Buying a farm is so much more than just dealing with a place to live and a plot of land: an entire company is changing hands. Here is a description of a few points and issues relating to the things you will have to bear in mind when buying a farm in Sweden.

The description below is merely a brief guide on how property sales take place in Sweden. It must be viewed only as an initial insight, not as a complete description. For further information, please call your nearest Areal staff member.

How do I find properties for sale?
Most properties in Sweden are sold via brokers. The broker advertises properties for sale in newspapers and on the Internet. They all have their own websites, and there are also two fairly large, more comprehensive search engines: www.hemnet.se and www.bovision.se.

Documentation and conditions for sale
The broker produces a prospectus which describes the property and the conditions applicable to the sale. This prospectus is a basis for you as a buyer to find out facts so that you can do an assessment of your own.

Viewings
Viewings are arranged in order to give prospective buyers the opportunity to visit the property. These may be “open house” sessions where everyone wanting to view the property can come and have a look all at once. Or they may also be private, where you book an appointment with the broker to view the property with him or her.

Buyer’s obligation to carry out checks
The buyer has a far-reaching obligation by law to carry out checks. Therefore, take a careful look at all parts of the property in order to locate any faults or shortcomings. If you are not very good at this yourself, you should employ a professional surveyor. It is not possible later on to make claims against the vendor for faults which you ought to have discovered during a thorough inspection. It is often the buyer who pays the cost of hiring a surveyor.

A surveyor carries out an inspection and you receive a survey report. It is important to read through this survey agreement so that you know what it includes. Renegotiate the price of the property or pull out of the purchase if any major problems are uncovered.

Price and bidding
An asking price is given for most properties. Normally, anyone interested has to register with the broker by a specific date if they want to continue with the purchasing process.

Bidding takes place when there is more than one prospective buyer for a property. Most bidding processes use the “closed” or “open” model. In the case of a closed bidding process, prospective buyers are given a certain amount of time in which to submit a bid in writing. The broker informs the vendor of the bids. Prospective buyers are not notified of what other prospective buyers have bid. In the case of an open bidding process, bids are submitted in writing to the broker. The broker openly notifies the vendor and all prospective buyers of the highest bid. The prospective buyers then have the opportunity to outbid one another. Any prospective buyer submitting a bid is not bound by law to stand by his or her bid, even if it has been submitted in writing.

The vendor decides in consultation with the broker whether a bidding process is to be initiated, and if so, how this is to be formulated. The vendor is never legally bound by any agreements in respect of bidding; instead, he or she can change the form or bidding, or even cancel the bidding completely, at any time. The vendor does not have to sell to the party placing the highest bid. Nor is the vendor legally bound to sell at the price specified in an advertisement or otherwise during the sale process. Only a signed purchase contract is binding upon both parties.

The role of the broker in a sale is to act as an impartial point of contact between the vendor and the buyer. The broker is obliged to forward all bids to the vendor. It is up to the vendor to decide whether or not to take the bids into consideration. Only the vendor decides who is to be allowed to buy the property.

Prospective buyers are not entitled to demand ongoing information from the broker on how bidding is progressing, to know who the other bidders are or to find out what bids have been made. Prospective buyers are not entitled to any information other than the fact that they have not been allowed to buy the property.

Contract
The sale is binding only when a written contract has been prepared and signed by the vendor and the buyer. All the conditions applicable to the purchase are formulated in the contract.

Payment of the purchase price and mortgaging the property
When the contract is signed, a deposit is paid which normally amounts to 10 % of the purchase price. The rest of the purchase price is paid on taking possession of the property. Taking possession takes place on agreement between the vendor and the buyer, normally within 1 – 3 months of the contract being entered into.

If the property is to be mortgaged, contact should be established with the bank in plenty of time before any bidding process begins.

Licensing and expenses in connection with the acquisition of a property
An application for entry into the land register (proof of ownership) for the property is made by the buyer to the registration authority. A fee is levied for this of an amount equivalent to 1.5 % of the purchase price.

Some areas in Sweden are designated “sparsely populated areas”. In these areas, acquisition permits are required which are issued by the county council in the county in which the property is located. The application fee is around SEK 3 000. Permits are normally granted unless the property is needed to support employment in the area.

The municipality has right of first refusal on all agricultural properties. When the municipality exercises its right of first refusal, this results in the buyer losing the property. When a contract has been signed, the broker will help to check whether the municipality intends to exercise its right of first refusal. It is rare for the municipality to exercise its right of first refusal. This check is free of charge.

If a bank is to finance the purchase by mortgaging the property, they will require security for this by means of a mortgage entered into the land register. This entry is known as a pledge document. To be able to mortgage the property, therefore, a pledge document is required for at least the amount of the loan. Any pledge documents already existing for the property will be transferred to you as the buyer on the date on which you take possession of the property. If there is no pledge document, an additional cost of 2 % of the amount demanded will be payable.

Owning a farm is the same as running a company
Owning an agricultural property in Sweden means that you are running a company and are liable to pay tax on the income from the farm. For more information on tax issues relating to farms in Sweden, please contact a member of Areal staff; they have plenty of experience of advising on tax to owners of land and forests.