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Swiss Civil Code (SR 210),
Articles 641 to 712t, 730 to 883 and 919 to 977
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Federal Ordinance on the Land
Register of February 22, 1910 (SR 211.432.1)
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Swiss Code of Obligations,
Articles 253 to 274g (SR 220)
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Federal Act on rent and lease of
housing and office space of May 9, 1990 (SR 221.213.11)
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Federal Act on agricultural land
rights of October 4, 1991 (SR 211.412.11)
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Federal Ordinance on agricultural
land rights of October 4, 1993 (SR 211.412.110)
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Federal Act on the Acquisition of
real estate by persons abroad of December 16, 1983 (SR 211.412.41)
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Federal Ordinance on the
Acquisition of real estate by persons abroad of October 14, 1984 (SR
211.412.411)
Related publication:
Swiss Property Law
Swiss law restricts acquisition of real estate by persons abroad. The
relevant provisions are constituted in the Federal Law on the Acquisition of
Real Estate by Persons abroad of December 16, 1983 (hereinafter "FLA") and
the Ordinance on the Acquisition of Real Estate by Persons abroad of October
16, 1984 (hereinafter "OA").
The term "person abroad"
applies to people who reside outside Switzerland and to people who reside in
Switzerland and are neither citizen of an European Community (EC) country nor
of an European Free Trade Association (EFTA) country nor hold a valid
settlement permit ("Foreigner Permit C"). Legal entities are considered as
persons abroad if they are incorporated abroad. Legal entities incorporated
in Switzerland are regarded as persons abroad, if persons abroad have
significant influence over the Swiss company by capital or by vote.
An acquisition of real estate involves not only the transfer of ownership to
a person abroad but also any transaction that gives a person abroad control
over real estate. Thus acquisitions of building lease, rights of residence (occupancy)
or usufructs rights on real estate could be an acquisition of real estate in
terms of the FLA as well as participation and investments in companies which
own real estate in Switzerland. Persons abroad do not need
an authorization to acquire real estate, if the real estate consists of a
permanent business establishment. Permanent business establishments are
factories, offices, shopping centres, doctors' practices etc. Acquisitions of
such real estate and investments in companies owning such real estate are
permitted. No authorization is needed either if a person abroad plans to
establish his main residence in Switzerland. In addition the following
persons are inter alia exempt from filling an authorization: legal heirs (e.g.
children, spouse, nephews and nieces) under Swiss law in a case of
acquisition by inheritance, relatives in line of ascent or descent from the
person disposing of the property and his spouse. If the
person abroad is bound to file an authorization, only few reasons justify an
approval by authorities: Banks and insurance companies may acquire a real
estate as a result of foreclosing a mortgage. An authorization may also be
issued if the real estate is used to secure staff pension schemes in Swiss
operations for personnel employed in Switzerland. Finally, based on cantonal
provisions, an authorization may be issued to acquire apartments in holiday
resorts within a given annual quota.
The authorization will be refused if the person abroad is not able to appeal
to an exemption in the FLA or a cantonal provision. Contempt of those rules
leads to an invalidity of the contract over the real estate and a prison
sentence or a fine up to CHF 100'000.00.
Sale and Purchase of Real
Estate
Sale and purchase of real estate is governed
by the Swiss Civil Code (hereinafter "CC"; SR 210) and the Swiss Code of
Obligation (hereinafter "CO"; SR 220). Conveyance of a real estate founded on
a purchase agreement requires a written contract. In addition, the contract
has to be authenticated by a notary. In Switzerland a notary verifies the
contract only with respect to formal faults and he states the party's will.
The transfer of title is completed by the registration of the new owner in
the Land Register, except of a company take over in terms of the Federal Law
on Merger, Demerger, Conversion and Transfer of Assets and Liabilities (SR
221.301). This act is executed by the Land Register Authority and
requires the request of the actual owner of the real estate. The entry in the
Land Register inheres in being true and correct. Everybody relying on this
entry will be protected if he or she appeals to the entry. The relevant file
does not only state the ownership of the real estate but also contains all
information about the relevant tract of land such as easements, pre-emption
rights, priority notices, mortgages, order of priorities, etc.
It is common practice to process the payment transaction
by means of a bank (irrevocable letter of credit). The payment is made at the
same time as the request of the seller to the Land Register Authority.
The fees for a registry usually depend on the market value of the real estate
and base on the purchase price. The amount varies between 0.1% and 0.3% of
the market value for each transaction. Additionally, transfer of real estate
may entail tax consequences which differ from canton to canton.
Rental agreements
The relevant provisions on rental agreements are stated in the CO. In a
rental agreement, the landlord agrees to place commercial or residential
property for a given or indefinite period of time at the lessees' disposal in
return for a monthly or quarterly compensation. Even if a rental agreement
has not to be in written form it is common to sign a contract.
During the rent period the lessee is obliged to deal with
minor repairs within the scope of regular maintenance, regardless of whether
he is reliable for the damage or not. In case of larger repairs the tenant is
entitled to ask the landlord for restoring it, for reducing the rental or for
paying for the damage.
If the owner of a real estate sells the building the
purchaser has to take over the actual rental agreement and the relationship
to the new owner basically remains the same as it was to the former owner.
However, the new owner is entitled to give notice to the tenant if he proves
an urgent need of the building by himself.
The contract provides either an infinite or a finite term.
To terminate an infinite contract either party has to give at least tree
months notice. In addition "customary dates" have to be considered which
confine a termination. In Zurich (as in most regions of Switzerland)
termination is possible on 31 March and 30 September, partly also on 30 June. At the moment
those dates seem to change and the last day of every month may become "customary
dates".
Frequently Asked Questions
What are common forms of property ownership?
The most common form of property ownership is sole ownership. Other ways of
ownership are joint-ownership, co-ownership or leaseholds. Whilst in case of
joint-ownership the rights over the property results from the legal
relationship between the owners (e.g. community among heirs, partnership) the
co-owners own the property in equal share of property. Condominium is the
ownership of an apartment or one floor in a building and is governed by
special rules. Leasehold is the right to construct a building and dispose of
it without owning the land on which the building is built. In return for this
right the owner of the building usually pays a ground rent to the owner of
the land.
What sorts of taxes are levied in case of an
acquisition of real estate? Owners of property have to
pay property tax on the real estate and income tax on revenues from the real
estate (rents or rental value). Finally fees and a tax are levied for the
transfer of a real estate (fees for the Notary, fees for the Registry Office
and - in some cantons - a tax for the transfer of real estate). In addition,
some cantons levy a property gain tax for the sale of real estate. The legal
transfer tax and fees are usually shared between buyer and seller whereas the
seller pays the property gain tax. What are possible
liabilities of a real estate owner? An owner of real
estate is liable for damages to neighbours and other affected persons which
result from a violation of the title of ownership. The owner is also
responsible for the maintenance of the building and is liable for any damage
caused by a result of insufficient maintenance or flawed construction. At
last the owner is liable to recover his ground from ground-pollution.
Especially the last point has to be borne in mind by envisaging an
acquisition of real estate if the ground was encumbered by former industrial
activities.
April 2006
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