Property Purchase: What You Need to Watch for in the Purchase Contract

The publicly notarised purchase contract is the basis for acquiring your property in Switzerland. In addition to personal details and the property description, it contains important provisions regarding fees, taxes, and securities. In order to avoid unpleasant surprises after conveyance, you should carefully review certain clauses.

The Cost Split: Who Pays What? 

In Swiss practice, a particular division of incidental purchase costs has become established. In many cantons, it is customary for notary fees and land registry fees to be divided 50/50 between buyer and seller.

However, it's important to know: this split is negotiable and not legally required (except in a few cantons with fixed fee structures). Make sure the agreed cost allocation is explicitly recorded in the contract so that you can accurately plan your budget for ancillary costs.

Securing the Capital Gains Tax

A critical point for you as the buyer is the property gains tax. This tax is levied on the increase in value of the property and must generally be paid by the seller. The problem: if the seller does not pay this tax, the canton has a statutory lien on the property. This means that, in the worst case, you will be liable for the previous owner's tax debts with your new property.

To eliminate this risk, there are two common approaches in the purchase contract:

1. Direct payment to the tax office: Part of the purchase price is transferred by the buyer directly to the cantonal tax office (as security).
2. Blocked account: The anticipated amount for the tax is paid into a blocked account and is only released once the final tax bill has been settled.

Possession and Transfer of Benefits and Risks

The contract specifies on which date "benefits and risks" are transferred to you. From this point on, you are responsible for the property but are also entitled to revenues (e.g., rent). Check that this date aligns with your financing and move-in date.

Advantages and Disadvantages of Clear Contractual Regulations 

Carefully reviewing the draft protects you against further financial demands. Here we summarise the most important points:

Advantages of precise regulations:

• Financial security: By securing the property gains tax, you are not liable for someone else's tax debts.
• Transparency: The 50/50 split of fees creates clarity regarding incidental costs.
• Legal certainty: Warranty rights and guarantees are clearly set out.

Disadvantages of unclear contracts:

• Cost risk: Without explicit regulation, you may end up paying a larger share of the fees.
• Legal liabilities: Missing securities may result in encumbrances on the land register.

Buying a property is one of the biggest financial decisions in life. Since cantonal differences within Switzerland can be significant, carefully reviewing the draft purchase contract is essential. We strongly recommend seeking advice and consultation with an expert. Our team will be happy to answer any questions you have about the purchase process.