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ACQUISITION PROCESS:
KEY STAGES
Authorization requirement
• The acquisition of non-commercial real estate by persons
abroad requires an authorization; the authorization
requirement applies to:
–– all real estate that is not used for trade or other
commercial activities, i.e. residential properties, land,
properties used by the state, etc. Also the acquisition of
shares in a company holding non-commercial real estate
is subject to authorization, unless – to put it broadly –
such property is of immaterial nature only;
–– private individuals and legal entities, namely
(i) to non-Swiss residents who do not have Swiss
nationality; nationals of a EU member state who are
resident in Switzerland and other non-Swiss nationals who
have a residence permit C in Switzerland are exempt from
the authorization requirement;
(ii) to legal entities incorporated abroad as well as to
entities incorporated in Switzerland if they are directly or
indirectly controlled by foreigners.
• An authorization is granted only in very few cases; for
properties acquired for investment purposes, an authorization
is usually not available. Foreign investors are thus precluded
from acquiring residential properties for investment purposes.
Negotiations
• As a preliminary step, a non-disclosure agreement is usually
proposed by the seller/agents in order to allow access to the
property, information and documentation.
• Often, the would-be purchaser issues a letter of intent which
(in case of an asset deal) is typically non-binding even if
marked as “binding”; a binding undertaking to purchase real
estate in Switzerland requires a notarised deed. Sometimes,
the would-be purchaser is asked to make a reservation
payment that accrues to the seller if the purchaser does not
sign and complete a purchase agreement.
• Discussions are sometimes pursued within the frame of a
preliminary agreement providing for an exclusivity period
during which the due diligence exercise is carried-out and
at the expiry of which the would-be purchaser is expected
to confirm its initial offer; more often, properties are sold
in private auctions with several bidders with two or three
phases.
Sale and purchase agreement (asset deal)
• A sale and purchase agreement for real estate (asset deal)
must be made in notarised form before a notary at the place
of the property in order to be legally binding.
• The agreements often follow typical standards that have been
developed in notary practice.
• The warranties provided by law are typically fully excluded in
the agreement but specific warranties are agreed between the
parties; the warranties typically comprise:
–– correctness and completeness of tenancy schedule; no
arrears in rent, no notices of termination etc.;
–– no registration in the register of contaminated sites;
eventually no knowledge of contaminations and
hazardous substances;
–– no legal pledges and workmen’s liens; no pre-emptive
rights;
–– no legal proceedings or orders by authorities relating to
the property, often qualified by seller’s knowledge;
–– in case of yet to be built properties (Off-plan sales) full
warranties for construction defects are typically given.
• The sale is completed by submitting the deed to the
land registry for registration. The payment is made after
registration:
–– in most German speaking cantons, the seller’s bank issues
a promise to pay addressed to the buyer according to
which the seller’s bank undertakes to pay the purchase
price to the buyer immediately upon the registration of
the sale in the land registry;
–– in most French speaking cantons and the canton of Ticino,
the notary typically acts as escrow agent.
COMMERCIAL LEASES
• Leases of buildings used for commercial purposes are covered
by the ordinary provisions of the Swiss Code of Obligations.
Duration
• The duration of the lease may be of indefinite term; indefinite
leases for commercial floors may be terminated with a notice
period of 6 month (unless a longer notice period is agreed), or
• Of a fix term in which case the lease cannot be terminated prior
to the expiration of the fix term (unless otherwise agreed):
–– the law provides neither for a minimum nor a maximum
duration; however, perpetual leases are prohibited
and leases of a very long duration may be found to be
excessively binding on the parties by a court; 20 or 25
years are however normally regarded as admissible by
market participants even if the tenant is granted one or
two extension options of e.g. 5 years;
–– whether a fixed term contract is automatically terminated
at the end of the fixed term or converted to a lease of
indefinite term if no notice is given depends on the
wording of the agreement.
• Often, extension options to extend the lease by an additional
fixed term are granted to the tenant (for example two options
of 5 years each).
Rent
• Rent may in principle be freely agreed between lessor and
tenant (while the tenant may challenge the rent within 30
days for duress or in case the rent has been substantially
increased compared to the last tenant; this is very rare for
commercial leases).
• Stepped rents and turnover rents are possible.
• In current market conditions in Swiss city centers, it is quite
usual that the parties agree on a rent free period of a few
month or a contribution by the lessor to tenant fittings.
• Rent is usually yearly adjusted in accordance with an
indexation clause; such indexation is only valid if:
–– the lease is entered into for a minimum duration of
5 years; and
–– the Swiss Consumer Price Index is followed.
• An adjustment requires a notice by the lessor to increase the
rent; the adjustment is not automatic; tenants must request
an adjustment in case of a decrease of the index.
114 Investors Guide to Europe 2015