§ 5-14. When can the bank terminate a credit agreement?
Machine-translated from Norwegian. The Norwegian text is the one that applies. Read the original in Norwegian.Norsk English العربية Polski Українська
In brief
- The lender (kredittyter) can terminate a credit agreement (kredittavtale) with no end date only if the agreement allows it and there are reasonable grounds.
- For consumers (forbruker), the notice period is at least two months, while the customer's (kunde) own notice period can be at most one month.
- The notice must be in writing and state the reasons, the payment deadline and information about complaints.
- For a fixed-rate loan (fastrentekreditt), the agreement can rule out termination during the fixed-rate period.
The text of the law (unofficial translation)
§ 5-14. The lender's notice of termination
What does this mean?
This section sets the limits for when a lender can end a credit agreement that has no end date. The lender needs two things: the agreement must allow termination, and there must be reasonable grounds. If the customer is a consumer, the lender must give at least two months' notice. The customer has the opposite starting point under § 5-13: the customer can end the agreement at any time, and an agreed notice period for consumers can be at most one month. The lender must have grounds and give plenty of time, while the customer can leave without giving reasons.
The agreement can also bind the lender. With a fixed-rate loan, where the interest and other costs are fixed for a period, the parties can agree that the lender may not terminate for as long as the period lasts. Example: a customer has agreed a fixed interest rate for a period, and the agreement rules out termination during that period. The lender then cannot use its right to terminate until the period is over.
The notice of termination (oppsigelse) must be in writing, and the notice period starts to run when the customer receives the notice. When the period is over, the lender no longer has a duty to keep the agreed credit facility open. The notice must at the same time state why the agreement is being terminated, how long the customer has to pay what is owed before late payment interest applies, and how the customer can complain. The complaints part is linked to § 3-53. That section requires the service provider (tjenesteyter) to have good complaints procedures and to reply to complaints in writing. On termination, the customer must also be told about the right to complain and about the possibility of dispute resolution before a complaints board (klageorgan).
The fourth paragraph brings in two rules from § 5-13. The customer must continue to pay instalments, interest and costs under the agreement until the debt is repaid, and the lender can demand the money back no earlier than the time from which the termination takes effect. The customer is also entitled to a proportionate share of fees and costs paid in advance for the period after termination. The section is also linked to § 5-15 on blocking (sperring), which is another tool for the lender. Blocking requires that the conditions are set out in the agreement and that objectively justified reasons support it. Under § 5-10, the lender also cannot charge a fee or other payment beyond what has been agreed in writing.