Bankruptcy surge prompts legal concerns for apartment buyers in Finland

The rise in bankruptcies within the construction sector has led to more complex disputes regarding the purchase of new apartments being referred to the Consumer Disputes Board. Board Chairman Pauli Ståhlberg notes that purchasing a project that is either in planning or construction carries risks, including the possibility of the project being left unfinished, which incurs additional costs.

One notable case involved a couple who bought an unfinished apartment for €405,000. Following the developer’s bankruptcy, the implied price of the apartment escalated to approximately €735,000. The couple purchased shares from a woman who originally acquired them from the developer. The Board concluded that the seller was likely unaware of the developer’s financial troubles.

The couple argued that the seller should have disclosed the risks associated with the developer’s situation, claiming an entitlement to a €330,000 price reduction alongside nearly €21,000 in damages. The seller contended she had not received any correspondences regarding the developer’s issues after putting her shares on the market.

Ståhlberg remarked that the board could not apply new housing sale regulations as the seller was neither a founding shareholder nor a business entity. This legal gap leaves significant risks solely with the new buyers, who have no right to the considerable reductions or compensations they sought according to current laws.

Ståhlberg emphasizes the urgent need to amend housing sale regulations to protect buyers in cases of bankruptcy. He highlights that existing laws do not adequately address situations where construction firms go bankrupt, and the legal framework is unclear on risk distribution in these transactions. The government is considering updating these regulations as part of its agenda in the Ministry of Justice.