SWITZERLAND Law and Practice Contributed by: Francis Nordmann, Johannes Bürgi, Christian Eichenberger, André Kuhn and Sabrina Kunz, Walder Wyss Ltd
2.8 Permitted Uses of Real Estate Under Zoning or Planning Law Based on the applicable building law, the buyer usu - ally has some certainty regarding the permitted uses of a property. In case of any uncertainty, the issue can be discussed with the competent authority, which can also impose specific rules for a property or area. 2.9 Condemnation, Expropriation or Compulsory Purchase Governmental taking of land, condemnation, expro - priation and compulsory purchase are possible. The proceedings vary, depending on whether the expro - priation is based on federal or cantonal law. However, the landlord has constitutional rights under all relevant proceedings, and is usually fully compensated. 2.10 Taxes Applicable to a Transaction In most cantons, cantonal and/or municipal real estate transfer taxes apply to the transfer of real estate. Gen - erally, the buyer pays the tax, but the seller is jointly and severally liable for payment. The rates range between 1% and 3.3%. It is not uncommon for the parties to contractually agree to share the transfer tax. In some cantons, there is no real estate transfer tax in share deals. Also, corporate restructurings (includ - ing of real estate companies) do not generally trigger transfer taxes and similar charges. Further exceptions are regulated in Article 12 (3) of the Federal Act on the Harmonisation of Direct Taxation at Cantonal and Communal Levels. Most cantons that impose real estate transfer tax can secure their corresponding tax receivables by a first-ranking legal lien on the real estate. In addition, the transfer of real estate is subject to cantonal and/or municipal land registry and notary fees. 2.11 Legal Restrictions on Foreign Investors Foreign ownership of residential real estate and, to some extent, land reserves is restricted by the Lex Koller. In the case of an infringement, the transaction can be deemed void, which can even lead to criminal sanctions. Transactions that have a similar effect to ownership should be examined on a case-by-case basis, as the Lex Koller governs not only the mere ownership of residential real estate, but also aspects such as financing, long leases, etc. Exceptions exist
transactions should be examined on a case-by-case basis. 2.5 Typical Representations and Warranties The warranties typically given by a seller within a share deal include corporate warranties relating to the cor - rect organisation and valid existence of the company, accurate presentation of the financial statements, and title to shares. Other important warranties relate to the accuracy of rent rolls, and the due diligence informa - tion being accurate, complete and up to date. Moreo - ver, specific tax representations are usually contained in the purchase agreement. In both asset and share deals, the seller does not usually provide any war - ranty as to the substance of the building. The seller’s other representations are often qualified by the seller’s knowledge. In share deals, most of the seller’s warranties are often capped at a certain amount – eg, 10% of the asset’s price. However, such cap normally does not apply to the seller’s title in the shares. In case of any misrepre - sentation, the seller is liable to compensate the buyer for any damage incurred. In share deals, part of the purchase price is often held in escrow for a limited period of time in order to protect the buyer. Representation and warranty insurance is very unu - sual in real estate transactions. 2.6 Important Areas of Law for Investors Contract law, property law, building law, lease law and environmental law are the most important areas of law for an investor to consider when purchasing real estate. 2.7 Soil Pollution or Environmental Contamination Basically, the buyer of a real estate asset is responsible for soil pollution or the environmental contamination of a property even if they did not cause the pollution or contamination, since the legal owner of the property is partly liable for contamination of the real estate, even if contamination took place pre-ownership. Moreover, a landlord can be held responsible for pollution caused by its tenant.
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