What are the usual steps to buy a real estate property in Finland?

When all terms and conditions of the transaction have been negotiated, can parties prepare a preliminary agreement on the property transaction. It must be made in writing with an attesting notary being present.

An actual real estate deal also has form prescribed by law. The buyer and the seller must draft the bill of sale on paper. Both the buyer and seller must be present in one location to sign it and have it witnessed by a public purchase witness. If the buyer and the seller are registered in the Finnish Population Information System, can property transactions also be completed in the online real property transaction service maintained by the National Land Survey of Finland.

The bill of sale must include information about the real property, the intention of sale, the contracting parties and the purchase price. The buyer must apply for title registration within six months after signing the bill of sale.

The municipality or state may have the right of pre-emption in a property sale. The right of pre-emption is valid for three months following the date of sale.

What legal checks should be done before buying a property?

Before buying a property, should buyer inspect it for any defects. The buyer cannot demand compensation for a defect afterwards if he/she should has noticed the defect when inspecting the property.

The buyer should always check the certificate of title and the certificate of mortgages and encumbrances. The buyer can ask the seller to provide with the certificates or order them from the National Land Survey.

If the buyer comes from outside the EU or EEA, he/she may need permission from the Ministry of Defence to acquire property.

Buying real estate through a company in Finland

In Finland companies have right to buy property. In case a company doesn‘t exist yet when buying a real estate, can an agent made bill of sale on behalf of a company. Agent who has taken action on behalf of company, is personally responsible for company‘s actions until the company has been established or registered.

Money laundering

Real estate agencies, banks and lawyers have duty to identify their clients and the origin of money which is invested in the purchase of the property. They are also obliged to observe any exceptional things appeared from their clients.

What are the purchase costs and taxes?

The buyer of the property must pay transfer tax. The transfer tax must be paid in six months from the signing of the bill of sale. The transfer tax is 4 % of the property value. Other costs are for example title registration costs and possible real estate agent‘s and lawyer‘s fees.

What documentation must the buyer have in place before buying a property?

The buyer must have an ID card and an extract from the Trade Register when acting on behalf of a company.

What precautions have to be taken regarding off-plan purchases?

One of the most important precaution is to verify the developer is the registered owner of the land where the building will be built. The buyer should also check that building permits of developer corresponds to the project.

All essential terms of the project should be made in writing. Especially the contract should clearly state a date of handover of the property, the amount paid in advance by the buyer and the total price paid finally by the buyer. It is also reasonable to draft conditions of refund if the developer fails to fulfil its contractual obligations.

Tips for clients looking to build their own property:

When thinking about building, the municipal building inspection authority can provide the buyer with information about building permits and zoning.

Once the buyer has got building permits, he/she should check backgrounds of builder candidates and finally draft a written contract with it. It is also recommended to hire supervisor who supervises that the building process is in accordance with all appropriate standards. Final inspection is made by official building inspector.

Annual running costs?

Annual running costs when owning a real estate are for example: repayments and interest on mortgage, real estate tax, water rates and electricity charges, heating costs, waste collection fees and possible repairs.

What minimum legal checks should be done when selling a property?

The seller of a property must notify the buyer of any known defects in the property before the sale. If any defects appear later and the seller has known about a defect in the property, but has failed to inform the buyer of it, the seller may be obliged to pay compensation to the buyer. It is recommended to inspect property with building inspector before selling property.