Acquisition costs |
In
Denmark the buyer is responsible for paying the closing costs. This
includes a tax that must be paid when the deed (skoede) is registered.
This cost consist in a fixed amount of DKK 1.400 and a registration fee
of 0.6% calculated on the purchase price or the official public
valuation, if this is higher. Further, if the purchase of the real
estate is financed by a bank the mortgage also has to be registered.
The buyer is then responsible for paying a registration duty of 1.5% of
the principal capital sum plus DKK 1.400. Normally the buyer is
represented by an attorney or an estate agent, and must therefore pay
them a fee.
In relation to the realization of the real property the seller is also responsible for paying some costs.
As most of the transactions of real property involve a Real Estate
Agent, the seller normally must pay a sales commission for this
representation. This fee normally amount to 3-4% of the purchase price.
Further the seller must pay advertisement- and documentation costs.
There are normally also some costs related to the financing of the
transaction. Both in relation to the raising and to the notice of a
debt and to a re-mortgaging of a loan the seller is often responsible
for paying a fee to the lenders. Finally, in some cases the seller is
also responsible for paying a tax calculated on a profit related to the
realization. (Information provided by Bente Naver of 11/12/03) |
Property and ownership information |
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. (ICREA Real
Estate Business Practices) |
Transaction information |
Open listings for agents are: Not available. Exclusive listings for agents are: Available.
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 . (ICREA Real Estate Business Practices) |
Real estate trade association |
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. |
License requirements |
Real
estate license requirements are regulated by the Ministry of Commerce.
Licenses are granted only after passing extensive examinations.
Education at the college level is required, however there is also
continuous education requirements to maintain the license. Typically, a
licensee will have spent 4 years attending evening classes and have
served two years within the industry. (ICREA Real Estate Business
Practices) |
Land description meters and bounds survey system |
In
Denmark the real properties are identified, described and bounded via
the Cadastral System, and in a system called the BBR (bygnings- og
boligregisteret). The Cadastre records include parcel number, parcel
area, date of change, and public restrictions. Private restrictions
such as easements can be found in the land property registry. For
condominium flats the sizes are also described in a
“ejerlejlighedskort”. Surveying is the method used for describing the
lot size and the precise boundaries. The same method is used in all
municipalities. |
Rights and interests in land |
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.
(Information provided by Bente Naver of 11/12/03) |
Forms of ownership |
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.
(Information provided by Bente Naver of 11/12/03)
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. |
Transfer of title |
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. (Information provided by Bente Naver of 11/12/03) |
Recordation and transfer of title |
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. (Martindale-Hubbell, Denmark Law Digest , Deeds) |
Contracts |
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. (Information provided by Bente Naver of
11/12/03) |
Mortgages |
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) |
Financing and lending practices |
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. |
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.
(Martindale-Hubbell, Denmark Law Digest , Property Taxes)
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. |
Closing and escrows |
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. |
Appraisal |
The
lenders always require appraisals in Denmark, before they grant a loan.
The method used for determining value is a valuation based on
geographic situation, size, quality etc. (Information provided by Bente
Naver of 11/12/03) |
Insurance |
Insurance
is not required by law, but lenders demand, that the real property is
insured against fire. The owner usually also take out a policy on house
insurance. This insurance normally covers damage by dry rot, insects
and water. Further, the buyer also has an option to take out a policy
on a change of ownership insurance. This covers hidden defects.
(Information provided by Bente Naver of 11/12/03) |
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. |
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