Etusivu \ Consumer Issues \ Supervision of Marketing and Contract Terms \ The obligation of developers to lodge a security against insolvency was monitored

The obligation of developers to lodge a security against insolvency was monitored

The duty of the Consumer Ombudsman is to supervise that the developers of new housing in the form of a housing company lodge a security against their possible insolvency as provided for in the Housing Transactions Act. In addition to new construction, the obligation to lodge a security applies to renovation and additional construction comparable to new construction, for example, when premises previously used for other purposes are converted into apartments. The regulation on insolvency security is part of the buyer protection provisions in the Housing Transactions Act and aims to protect the buyers of shares in a housing company.

During 2017, the Consumer Ombudsman had 30 insolvency-related cases at various stages of processing. Most of them concerned failure to pledge a security against insolvency. The rest were inquiries submitted to the Consumer Ombudsman by developers and municipal building supervisors on the application of the Housing Transactions Act.

The Consumer Ombudsman's guidelines (in Finnish) for construction companies and developers was also updated in 2017. The guidelines provide information on the obligation to lodge a security. The purpose of the guidelines is to ensure that, either during or upon the completion of construction, all construction companies and developers that are selling new homes receive sufficient information and instructions before they begin construction on the security that must be pledged for the benefit of home buyers, as specified in the Housing Transactions Act. The guidelines were sent to the Association of Finnish Local and Regional Authorities, among others, and they are also available from city and municipal building control authorities.