The articles of association of a housing company may include a clause according to which another shareholder or the housing company has the right to redeem an apartment or a parking space when their ownership is transferred to a party outside the housing company.
In addition, the articles of association of housing companies established prior to 1992 may still contain other types of transaction restriction clauses, such as a pre-emption or consent clause.
How does a redemption clause appear in the Residential and Commercial Property Information System?
The redemption clause is shown on the printout for an apartment.
The redemption clause may also appear on the printout for an apartment to which it does not apply. This is because if the information about the redemption clause has come from the Trade Register, it will appear in the Residential and Commercial Property Information System for each apartment.
The redemption procedure starts after the registration of ownership
The housing company can start the redemption procedure once the National Land Survey of Finland has registered the new owner in the Residential and Commercial Property Information System. For the redemption notification, the housing company will need additional information from the buyer of the apartment, which can usually be found on the deed of sale.
Time limits
Always check the time limits for the redemption procedure from the housing company’s articles of association. The two-week time limits mentioned in the example redemption procedure below are assumptions based on law, but the housing company’s articles of association may also stipulate shorter time limits.
Progress of the redemption procedure:
Buyer
- Applies for the registration of ownership in the Residential and Commercial Property Information System.
National Land Survey of Finland
- In connection with the change of ownership, checks whether there is a redemption clause that applies to the apartment in question. If there is, the ownership will be registered as urgent.
- Adds the entry “The acquisition of the title to the share in the housing company is subject to a right of redemption in accordance with the articles of association” for the apartment in the list of shares. The entry will remain in the list of shares for three months, unless the housing company specifies otherwise.
- Sends a notification of the registration of the buyer’s ownership in the Residential and Commercial Property Information System to the housing company.
- Enters the buyer in the list of shares once the buyer has paid the asset transfer tax.
Housing company
- Informs the shareholders of the possibility of redemption within two weeks of having received
- from the National Land Survey of Finland a notification of the registration of the buyer’s ownership; and
- from the buyer the necessary information, such as the deed of sale.
Redeemer
- After the notice from the housing company, the redeemer will have at least two weeks to submit a redemption request to the board of the housing company.
Housing company
- Declares as soon as possible whether the right of redemption will be exercised. The declaration must be submitted to the National Land Survey at huoneistohakemukset@maanmittauslaitos.fi.
- If the determination of the right of redemption takes more than three months from the registration of ownership, the housing company must notify the National Land Survey of Finland of the pending redemption procedure at huoneistohakemukset@maanmittauslaitos.fi.
Redeemer
- Pays the redemption price to the housing company within two weeks of the time limit for the demand for redemption.
- Applies for the registration of ownership in the Residential and Commercial Property Information System. The application must be accompanied by the original buyer’s consent to the registration and a report from the housing company about the redeemer.
National Land Survey of Finland
- Registers the redeemer’s ownership in the Residential and Commercial Property Information System and removes the entry on the redemption right from the list of shares.
- Sends a notification of the registration of the buyer’s ownership to the housing company.
- Enters the redeemer as the new owner in the list of shares once the redeemer has paid the asset transfer tax.
Housing company
- Repays the price of the apartment to the original buyer once the redeemer has been registered as the owner of the apartment in the Residential and Commercial Property Information System.
- Please note: Before the housing company repays the price of the apartment to the buyer, the housing company must check from the printout for the apartment that the apartment has not been used as the collateral for a loan, for example. For this purpose, the housing company will be issued the printout for the apartment free of charge. Derogations from this procedure may only be made with the redeemer’s consent.
Pre-emption or consent clause
A pre-emption clause means that the owner of an apartment must give other shareholders or the housing company the opportunity to redeem the apartment before they can sell it to a party outside the housing company. If there is a pre-emption clause in the articles of association, the buyer must attach to the application for registration of ownership a report from the board of directors of the housing company or the property manager that the right of pre-emption will not be exercised.
A consent clause means that the consent of the housing company is required to purchase an apartment. If there is a consent clause in the articles of association, the buyer must attach to the application for registration of ownership consent of the housing company’s board of directors to the transaction.