Legal Compass Switzerland: Real Estate

1. Practice until 31 December 2025

In work contracts for construction of new buildings, the parties are largely free to agree on terms that deviate from statutory law. In this context, defect rights are of particular importance, as they provide the building owner or property purchaser (hereinafter referred to as the “Purchaser”) with legal remedies after the delivery of the building.

In practice, one frequently encounters one-sided contractual clauses under which the contractor fully assigns its defect claims against its subcontractors to the Purchaser, thereby attempting to release itself from any liability. This practice, which is relatively common, makes it considerably more difficult for the Purchaser to enforce warranty claims effectively. In many cases, the Purchaser does not even know which subcontractor to action, as the completed building is the result of the work of numerous parties.

In addition, statutory law currently requires defects be reported immediately. Such a short notification period is highly unsatisfactory for Purchasers, particularly in the case of large construction projects. In practice, however, SIA Standard 118 is often applied, which provides for a two-year period for reporting defects, at least in respect of apparent defects.

Policymakers have recognised these shortcomings and have partially amended the rules on defect notifications under the Swiss Code of Obligations with effect from 1 January 2026.

2. New provisions effective as of 1 January 2026

The amendments affect both the law governing sale contracts and work contracts, as in practice it is often largely coincidental whether a sale and/or work service applies.

2.1 60-day period for notification of defects

Purchasers of newly built properties — i.e. buildings that are yet to be constructed or that were completed less than one year prior to the sale — are now entitled to a mandatory 60-day period for the notification of defects, which may not be shortened by contract. In the case of apparent defects, the period begins upon transfer of possession; for latent defects, it begins upon discovery.

These mandatory provisions apply both to land and to works that are incorporated into another work (for example, window frames). The 60-day period may not be contractually amended.

The limitation period for defect claims is five years and may not be reduced to the detriment of the Purchaser. This corresponds to the standard limitation period under SIA Standard 118.

2.2 Mandatory right to rectification

For new buildings, Purchasers are also granted a mandatory right to free rectification of defects vis-à-vis the contractor. The contractor may not, in advance, assign its right to rectification against its subcontractors to the Purchaser. The seller therefore remains the Purchaser’s primary point of contact in the event of defects and cannot evade liability.

These provisions apply not only to defects in traditional real estate, but also to building rights as well as co-ownership interests in land, in particular condominium ownership.

2.3 Transitional provisions

Contracts concluded on or before 31 December 2025 remain subject to the previous law. The above-mentioned amendments therefore apply only to contracts entered into on or after 1 January 2026.

3. Conclusion and recommendation

With the new rules effective from 1 January 2026, building owners and property purchasers will benefit from enhanced legal protection. In practice, however, the new 60-day period for reporting construction defects is unlikely to bring about significant change, as SIA Standard 118 already applies to most construction projects. This standard provides a two-year notification period for apparent defects. Similarly, the new five-year limitation period for defect claims is not genuinely new, as it is already commonly applied in practice — and in the case of intentionally concealed defects, a ten-year limitation period even applies.

The amendment that will have a truly noticeable impact concerns the right to rectification for new buildings: the right to have defects remedied may no longer be excluded in advance. This means that contractors are obliged to remedy defects even if a contract concluded after 31 December 2025 provides otherwise. The previously widespread practice of assigning all defect rights — including the right to rectification — against subcontractors to the Purchaser will no longer be permissible.

SIA Standard 118 will need to be amended in certain respects to reflect the new mandatory legal provisions; however, this has not yet occurred. Where this standard conflicts with the new mandatory law, it is therefore inapplicable, even if the parties have contractually agreed otherwise.

We strongly recommend reviewing work contracts and sale contracts to ensure compliance with the applicable law. We would be pleased to provide you with our expert legal advice and support.