation by an estate agent or attorney. An estate agent may represent either buyer or seller but not both in the same transaction. Estate agents must have a written contract with represented parties. The seller’s agent is responsible for drawing up the contract between buyer and seller. The buyers agent or lawyer creates the deed. The role of estate agents is covered in the Danish Property Transaction Act. The Danish Association for Chartered Estate Agents established a site where property listings from both large chains and independent agents are displayed (www.boligsiden.dk). This site, however, only covers residential properties. Commercial properties can be located at www.oline.dk.
The Danish Association of Chartered Estate Agents (Dansk Ejendonsmaeglerforening)
Islands Brygge 43
Copenhagen
K.
DK-2300
Denmark
Phone : +45 32 644 570
Fax : +45 32 644599
e-mail : de@de.dk
Web : www.de.dk
DE - the Danish Association of Estate Agents was established in 1912 and is the principal association for estate agents in Denmark with approximately 2,300 members, equivalent to about 95% of all Danish estate agents. The association offers a number of services to its members, such as 3 websites, of which one is the most well known and used platform for houses for sale, education, a monthly magazine, support as far as IT and professional skills are concerned.
The government retains certain rights in real property in Denmark, such as the right to levy property taxes, and the right to control the use of private property through the exercise of police power(the right to privacy is protected via the constitution, and therefore police power is only rarely used and only if the police have a warrant) and zoning. The right of escheat is not authorized by law but by contract. The right concerns a few real properties – mainly in the center of Copenhagen. Spouses have the statutory right to remain in possession of joint property as long as the surviving spouse does not marry again.
In Denmark real property can also be owned in severalty and concurrence. In Denmark the forms are: sameje, ideelle anparter, andelsboliger. Real Property can also be owned by a corporation or a partnership.
Corporations, Aktieselskab, must be registered and as a rule may not acquire agricultural property. Partnerships are usually governed partnerships in which all partners are liable for the debts of the partnership.
Title & Contracts in Denmark:
In Denmark the title to real property is transferred via a written document called a Skoede. This is the valid document to be used on transfer of real property. Alternatively the written contract between buyer and seller can be used for transfer of title. A deed can be conditioned or definitive. There are certain information requirements to the document. The parties (the grantor and the grantee) and the real property must be carefully identified. The date and the price must also be stated. The skøde must also content information about the rights which the registration of the skoede respects. The deed has to be witnessed.
Deeds and mortgages must be in writing and registered in a public registry to be valid. Real property deeds carry registration duty of 0.6% calculated on purchase price or public evaluation whichever is higher. Furthermore nominal fee of DKK 1,400 must be paid for filings in land registry.
In general an oral contract in Denmark can be valid. However the contract between a seller and a buyer of real property is only valid if made in written. This document is called “koebsaftale”. This document must contain the same information as the deed and even further information related to the agreement between buyer and seller. This contract doesn’t have to be witnessed unless it is registered instead of the deed. The contract is not notarized – only wills are notarized in Denmark. The contract between seller and the real estate agent must also be in writing to be valid.
Property Taxes:
Danish tax law is complicated and must be carefully studied by foreign investors. Taxes are levied by municipalities fixed between 6 and 24 per mille and counties at 10 per mille based upon the land value. The Property Taxation Act governs tax rates. The tax assessment of property is done every second year. In addition to the property value tax, a property or land tax is charged on the value of the land. Land tax is assessed and collected directly by each local authority.
Ad valorem property taxes are paid by property owners except that corporations are exempt from property taxes.
Stamp duty is payable on deeds, mortgages and many real property leases. This tax ranges from .3% to over 4% of the values involved. All signatories to documents are ultimately liable for the payment of stamp duty.
Transfer tax of 1.2% is payable upon the close of real estate transactions where title is transferred, except when the subject property is residential.
Once a sales contract has been drawn (typically by the seller’s agent although both seller and buyer are legally represented in this process) a deed of conveyance (skøde) is drawn up, normally by the buyer’s attorney. This assures the buyer of clear title to the subject property once the deed has been recorded at the local land registry office.
Cash payments are deposited directly into a commercial bank account and the funds can be released only to the seller once the buyer has received unconditional title to the property. Normally only one agent, typically the buyer’s agent, is involved in a transaction. Escrow typically lasts between 60-120 days.
Land Use & Control:
There are certain regulations on land use in Denmark. The regulations can vary between cities. There are a variety of reasons for these regulations, including regulations can have different reasons such as the ones you mention. Authority can be granted to municipalities.
Real property may be mortgaged as security for a debt in Denmark. Mortgages must be in writing and must be in a form as authorized by law. Mortgages must be signed by the mortgagor, witnessed and published in an official register. Claims on a title are ranked based upon the first in, first right which directs the order of execution in the event of default by the property owner. A forced sale (auction) will be carried through by the enforcement court, which is part of the court system in Denmark. The ranking order of the mortgages on a given property must be set out in the Land Register in which registration is made subject to a judicial examination. Any person who suffers a loss as a consequence of errors committed within the Land Registration System may claim compensation from the Danish Treasury. (BRF Credit About the Danish Mortgage Credit System).
In Denmark, two main sources of financing exist; commercial banks and mortgage banks. Danish and foreign commercial banks make loans in Denmark with terms drawn to the mutual agreement of both parties. Interest rates are typically adjustable and can be tied to the Danish Kroner or to a mutually acceptable foreign exchange. Loan to value ratios typically range between 60-100% from mortgage lenders. Commercial banks will lend up to 100% of the value. In some cases, buyers will create agreements with both commercial and mortgage lenders. The mortgage lender will loan up to the 80% level with the commercial bank picking up the remaining loan amount.
After extreme losses due to property exposure in 1991-1993, lenders are quite conservative in their lending decisions. Therefore, speculative building is quite uncommon. Loans have been made on speculative building projects where heavy pre-leasing was possible.
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