Purchasing real estate in Switzerland is a significant investment that presents both opportunities and challenges in terms of legal considerations. This brief guide aims to help avoid common pitfalls and make the purchasing process as smooth as possible.
Do’s – What to consider
1. Check legal requirements
Before purchasing a property, it is crucial to assure whether, as a buyer, you are authorized to purchase real estate in Switzerland. Specifically, for foreign buyers, there are specific restrictions under the Federal Law on the acquisition of land by foreigners (LAFE or more commonly “Lex Koller”). Furthermore, it is necessary to verify whether the property can be used as a primary or secondary residence under the law on secondary homes.
2. Request a Land Registry Extract
A look at the land register extract is essential. It provides information on property rights, easements (such as right of passage), and real estate charges (such as mortgages) that affect the property. However, this is not always enough. The property should always be inspected to verify wether any situations not mentioned or listed differently in the land registry are actually present (keyword: natural publicity).
3. Have the Purchase Agreement reviewed by a lawyer
The purchase agreement should absolutely be reviewed by a specialized lawyer. Important clauses regarding the purchase price, payment terms, transfer of ownership, and liability must be clearly defined.
4. Ensure financing in advance
The financing should be secured before signing the purchase agreement. The bank will assess repayment capacity, review the amount of personal funds, and evaluate long-term financial sustainability.
5. Check building regulations
Before purchasing, one should verify if there are any building or usage restrictions. Cantonal and municipal building regulations may significantly limit the potential uses of the property.
Don’ts – Mistakes to avoid
1. Signin without legal verification
Many buyers hastily sign a purchase agreement without having it reviewed by a lawyer in advance. This often leads to unexpected obligations and unforeseen financial risks.
2. Neglecting defects
A preliminary visit to the property with an expert (architect or building surveyor) can help to quickly identify hidden defects and is strongly recommended.
3. Failing to set aside funds for additional costs
In addition to the purchase price, you should also consider notary fees, transaction taxes, and potential renovation costs. Inadequate financial planning can lead to financial difficulties.
4. Neglecting easements and encumbrances
Easemenst, such as rights of passage or residential rights, can limit the use of the property. It is essential to check them before purchasing.
5. Assuming that every property can be used as a vacation home
In Switzerland, using a property as a secondary residence or vacation home is subject to strict regulations. Due to thelaw on secondary residences, use may be restricted in certain municipalities. Especially in highly sough-after tourist areas, there are municipalities where the construction and conversion of properties into secondary homes are heavily regulated or even prohibited. If you wish to use a property as a primary or secondary residence, you should verify whether this is allowed in the relevant municipality and whether any available quotas have already been exhausted. Otherwise, the intended use may not be feasible.
For any questions, Andrea Franco Stoehr (Partner, andrea-franco.stoehr@nist-law.ch) is at your disposal. You can also contact us at +41 81 851 09 10 | info@nist-law.ch, we will be happy to assist you.