Late notice prevented cancellation of house purchase

A property outside Stavanger was sold in 2023. The sales particulars stated that a major road project was planned nearby. The project included the expansion of the E39 from two to four lanes and the construction of a new feeder road. The buyers claimed that the sellers had withheld information about the road project, in particular about the feeder road. They therefore sought to terminate the purchase on the ground that the property had a material defect. The Court of Appeal found in favour of the buyers.

A key issue was whether the termination claim had been made in time. Under section 4-13 subsection 2 of the Property Transfer Act, it is not sufficient merely to give notice of a defect. The buyer must also claim termination within a reasonable time.

The Supreme Court found that the termination claim had been made too late. The time limit starts to run when the buyer knew or ought to have known of circumstances making it realistic that termination may be justified. The buyer must have had reason to assess the factual circumstances relevant to whether the defect is material. It is not, however, a requirement that the buyer must have obtained legal advice.

The starting point and the length of the time limit must be seen in conjunction. Its duration depends on an individual assessment of the nature of the defect and the interests of both parties. No absolute time limit can be set, but three months will normally be sufficient. The Supreme Court did not expressly consider when the termination claim was made in this case, because in any event it was brought more than three months after the time limit began to run.

The Supreme Court held that the sellers had not acted with gross negligence. The provision in section 4-13 susbsection 2, second sentence — which in certain cases removes the time limit for notice — was therefore not applicable.

Because the time limit for claiming termination had expired, the Supreme Court set aside the judgment of the Court of Appeal.

The judgment provides guidance on the interpretation of the rules on notice in section 4-13 of the Property Transfer Act.

Read the judgment (Norwegian only) (PDF)

Area of law: Real property

Key paragraphs: 47, 59, 66, 67

Justices: Webster, Østensen Berglund, Høgetveit Berg, Sæther, Hellerslia