On 7 March this year, the Stockholm District Court announced a ruling in a case between two individuals (as claimants) and a housing cooperative association (as respondent). The case concerned if a preliminary agreement between the parties was compatible with the Cooperative Housing Act’s (the “Act”) provisions regarding estimated time for granting of the co-operative apartment.
In the preliminary agreement, it was stated that the preliminary time to grant the apartment was “from Q2, 2019 to Q3, 2019”, while the preliminary time for taking possession of the apartment was “from Q4, 2019 to Q1, 2020”. The claimants argued that the preliminary agreement was invalid, partly because the time of the grant was stated as preliminary, and partly because the time was expressed as a time interval of six months.
The District Court began by stating that the legislative history for the Act does not provide any answers as to whether a longer period, such as six months, is in line with the legal requirement that a “estimated time for the grant” must be set forth in the preliminary agreement and that there is no case law on this matter either.
The District Court found, inter alia, based on a contextual interpretation of the Act, that the term “time” in the Act should not be interpreted too narrowly. The District Court considered, inter alia, that construction projects are extensive, extend over a long period of time and are made in stages that involve several different actors. The court came to the conclusion that a specified time period of six months is in line with the formal requirement “estimated time for the grant”. The District Court also held that the statements in the legal literature that the timing of the grant should be stated as a specific date and in any case not exceed a period of a few weeks, did not, in the absence of support in the legislative history or case law, carry a significant weight as a source of law.
As regards the question of whether the time of grant can be preliminary, the District Court pointed out that the Act refers to a “estimated” time for the grant and that this choice of words, indicates that an uncertainty regarding the time for the grant is acceptable at the time of conclusion of the preliminary agreement. Thus, the court held that the preliminary agreement was not invalid on this basis.
The decision is interesting in view of the large number of disputes concerning preliminary agreements waiting to be tried. One of the issues in these disputes is how specified the timing of the grant must be in order to meet the requirements of the Act. Although this ruling is not binding on other courts, it is likely to influence other judges. The ruling will probably also have a cooling effect on the willingness to try to terminate preliminary agreements on the basis that they do not comply with the Act’s provisions on the time of the grant.