Insights into buying real estate.

Author:Labbruzzo, Dominique Calco
Position:Business: legal column
 
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In Switzerland, property purchases (asset deals) are subject to special regulations, and other peculiarities. Following is a quick overview of the second homes initiative, the Federal law of 16 December 1983 on the acquisition of real estate by persons abroad, formal requirements of the purchase contract, acquisition of land and warranty.

The second homes initiative

On March 11, 2012 Swiss voters resolved to impose severe restrictions on the construction of second homes in Switzerland. The popular initiative entitled "Stop the Endless Construction of Second Homes" calls for the proportion of second homes in a municipality to be kept at 20% or lower. According to the Ordinance on Second Homes, all homes not continuously used by persons domiciled in the commune, or used by persons for gainful or educational purposes, are deemed to be second homes. Owners of second homes will still be able to sell or bequeath their properties as second homes in the future, but the future halt to construction will trigger a shortage of supply. Therefore, their existing second homes are unlikely to be sold or sell at substantially higher prices than before, as with their current primary property, they will have practically no opportunity to build another second home. The Swiss Federal Supreme court ruled on May 22th 2013 (decision 1C_646/2012) that the initiative entitled "Stop the Endless Construction of Second Homes" was valid since its vote on March 11, 2012. As a result of this, many construction permits, which were issued after this date, are void. This means a financial loss for many landlords and a victory for the ecological fighters.

Restrictions on the acquisition of real estate by persons abroad

The Federal law of 16 December 1983 on the acquisition of real estate by persons abroad restricts the acquisition of real estate in Switzerland by foreigners, by foreign-based companies or by Swiss-based companies controlled by foreigners. As a rule, these categories of persons need an authorisation from the competent cantonal authority. Responsibility for enforcing the federal law on the acquisition of real estate by persons abroad falls primarily upon the canton in which the real estate is located. The authority designated by the canton will decide whether or not a legal transaction requires authorisation and is also responsible for granting or refusing that authorisation. The following persons do not require authorisation to purchase real estate in...

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