Section 15 of the Ground Lease Act limits the parties' ability to agree on adjustments of the ground rent

As a result of amendments to the Ground Lease Act, an older ground lease agreement from 1967 was modified in 2002. Among other things, a one-time adjustment based on the value of the land was carried out. The question in the case was whether the parties are free to agree on a further adjustment of the ground rent.

Following the 2002 amendment, the annual ground rent was increased to NOK 16,000, with provision for adjustment in line with the Consumer Price Index every five years. The lessor was granted a right of first refusal at a price corresponding to the technical value of the buildings. When the lessee sought to sell the property in 2018, this right of first refusal was regarded as having an adverse effect on the property's market value. The parties therefore agreed to amend the provision so that the lessor could instead step into any purchase agreement on the agreed terms. At the same time, the ground rent was increased to NOK 36,000. The agreement stated that the new ground rent was intended to reflect developments in the value of the land.

The new lessee argued that the 2018 agreement was contrary to the mandatory provisions of section 15 of the Ground Lease Act, which, as a general rule, provide that ground rent may be adjusted only in accordance with changes in the Consumer Price Index.

The Supreme Court agreed, pointing out that section 15 of the Ground Lease Act, read together with section 4, limits the parties' freedom of contract. Section 15 lays down mandatory and exhaustive rules governing the adjustment of ground rent. Accordingly, the parties cannot agree to a higher ground rent than that permitted by law. The Supreme Court did not take a position on whether a narrow exception may exist where an increase in ground rent is compensated by an equivalent consideration from the lessor.

The parties agreed that the ground rent should be slightly more than NOK 26,000 if the 2018 agreement cannot be upheld. The Supreme Court fixed the ground rent accordingly.

The judgment provides guidance on the interpretation of section 15 of the Ground Lease Act.

Area of law: Real Property

Key paragraphs: 51, 52

Justices: Bergh, Østensen Berglund, Steinsvik, Steen, Heggberget