Defect rights on acquiring residential property
Property within the legal sense not only includes real estate, but also co-ownership shares for property or condominiums, for example owner-occupied apartments or independent and permanent rights entered in the land register, such as building rights (Art. 655 and 779 et. seq. of the Swiss Civil Code (SCC)).
If there is a new, newer, or renovated building or construction on the acquired property, then not only do the norms of buying property in accordance with Art. 216 et. seq. of the Swiss Code of Obligations (SCO) apply, but rather – depending on the will of the parties – also the norms of the work and services contract in accordance with Art. 363 et. seq. of the SCO (this governs the building of a house). When consulting architects, the provisions of the corresponding order in accordance with Art. 394 et. seq. of the SCO apply in addition to those of the work and services contract for sub-projects (e.g. for the creation of plans).
Oftentimes, the application of SIA standard 118 is agreed. This is a collection of norms compiled by the Swiss Society of Engineers and Architects, which comprises conditions for construction work. More details are provided below.
The following explains who is liable for defects under which circumstances and shows what steps you can take with our sample documents. First we explain the legal situation according to the law, or what the situation is when no SIA standards have been agreed.
What is a defect?
A defect exists if during the handover, the object does not meet the agreed or required condition. “Agreed” is considered to be characteristics whose existence were expressly assured to the buyer by the seller (e.g. construction volume or number of rooms). “Required” relates to characteristics that can be expected without any special agreement – characteristics that are required for the intended use as a place to live (e.g. that the roof does not leak).
There are no defect rights if
- the buyer knew of the defect, or
- the liability of the seller for the defect was effectively excluded in the purchase agreement.
The seller of the property is obligated to inform the buyer of facts that are obviously important to the buyer’s decision to buy, for example to describe the state of the property and notify the buyer of previous damages or defects.
What do I have to do so that I don’t get left with the costs of a defect?
The buyer must check the property immediately after the purchase and report defects they discover to the seller immediately. It must be clear from the notification that you intend to hold the seller liable for the defect. For this reason, within the legal sense it is not only considered a notification, but rather also a complaint. To prove that the complaint has been made at the right time, it is advisable to send it by registered mail. A word of warning: The complaint does not yet stop the limitation period.
Can I send it at any time?
You can only complain about a defect and hold the seller liable during a certain time period. For property, this is five years from the time of purchase, i.e. from the entry as owner in the land register. Exception: If the seller intentionally concealed defects from the buyer, then the defects concerned can be claimed within a ten-year period. You can find more exceptions in our fact sheet.
If longer terms are contractually agreed, then these apply.
It is not enough to submit a complaint by registered mail to comply with the relevant deadlines. Rather, to interrupt the limitation period, one of the following is required:
- The counterparty acknowledges the claim
- An interest or partial payment from the counterparty
- Debt collection proceedings or a lawsuit
- Bankruptcy.
What are my rights in the case of a defect?
You can either
- decrease the purchase price (reduction),
- rescind the purchase agreement (in the case of severe defects),
- or, if contractually agreed, implement a repair.
In addition, you can also claim consequential damages from the seller, if for example, you have to move into temporary housing. However, this only applies if the seller is at fault.
What do I need to know if I buy an existing house (old construction)?
Since sellers of existing houses usually do not want to be held liable for any defects, exclusions for defect liability are usually made. These may include the following, for example:
“The parties acknowledge they are aware of Art. 192 et. seq. of the Swiss Code of Obligations. Any guarantee for material defects or defective title of the purchased object is explicitly excluded on the part of the seller. However, according to the provisions of the Swiss Code of Obligations, the seller is still liable for defects they are aware but that they maliciously concealed from the buyer.”
Such clauses are permitted. As a buyer, it thus all the more important to assess the house in detail before making the purchase, and ideally with the assistance of experts.
What do I need to know if I buy a new build?
Very often when buying a new build or a house that has yet to be built, contractually amended defect rights apply. As mentioned above, the SIA standards are usually included as a part of the contract.
What do they specify?
The SIA standards are a very comprehensive set of rules, almost like law. We have listed a few important points here, which apply when SIA standards are included:
- In the first two years after transfer of ownership, a defect can be claimed at any time, meaning it does not have to be reported immediately after its discovery as is otherwise the case. Several defects can thus be compiled and then reported together within the first two years.
- The above-mentioned right to remedy is also included (this is not otherwise provided for by law)
- But you can first require only the remedy of the defect, not an immediate reduction or even compensation.
More detailed information and what exactly you must bear in mind when SIA standards are a part of your contract can be found in our fact sheet.
Sometimes the sellers of a new build cede their claims against the contractors and planners (as they had the building constructed) to the buyers. That means that for each defect, the buyer themselves must deal with the party at fault. However, such a clause can be problematic. The reasons for are as follows:
- The terms for making a complaint run separately depending on when the work was completed. In other words, if a tradesperson has finished their work during an earlier stage of construction, then the period starts from that time.
- Oftentimes, important documents are held by the seller and not the buyer, meaning it is very difficult to proceed against a tradesperson at fault without the involvement of the seller.
- Certain defects cannot be traced back to a single party. In this case, it is easier if the seller has to be held liable.
- Many contacts for many defects instead of one contact for everything (seller).
Summary
- Clauses that limit or exclude liability for defects are permitted. Learn the exact details of the property to be purchased and get help from experts.
- If liability for defects has not been limited, then document the defects.
- Defects must be reported immediately (exception: see SIA standards). Note that first you must report the defect immediately, and then comply with the five-year limitation period. See the information provided above if you have to interrupt this period.
The following document contains additional information on defect rights. In this document, we have also included a sample for a handover report and notice of defects.