VERIFICATION OR DUE DILIGENCE OF REAL ESTATE IN SWITZERLAND

It was in Switzerland that the concept of Due Diligence arose, where uniform rules and standards of Due Diligence were developed back in the 70s. At the same time, the term was finally formulated in the late 1980s and early 1990s, when the world economy gained significant momentum and M&A deals began to grow exponentially, and in parallel with them, other types of deals in other areas that required auditing and verification “purity” of the deal, i.e. Due Diligence.

Buying real estate in Switzerland is not difficult, but due to the large sums of money involved, it becomes much more important to check the chosen property. Fortunately, there are a number of ways to check this before making any deals, and our local consultants recommend focusing on the following:

• documents for real estate for purchase;
• if the property is the subject of legal proceedings or disputes between heirs or other parties;
• if the property was purchased under a mortgage that was or was not repaid at the time of sale;
• if there are any encumbrances on the property, including unpaid bills.

While some checks can be done at the Swiss Land Registry, especially the legal aspects of the deal, others require the attention of construction professionals and/or architects. A comprehensive property inspection is not a difficult or time-consuming task if that is your concern, so you can rely on our agents who are at your service and can resolve urgent matters in short order.

Property inspection procedure

A comprehensive property inspection is a process that covers several key areas such as legislation, taxes, environmental safety or the actual construction of the building. A comprehensive real estate inspection will include:

• legal examination of real estate: any sales contracts or previous lease contracts;
• tax audit: property taxes, inheritance taxes or income taxes, if the property is purchased by a company in Switzerland;
• technical examination: verification of construction plans, obtaining permits for further construction in the building or making changes to repair works; structural quality of the building;
• environmental audit: issues of pollution, building water supply, energy consumption;
• financial expertise: a look at the costs and future possibilities of resale of the property.

Taken together, all this information will provide a complete analysis of the current situation in the building. These elements can be important when buying real estate and can help a buyer decide whether the deal will be profitable over time.

Appraisal of real estate in corporate transactions

While buying real estate as a private individual is straightforward and the procedure can be completed within a few weeks, in the case of large deals involving commercial buildings or industrial sites that are part of business assets, real estate valuation is key in Switzerland. This procedure implies a thorough analysis of the property from two important points of view: the value of the property and its market value as a means of capitalization. In addition, investors may also want to check the area the property is located in and assess whether it has the potential that the prospective owner wants.

What to pay attention to when buying real estate in Switzerland

The administrative organization of Switzerland is based on the cantons, which have their own rules, which is one of the most important aspects when choosing to buy real estate here. Each canton may have limits on the amount of real estate that can be sold to foreigners.

Here are some things to consider if you are interested in buying a house or apartment as a foreigner in Switzerland:

• Bern is one of the cantons where only 50% of real estate can be sold to foreigners;
• in Bern, in particular in the Grindelwald resort, the minimum value of real estate that foreigners can buy is set at 750,000 Swiss francs;
• on Vale and B, real estate bought by foreigners can be resold after 5 years;
• costs associated with the purchase of Swiss real estate are usually between 2.5% and 3.8% of its value in any canton.

Swiss real estate market

The Swiss real estate market offers investment opportunities in both residential and office buildings. The country is known as a country with a high quality of life and as a tourist destination. Many investors who decide to buy real estate do so with a clear business goal in mind. Switzerland has a Land Registry that contains information on properties and owners, cadastral plans and geological data.

What you need to check before buying land, a house, an apartment or any other real estate object:

• Emergence of the object and the first right of ownership. Most often, the law is violatedsty is allowed precisely at the stage of construction and registration of ownership. That is why it is important to check how the right to build arose, the origin of the land, who built it and on what basis, whether there were any conflicts or disputes during construction.
• Analysis of previous owners. It is very important to understand the order of change of owners and who they actually are, from the very first to the last. This can be done either by analyzing all agreements of purchase, sale, donation, etc., or through the relevant registers.
• What is the status of the real estate object. It is necessary to examine the documents on the basis of which the last registration of ownership took place, whether such ownership is currently encumbered by arrests or bans on registration actions, the absence or presence of legal disputes and decisions regarding the real estate object.
• Physical inspection of the real estate object. Verification of technical compliance characteristics of permit documentation. It often happens that the previous owners changed something and did not make appropriate corrections and changes to the technical documentation, which in the future can lead to at least additional costs for the legalization of such changes, or even to the unfitness of the object for use and significant investment losses.

Based on the results of the inspection of the investment object in Switzerland, you will receive a conclusion of our campaign, which will reflect all the stages of the inspection with identified shortcomings and remarks, as well as an investment conclusion regarding possible risks, if any are identified. Legal inspection of real estate in Switzerland does not consist in gathering information from open sources on the Internet, but in a thorough understanding of legislation in the field of construction and experience in working with construction and judicial activities.

Our Swiss company registration consultants can provide additional information on real estate valuations, especially when dealing with transactions involving large sums. We are also at your disposal if you want to open a Swiss company and need help registering one of the legal forms available in this country.