Moving the immovable to a digital landscape

Real property holds a special position in Finnish property law, not least because of the existence of the real estate register and other registers containing a lot of information on each real estate unit. As regulated as the ownership and transfer of real estate is, share ownership in companies that own real estate has not been subject to such strict legislation. This is about to change with the new electronic register for housing company information (in Finnish ‘huoneistotietojärjestelmä’) that will be applied to both residential housing companies and such mutual real estate companies to which the Limited Liability Housing Companies Act (1599/2009, as amended; in Finnish ‘asunto-osakeyhtiölaki’) is applied.

Electronic share register will supersede physical share certificates

Since 1 May 2019, it has been possible for housing companies to transfer the upkeep of their share register to the National Land Survey (in Finnish ‘Maanmittauslaitos’; hereinafter the “NLS”). All housing companies established on or after 1 January 2019 will automatically have an electronic share register and all housing companies established before that are required to apply for the transfer of the upkeep of the share register which must be completed by the end of 2022. As such, housing company share registers will be fully digitised during the next few years. Consequently, physical share certificates held by the shareholders will also be a thing of the past as, after the housing company has transferred the upkeep of its share register, each shareholder can apply for the registration of their ownership and the annulment of their physical share certificates.

A new shareholder in a housing company with an electronic share register is required to apply for the registration of their ownership and the annulment of any physical share certificates within two months of signing the deed of sale or, in the case of new housing, two months after the transfer of ownership. In any case, the shareholder is required to apply for the registration of ownership within 10 years of the transfer of the upkeep of the company’s share register to maintain their right to attend shareholder meetings. If the share certificate(s) matches the information on the electronic share register, the share ownership will be registered directly. Otherwise, the shareholder will be required to provide additional documentation proving their ownership, in practice, by acquiring a document signed by the Board of Directors of the housing company confirming the share ownership. After the registration of the ownership and the annulment of the physical share certificates, in all subsequent transfers of the shares, the new shareholder shall apply for the registration of its ownership. A prerequisite for the registration is the approval by the registered shareholder or some other form of clarification of the transfer.

For the time being, applications for the transfer of the upkeep of the share registers and the registration of the share ownership are handled by the NLS which maintains the new electronic register for housing company information. An electronic service specifically designed for the transfers is in progress and is scheduled to replace the abovementioned registration process sometime during 2020. Due to an anticipated initial flood of applications, it is recommended to wait for the introduction of this electronic service before applying for the transfer.

Electronic mortgage certificates replace physical ones in January

Meanwhile, the digitalisation process for physical real estate mortgage certificates has already advanced to its last stages and physical mortgage certificates will soon be fully replaced by their electronic counterparts. During the past few years, a transition into using electronic mortgages has taken place. This means that after the mortgage and the mortgage holder have been registered in the title and mortgage register, no physical mortgage note is given as a proof of the mortgage, but only a decision by the NLS regarding the confirmation of the mortgage. Electronic mortgages cannot be transferred physically, and all transfers must be done either via an electronic service maintained by the NLS or an application to the NLS. This amended procedure should be taken into account and reflected in real estate transaction documentation and mortgage transfers should be done electronically or mortgage transfer applications should be signed and provided as closing deliverables.

Since 1 June 2017, the NLS has only given mortgage notes in electronic form and starting 1 January 2020, mortgages in paper form will no longer be used as collateral. This applies to both new debt and existing debt. In practice, as there are still a fair amount of mortgage notes in paper form, it is highly likely that the NLS will receive a high volume of conversion applications as 2019 comes to a close, which means that the processing times may be slower than usual.

Taking into account that real estate law is traditionally quite static in nature and legislation is typically revised slowly and incrementally, these new digital systems have been introduced rather quickly. At the same time, electronic systems are very well suited for Finnish real estate law that already has highly-specific, well-maintained and trusted registers and there is certainly still much more room for digitalisation in the field.


HPP is constantly following this transformation of the real estate market. HPP aims to provide its clients with the most up-to-date advisory services and highlight the future possibilities for its clients involved in the real estate sector.


This is the second article of HPP’s Smart Building article series, where HPP’s real estate team members share their thoughts regarding the transformation of the market. Read more specifics about the regulation on electric vehicle charging in HPP’s Partner Leif Laitinen’s, Senior Associate Minna Juhola’s and Associate Trainee Johanna Heinonen’s upcoming post of this series.


Leif Laitinen

Oskari Kemppinen

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