Code of Ethics
For the Danish Association of Chartered Estate Agents, Code of Ethics, click here:
http://www.de.dk/Om+DE/Forbrugeretiske+regler/
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Entrance/licensing requirements
Anyone can own an estate agency, but only estate agents and attorneys-at-law registered with the Ministry are allowed to practise as estate agents. In practice, this means that all estate agencies, including any branches, must be headed/directed by a registered estate agent or attorney-at-law who has this particular activity as his or her primary business.
In order to become registered as an estate agent in Denmark you:
- Must be a resident of Denmark
- Must be legally competent not under guardianship
- Must not be under receivership or bankruptcy
- Must not hold a position which is incompatible with being an estate agent
- Must have a sufficient theoretical knowledge in order to fulfil requirements imposed by the Ministry of Economic and Business Affairs
- Must have a sufficient practical knowledge of house buying and selling in order to fulfil requirements imposed by the Ministry of Economic and Business Affairs
- Must be covered by a financial guarantee and a third party liability insurance in order to fulfil requirements imposed by the Ministry of Economic and Business Affairs (a financial guarantee of 2,500,000 DKK (approx. 400,000 $) as well as a third party liability insurance with a maximum of not less than 2,000,000 DKK (approx 250,000 $) per estate agent per year - the guarantee and the insurance is provided by the Danish Association of Estate Agents to all its members (95% of all Danish estate agents)
- Must have a clean track record (i.e. there must be no suspicion that the applicant will not run his business as an estate agent in a proper manner)
- Must not owe more than 50,000 DKK (approx. 6,000 $) to public authorities
- Must pay a fee to the Ministry of Economic and Business Affairs
The registration will stay in place as long as the estate agent fulfils the above commitments
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Foreign ownership
Nonresidents can acquire Danish property if: they have previously resided in Denmark for five years; they are EU nationals working in Denmark; or they are non-EU nationals with a valid residence or business permit in Denmark. There are some restrictions on purchasing property in and around the popular coastal areas in Denmark.
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Land Registration System
All Danish properties are registered at the Land Registry, which currently is operated by the local city courts. A centralization of the registry in the city court of Hobro took place in September 2009. Ownership as well as mortgages, easements etc must as a general rule be registered at the Land Registry to be legally valid towards third parties. In other words: If an ownership, a mortgage or an easement is not registered at the Land Registry third parties do not have to take such rights into consideration. The Danish Land Registry is computerised and everybody has access to information contained in the Registry.
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Other industry professionals
According to the Danish Property Transaction Act n Denmark, anyone can own an estate agency but only registered estate agents and registered attorneys-at-law are allowed to practise as estate agents. This also applies to foreign individuals and businesses. But - as mentioned above - all estate agents offices must be headed/directed by either an estate agent or an attorney-at-law. No other professionals other than estate agents are required to be involved to complete real estate transactions. No notary system exists in Denmark. The seller is normally represented by an estate agent and the buyer by either a lawyer or another estate agent. It is part of the task of the seller's estate agent to draw up the contract between the seller and the buyer. The deed will normally be drawn up by either the buyer's lawyer or his estate agent.
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Practitioner Services
The role of an estate agent is precisely described in the Danish Property Transaction Act and in other laws in connection with this law. If he represents the seller his primary role is to assist in sale.
It is the duty of the estate agent to:
- Agree the price at which the property is put on the market with the seller. This agreement must be based upon the estate agent's valuation of the property
- Prepare a financing proposal for the property in question based on a standard presentation.
- To calculate the gross and the net cost of owning the property (i.e. before and after tax - all interest are deductible in the Danish tax system)
- To calculate the seller's proceeds of the sale
- To prepare a sales prospectus, containing key figures which enables the buyer to take a decision to buy on a correct basis
- To prepare a draft contract of sale
Furthermore, the estate agent must inform the seller about the option to have his or her property scrutinised/checked by a person, who is an expert in building technology (i.e. an architect or an engineer) who is approved by Government to carry out such investigations. The expert's report as well as an offer from an insurance company to cover hidden defects, which hasn't been detected by the expert, will have to be given to potential buyers. If the seller doesn't do this he is liable for all defects that he hasn't disclosed to the buyer for the following 10 years. Finally the estate agent must inform the seller about his or her duty to arrange for the preparation of a report on the property's energy consumption. This report must even cover the energy consumption of all electrical appliances, i.e. fridges, washing machines, dishwashers etc.
After all the above preparatory steps the property can now be put on the market. The estate agent will normally advertise the property in local newspapers and on the Internet. More about this later.
If the estate agent represents the seller he is obliged to inform potential buyers of the need for them to seek independent advise from an attorney or another estate agent.
A relatively small number of Danish estate agents are specialised in letting of properties. Particularly in the major cities such as Copenhagen and Aarhus there is a great demand for rented accommodation - and some estate agents are involved in this business. Letting of properties, apartments or rooms is not covered by the Property Transaction Act and consequently everybody can enter into this business irrespective of educational background, registration etc.
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Property Marketing Systems
The Danish marketplace for estate agency services is dominated by a number of large chains, owned or run in connection with banks or mortgage banks. But there is also a large market for independent estate agents, some of whom have entered into marketing chains.
Each of these chains has their own highly computerised marketing systems. Each of the chains have their own platform on the Internet with a sales prospectus including pictures, floor plans and all financial key figures for each of the properties, they have for sale.
All property ads from all chains and all independent estate agents are gathered on one Internet platform www.boligsiden.dk. In other words: All properties for sale in Denmark can be found on www.boligsiden.dk. Normally 42 - 43,000 properties are for sale on this website, which is quite a substantial number, bearing in mind that the total annual number of transactions, where brokers are involved, is 80 - 90,000. The number of unique visitors to the website is 250 - 300,000 per month and they watch 6 - 7,000,000 WebPages per month.
www.boligsiden.dk does only cover residential properties. A large number of commercial estate agents have established www.oline.dk the Danish website for commercial properties. This website, which is now operated by The Danish Association of Chartered Estate Agents (DE), contains approx. 3,000 commercial properties for sale or for rent and has become a very important marketing tool for the commercial estate agents.
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Referral System
A referral system does not exist in Denmark. As mentioned above all estate agents are paid directly by their clients. Consequently there is no need for a referral system.
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Relationship of Buyer/Seller to Practitioner
According to the Danish Property Transaction Act an estate agent may represent either the seller or the buyer - but never both parties in the same case. Traditionally the seller is represented by an estate agent and the buyer by an attorney-at-law. Since 1998, however, The Danish Association of Chartered Estate Agents (DE) has actively (through TV commercials etc) promoted the estate agent as "the buyer's man" as well. It is still, though, normal that the buyer is represented by a lawyer; but things are changing. Consequently, an estate agent in Denmark is not an intermediary, but is representing one of the parties. According to the law the estate agent must have a written contract with the party he represents. The duration of contract must not exceed 6 months, but it may be renewed for a maximum period of 3 months at a time. A written contract is mandatory as the agent is not entitled to remuneration or reimbursement of expenses (for advertisements for instance) if a written contract doesn't exist. The contract must state the exact amount for commission and expenses.
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Remuneration
Remuneration in the form of commission is freely negotiated by the parties. Residential brokers may receive commission only from the party they represent .Commercial brokers have no specific rules to follow but it is customary that they are paid by one party.
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