Real Estate, Switzerland updates

Federal Supreme Court decision on compensation due to limitation of secondary homes
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 16 November 2018

The Federal Supreme Court recently addressed for the first time whether the prohibition to build secondary homes on private property entitles landowners to compensation. The court ruled on the consequences of the withdrawal of a previously established right through an amendment of the law and clarified that the concept of private property is not a fixed notion inaccessible to change. There is no entitlement to a permanent definition of the concept of private property.

Federal government drops plan to tighten rules on foreign real property investments
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 29 June 2018

In March 2017 the federal government submitted to public consultation several proposals to amend the legal regime governing foreign investments in Swiss real property. The vast majority of the comments received rejected the proposed amendments. While the government subsequently dropped its plan to amend the Lex Koller and a related ordinance, certain pending parliamentary motions may impact the Lex Koller regime in the medium term.

Levy on added value of land resulting from planning measures
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 27 April 2018

Swiss legislation provides for adequate compensation for considerable advantages and disadvantages resulting from spatial planning measures. In particular, land that is newly allocated to a building zone substantially increases in value. Owners of such land will benefit from spatial planning activities without any contribution on their part. For reasons of fairness, these benefits are subject to a levy which is supposed to 'skim off' part of the added value.

Legislative developments in land-use planning
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 24 November 2017

The proposed second part of the Spatial Planning Act revision will give the cantons more flexibility with regard to construction activities outside building zones so that they can consider their individual needs more appropriately. An initiative to stop uncontrolled urban sprawl will oblige the federation, cantons and communities to freeze the present size of building zones and ensure that the zones grow no further.

Federal Supreme Court stops property sale between foreigners
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 14 July 2017

Foreign investments in Swiss real estate are governed by a federal law known as the 'Lex Koller' and additional cantonal rules. The law restricts the acquisition of residential real property by non-Swiss residents. In a recent decision, the Federal Supreme Court decided for the first time that the sale of a vacation home between two non-Swiss residents is allowed only in designated communities. The decision stops a long-standing practice of the cantonal authorities.

Swiss inventories of second homes published
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 05 May 2017

An initiative adopted in 2012 led to a constitutional amendment limiting the total number of second homes in any municipality to 20% of the total number of residential units existing in the concerned municipality. Each municipality is obliged to keep an inventory of all homes and to update it by the end of each calendar year. The Federal Office for Spatial Development recently published the inventories of second homes for the first time.

Stricter rules for foreign investments in Swiss real property?
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 07 April 2017

Even though the federal Parliament recently rejected two motions to tighten the legal regime governing foreign investments in Swiss real estate, the federal government has now submitted a number of proposals that head in the same direction. Under the guise of closing loopholes and improving law enforcement, a substantial tightening of the legal regime governing foreign investments is under discussion.

Federal Supreme Court decision on building in noise-affected areas
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 16 December 2016

Swiss environmental laws provide for certain requirements to allow new building zones and new buildings in areas that are affected by noise. To assess compliance with these requirements, noise measurements are required. In a recent decision, the Federal Supreme Court decided that a widely used method of measurement – so-called 'ventilation-window practice' – is not compatible with legal requirements.

New register of public law restrictions on land ownership
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 04 November 2016

The cadastre of public law restrictions on land ownership (PLR cadastre) is being developed by the federal government and the cantons. It is one of the three cornerstones of the Swiss cadastral system, besides the land register and cadastral surveying. Whereas information on private law restrictions can be obtained from the land register, the PLR cadastre provides information about the most important public law restrictions on land ownership.

Brexit vote: time to buy Swiss real estate?
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 01 July 2016

Following the United Kingdom's EU referendum, the legal situation of UK citizens – particularly those living in Switzerland – is likely to change in relation to Swiss real estate. Until Brexit takes legal effect, UK citizens with legal and actual Swiss residence may be treated as Swiss residents and thus may acquire Swiss residential properties without restriction. However, this should change once Brexit takes legal effect.

Access to land register information
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 03 June 2016

The Civil Code and the Federal Ordinance on the Land Register govern formal and substantive land register matters, including land register management, access to register information and the legal effect of register entries. Even though land register matters are mainly governed by federal laws, the registers are kept by cantonal authorities. Thus, land register information should be requested from the cantonal authority at the place of the concerned property.

Non-Swiss residents can own several holiday homes in exceptional cases
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 13 November 2015

A non-Swiss resident inherited one Swiss holiday home and already owned another. The question arose of whether he had to sell one of the properties due to restrictions on the acquisition of Swiss real estate by non-Swiss residents. The Federal Supreme Court confirmed that the rule that non-Swiss residents may acquire only one holiday home does not apply to legal heirs.

Parliament adopts new federal rules on second homes
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 24 July 2015

In March 2015 Parliament adopted the Federal Act on Second Homes, which is expected to enter into force in early 2016 and will govern the final implementation of the new rule restricting second homes. The relevant constitutional provision states that no more than 20% of the total number of residential units and of the gross residential floor area in any municipality may be used as second homes.

Federal Supreme Court decision on standing to challenge lease termination
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 17 April 2015

The Federal Supreme Court recently considered whether a co-tenant had standing to challenge wrongful termination of a lease contract on her own. It stated that a lease contract cannot be terminated for one co-tenant only; therefore, all parties concerned must participate in an action challenging the lease termination. However, this does not mean that all co-tenants must be on the same side of the bar.

Federal Supreme Court decision on lease termination during blocking period
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 10 April 2015

The Federal Supreme Court recently had to decide for the first time whether challenging the termination of a lease during conciliation or court proceedings requires the landlord's knowledge of the pending proceedings. It concluded that protection against untimely termination applies from the start of the proceedings until a final decision is rendered, irrespective of when the landlord becomes aware of proceedings.

Federal Supreme Court decision on lease termination for late payments
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 02 April 2015

The Code of Obligations provides that where a tenant is in arrears with rent or charges, the landlord may set a time limit for payment and notify the tenant that in the event of non-payment, it will terminate the lease. The Federal Supreme Court recently confirmed that this provision must be applied strictly, as its purpose is to ensure that landlords are paid on time and leases are terminated in case of late payment.

Federal Supreme Court decision on non-use of official form for new leases
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 27 March 2015

In the event of a housing shortage, the cantons may make it obligatory for a landlord to use an official cantonal form when contracting a new lease which indicates the rent paid by the previous tenant. The Federal Supreme Court recently confirmed that failure to use the form does not lead to the nullity of a lease contract as a whole, but only to the nullity of the rent fixed in the lease.

Federal Supreme Court decision on rural land rights
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 28 November 2014

Certain restrictions and approval requirements apply to agricultural businesses and agricultural land, and the sale of such businesses or land requires approval. The Federal Supreme Court recently held that a leaseholder's pre-emptive right is subject to the main asset test and requires that a majority of shares be transferred.

Latest developments in foreign real property investments
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 11 July 2014

Foreign investment in Swiss real estate is governed by a federal law known as the 'Lex Koller'. The government recently announced a revision of the Lex Koller in order to address certain enforcement problems and loopholes. A popular initiative may follow to tighten the regime, but it would take several years before such changes to the law were legally effective.

Transfer of lease regarding commercial premises – effects on sublease contract
Pestalozzi Attorneys at Law Ltd
  • Switzerland
  • 28 March 2014

The Federal Supreme Court recently confirmed that the contract for the transfer of a lease is a contract between the former tenant and the new tenant, and that the landlord's written consent is a condition precedent for the validity of such a contract. In case of a transfer of a main lease, and without any reservation under the transfer contract, a sublease for the same lease object ends with the main lease.

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