| RAMZI CHAMAT | OAKS GROUP
The reform of Swiss construction defect law, which will enter into force on 1 January 2026, marks a clear shift in the legal framework governing real estate development projects. Behind what may appear to be targeted technical adjustments—the extension of the defect notification period and the mandatory nature of the right to rectification—lies a far more significant development: a substantial strengthening of the external liability borne by real estate developers.
Although officially presented as a measure to enhance buyer protection, the reform primarily acts as a stress test for existing contractual balances within the property sector. It places developers squarely at the centre of legal risk, regardless of their operational involvement in the construction process. In an environment where real estate projects are increasingly complex, fragmented and financially constrained, this evolution requires a careful reassessment of contractual structures and a rigorous anticipation of long-term economic consequences.
The amendment to the Swiss Code of Obligations reflects a clearly articulated political intention to correct imbalances identified in practice. Authorities have long observed that extremely short defect notification periods—often contractually reduced to just a few days—no longer align with the technical realities of modern buildings or with purchasers’ genuine ability to identify defects that may be complex, hidden or only become apparent over time.
The reform, communicated in particular through the Federal Procurement Conference, does not dismantle the overall architecture of Swiss construction law. Instead, it operates with precision, neutralising contractual practices that had become standard while preserving the principle of contractual freedom. This approach reflects a pragmatic legislative philosophy: strengthening legal certainty without destabilising the market, but by clearly rebalancing bargaining power where it had tilted too far in one direction.
Prior to the reform, liability for construction defects was governed by a highly formalistic system that could be used as a risk management tool. Purchasers were required to notify apparent defects immediately upon delivery, failing which all rights could be forfeited. Combined with the possibility of contractually shortening these deadlines even further, this framework significantly limited the exposure of sellers.
In the context of real estate development, this system encouraged a dilution of legal risk. Developers could rely on restrictive clauses to curtail purchasers’ rights, while internally allocating responsibility to the general contractor through separate contractual arrangements. Disputes frequently focused on whether notification deadlines had been respected, rather than on the substantive conformity of the building itself. Over time, this undermined the economic effectiveness of defect warranties.
The reform puts an end to this logic. It redirects legal analysis towards the quality of the delivered work and towards the responsibility of the party that placed it on the market.
A fundamental principle of Swiss contract law remains unchanged: the purchaser brings claims against their direct contractual counterparty. In the vast majority of real estate transactions, that counterparty is the developer, whether in off-plan sales, newly completed buildings or properties constructed shortly before sale.
With the introduction of a mandatory minimum 60-day notification period and the prohibition on excluding the right to rectification, developers’ external liability is reinforced on several levels. Purchasers are now granted a realistic timeframe to identify and report defects, including after taking possession. More importantly, they may demand that defects be remedied, rather than being confined to a price reduction or financial compensation.
As a result, developers become even more clearly established as the legal guarantors of the conformity of the properties they sell, irrespective of the extent of their direct operational role in the construction process.
Contrary to some superficial interpretations, the reform does not transfer direct liability towards purchasers to the general contractor. Except in specific circumstances, the general contractor remains contractually bound to the developer, not to the buyer.
Its liability therefore remains internal, based on the proper execution of works and compliance with contractual specifications. The general contractor answers to the developer for defects, and the developer may seek recourse on that basis. The familiar cascade of liability remains intact: developer towards purchaser, general contractor towards developer, subcontractors towards the general contractor.
This structure, well known in practice, becomes more sensitive in a context where purchasers’ rights are strengthened and contractual flexibility is reduced.
One of the most critical challenges introduced by the reform lies in the potential misalignment between developers’ external obligations and their internal rights of recourse. A defect may be discovered by a purchaser weeks or even months after legal completion and handover. The developer will then be obliged to organise rectification within the statutory framework, failing which liability may be engaged.
At the same time, the developer’s contractual rights against the general contractor may be subject to stricter deadlines, often tied to the acceptance of works or internal notification mechanisms. Without contractual alignment, developers risk bearing the full cost of rectification—not because the general contractor would be substantively exempt, but because formal conditions for recourse are no longer met.
This desynchronisation represents one of the most significant risk factors for real estate developers in the run-up to 2026.
For general contractors, the reform entails heightened expectations in terms of execution quality, documentation and post-handover follow-up. The mandatory nature of the right to rectification makes it more difficult to adopt strategies aimed at closing out obligations rapidly after acceptance.
In return, the clear statutory 60-day notification period offers greater predictability, provided that contracts with developers are updated accordingly. General contractors with robust internal processes, rigorous quality control and structured subcontractor management will be better positioned to absorb this evolution without disproportionate financial exposure.
As 2026 approaches, contract revision is no longer a matter of optimisation but of necessity. For real estate developers, it is essential to align the warranty mechanisms and notification periods applicable to general contractors with those governing relationships with purchasers.
This requires in particular:
For general contractors, the challenge is symmetrical: securing effective recourse against subcontractors and clearly defining the limits of their liability, without attempting to circumvent rules that are now mandatory.
Beyond its immediate effects, the reform acts as a revealing lens on the structural weaknesses of certain development models. It encourages a more quality-driven approach to construction and earlier anticipation of legal risk during the design and planning stages.
Developers who successfully integrate these new rules into their contractual and operational strategies will strengthen their credibility with investors, purchasers and institutional partners. Those who continue to rely on outdated contractual schemes will see their legal exposure increase—not due to arbitrary legislative tightening, but because their practices no longer correspond to the regulatory environment.
The reform of construction defect law applicable from 2026 does not overturn the foundational principles of Swiss law; it reinforces them. Real estate developers remain responsible towards purchasers, and this external liability is now more difficult to dilute contractually. General contractors, for their part, remain responsible towards developers, within a framework that now demands greater contractual coherence.
For real estate development professionals, the challenge goes far beyond mere legal compliance. It is strategic, financial and organisational. Anticipating this reform, adapting contracts and rethinking risk management are no longer optional—they are prerequisites for maintaining control and resilience in a regulatory environment that has become more demanding, but also more transparent.
