Board members of BRF liable for damages for denial of membership
Board members of BRF liable for damages for denial of membership
A condominium association denies the buyer of a condominium membership. The buyer takes the matter to the Tenancy Board, which leads to the seller of the condominium having double costs for housing while the board handles the matter. The seller, who believes that there was no reason to deny the buyer membership, is therefore suing the association’s members with a claim for damages as compensation for his double accommodation costs. The Court of Appeal finds that the condominium association made its decision on insufficient grounds and grants the claim for damages.
A woman who recently bought a condominium in the association Ormsaltaren has her application for membership in the association rejected. The decision is justified by the fact that there are indications that she does not plan to live in the apartment, which according to the association’s statutes is grounds for denying membership. The buyer of the condominium therefore takes the matter to the Tenancy Board, which announces that the processing of the case will take two to three months. However, a decision in the case will not come until almost a year later, when the board comes to the conclusion that the buyer should be approved as a member. The condominium association then approves the membership. According to the seller, Ormsaltaren initially denied the buyer membership on incorrect grounds. The seller believes that this led to her having double housing costs for almost a year while she waited for the Rent Board’s decision. She is therefore suing the association’s members in the District Court with a claim for just over SEK 112,000 in damages. The association claims that it had good grounds for refusing membership and that there is therefore no liability for damages.
The district court begins by giving an account of the relevant legal grounds in the matter. According to ch. 2 Section 3 of the Tenancy Act, the buyer of a tenancy may not be denied membership if the conditions in the bylaws are met and the association should reasonably accept the acquirer. Ormsaltaren’s decision to deny the buyer membership was partly based on contact with her former condominium association, Kroken, which was made in connection with her application. A representative for Kroken gave an unclear answer to the question of whether the buyer lived in his former condominium.Furthermore, Ormsalteren has been in contact with the buyer’s father, which is believed to indicate that she has no plans to live in the new apartment. The court states that the information from the former condominium association is not clear-cut and that it should therefore be followed up with supplementary questions or investigation measures to clear up uncertainties about the buyer’s accommodation. Regarding the contact with the buyer’s father, the court considers that the information given cannot be given decisive importance because it is not directly attributable to the buyer himself. The District Court thus finds that Ormsaltaren’s investigation was so flawed that there was no reason to deny the buyer membership.
According to the seller, she has sublet the apartment for two months while waiting for the Rent Board’s decision. She states that the reason why the apartment was rented out for such a short time is that the committee initially stated that the processing would take two to three months and that she therefore initially planned not to rent it out. The association believes that the buyer rented out the apartment for a longer period of time than she states and that she did not actually suffer any financial damage. In the event that the court finds that the buyer only rented out the apartment for two months, the association believes that she has no right to damages because she failed to limit her damage by renting out the condominium for such a short time. The court states that the association has not presented any investigation that proves that the seller rented out the apartment for a longer period than she stated and that Ormsaltaren therefore did not prove that this is the case. Regarding the claim that the seller failed to limit his damage, the court finds that she had reason to wait with the rental when the Rental Board initially announced that the processing would take significantly less time than it did. The court therefore finds that the seller is entitled to the claimed damages because she had double costs for rent as a result of the association denying the buyer membership on insufficient grounds. The association later appeals to the Court of Appeal, which takes the case up for consideration. However, the Court of Appeal shares the District Court’s assessment in all essential aspects, which is why the judgment is not changed.