The process of purchasing a real property in Finland

Contract of purchase The content of contract is regulated in Maakaari chapter 2 article 1 The contract must be done in writing and contain at least: ● Purpose of transaction (i.e. sale, gift, change, inheritage) → Different transactions have different legislations ● Object of transaction ● Buyer and seller ● Purchase price

● Terms on how and when the purchase price is being paid Typically also following things are mentioned in the contract: ● Terms on how and when the purchase price is being paid ● Time when the ownership right changes ● Time when the possession changes ● What is included in the object ● Easements ● Special interests ● Mortgages (typically relieved of) ● Condition subsequent (”purkava ehto”) ● State of building ● Information given/received

PURPOSE OF TRANSACTION OBJECT OF TRANSACTION SELLER BUYER PURCHASE PRICE

Certain terms in sales contract are not binding Conditions that limit buyers possibilities to re-sale, mortgage, rent or otherwise juridically rule the property Conditions that dictate to whom the property can be re-saled Conditions that restrict seller’s liabilities contesting of title (”saannonmoite”) Condition that restrict otherwise the normal use of property, which is inappropriate, or illegal

Possible errors Errors defined in Maakaari 2 chapter articles 17-19: Finnish legislation recognizes three different error that give to the buyer a right for either a discount, or if the error is remarkable a right to cancel the deal and claim damage. Errors defined in Maakaari 2 chapter articles 17-19: 1. quality error (“laatuvirhe”) • whereby the quality of the property does not correspond to that agreed 2. legal error (“oikeudellinen virhe”) • whereby there is obscurity in the ownership or other rights related to the real property 3. utility error (“vallinta virhe”) • whereby the right to use the property is restricted without the knowledge of the buyer.

Taxation Registration Buyer pays transfer tax + 2 % when indirect ownership + 4% when direct ownership Buyer also pays the registration fee Seller pays capital income tax, which is 30% of capital incomes, but 34% is over 30 000€ Registration To get the title, the buyer must apply for it from the National Land Survey The application must include e.g.: sellers title (“lainhuutotodistus”) the original sales contract and a copy of it certificate that the transaction tax has been paid If NLS approves the application, the deed is registered in the public Land Register and the title is transferred to the buyer

Public purchase witness → verifies the contract (is present when signing the sales contract) and announce it to National Land Survey and the municipality The public purchase witness is usually a “high ranked” Municipality official When property is transferred using the Property Transfer Service, a public purchase witness is not necessary.