98 | Investor Guide to Europe 2014
aCQuISITIon PRoCESS:
KEY STaGES
Î
authorization requirement
•
The acquisition of non-commercial real estate by persons
abroad requires an authorization; the authorization require-
ment applies to:
-
all real estate that is not used for trade or other com-
mercial activities, i.e. residential properties, land, proper-
ties used by the state, etc.
- private individuals and legal entities, namely
(i) to non-Swiss residents who do not have Swiss natio-
nality; 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 pro-
perties acquired for investment purposes, an authorization is
usually not available. Foreign investors are thus precluded to
acquire residential properties for investment purposes.
Î
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 notarized deed. Sometimes,
the would-be purchaser is asked to make a reservation pay-
ment 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 pre-
liminary 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 auc-
tions with several bidders with two or three phases.
Î
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 hazar-
dous 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 a
re typically given.
•
The sale is completed by submitting the deed to the land re-
gistry 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.
Î
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 termina-
ted prior to the expiration of the fix term (unless otherwise
agreed);
-
the law provides neither for a minimum nor a maxi-
mum 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 termina-
ted 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).
Î
Rent
•
Rent may in principle be freely agreed between lessor and
tenant (while the tenant may in principle challenge the rent
within 30 days for duress or in case the rent has been substan-
tially 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 contribution by the lessor to tenant fittings.
- Evolution of the rent during the initial lease
. 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
