Recognizing and avoiding stumbling blocks in the real estate purchase contract

When buying a home, there's a significant amount of money involved and it can have a major impact on your finances. It pays to be well-informed and to remove potential obstacles from the start. A key figure in this journey is the notary (or another certified individual in some cantons) who notarizes the purchase contract and ensures the sale is entered into the land registry. In this article, we will show you what to look out for in your purchase agreement.


Purchase contract

The core of a real estate purchase is the purchase contract

The contract regulates point by point the conditions, the price and the date on which the property will change hands. As a rule, the purchase contract is not drawn up by the parties themselves, but by a notary. The notary first writes a draft and then submits it to both parties for review and amendment. When receiving the purchase contract, make sure that it includes the following points.

  • Names and addresses of both parties

  • Description of the property: address, cadastral number, building insurance number (if available), land area

  • Purchase price

  • Payment of fees and taxes - in particular, the payment of real estate gains tax must be clearly regulated

  • For new properties: building description; for older properties: condition of the property at the time of handover

  • Terms of payment, payment modalities

  • Deadline for the transfer

  • Arrangements for the continuation of existing insurances - for example building insurance

  • Easements - must necessarily correspond to the information in the land register

  • Documents that are considered part of the contract - for example, a building description

  • Regulation in the event that one of the two parties does not comply with the contract

Tip: If individual points of the contract are legally incorrectly formulated in the draft or have been forgotten, the first thing you should do is agree on them with the seller. Only then should you commission the notary to make the changes, because repeated corrections can quickly run into money. The purchase contract is signed by you and the seller in front of the notary and then notarized by him. Normally, the notary also organizes the registration in the land register. Only when this entry has been made, you become the owner of your new home. 

As long as the purchase contract is not signed, it is generally possible to withdraw from the purchase agreement. However, if you have verbally agreed to the purchase and you unnecessarily delay the seller, they will claim their expenses (such as for drafting the contract) and may also demand compensation because new buyers need to be found. The situation is different if the contract has serious defects, for example, if important documents are missing or if there is deception. Then you can, of course, refuse to sign. Moreover, once the purchase contract has been signed by both parties and notarized, only the exit clauses agreed therein are binding. This may include, for example, a provision that declares the contract void if the seller does not receive the building permit within the stipulated time frame.

© This content was provided by Raiffeisen Casa.