| RAMZI CHAMAT | OAKS GROUP SA
The Swiss real estate market, known for its complexity and high standards, is about to undergo a major legislative shift. To strengthen buyer protection and simplify recourse in the event of defects, a new law is being discussed in the federal chambers. This highly anticipated reform will redefine the responsibilities of developers and construction stakeholders, with significant repercussions for industry practices.
In Switzerland, real estate transactions are often plagued by issues related to construction quality. Currently, developers' liability can be limited, forcing buyers to navigate a complex legal system to assert their rights in the event of defects. To address these challenges, the Federal Council and the chambers have initiated a revision of real estate legislation aimed at better protecting buyers. This new law, expected to come into force in 2026, seeks to simplify the process by making developers directly accountable for defects—a significant shift for the industry.
The proposed law currently under discussion in the chambers aims to strengthen buyer protection by holding developers directly responsible for construction defects. This reform, which is expected to take effect in 2026, will have significant impacts on construction practices and contractual norms. The key points are outlined below:
At present, developers can exclude liability for defects, leaving buyers to deal with construction companies and subcontractors. The new law seeks to reverse this situation: developers will now be the primary point of contact in the event of defects and must assume full responsibility, with the option to seek recourse from other involved parties.
Arnaud Nussbaumer, an attorney at Jacquemoud Stanislas, describes this law as a major revolution in construction law. It is expected to encourage buyers to assert their rights, which is currently often difficult due to the need to prove defects and identify the responsible party.
Guillaume Barazzone, an attorney and former National Councillor, notes that the jurisprudence on the definition of a defect is already well-established. A defect occurs when a promised quality is not met or when construction is not performed according to professional standards. In case of defects, buyers will be entitled to repairs, or in severe cases, the return of the property.
Buyers will likely demand more detailed and precise sales contracts to better protect themselves against potential defects, a trend that will lead to changes in how real estate contracts are drafted.
Although the statute of limitations remains at five years, the deadline for reporting defects will be extended to 60 calendar days, giving buyers more time to raise issues, a significant improvement from the current seven-day limit.
A key area of disagreement remains between the National Council and the Council of States. The former wants the law to apply to all types of buildings, while the latter prefers to limit its scope to private residential properties.
The law will apply only to newly constructed buildings, excluding older properties. However, the question of renovations remains unresolved, as it's unclear whether major renovations should be considered new constructions.
The National Council proposes extending the law's protections to all buyers, while the Council of States recommends restricting it to private buyers, who are generally less equipped than professional investors to handle construction defects.
According to Ramzi Chamat, a real estate developer and CEO of OAKS GROUP, this law will benefit the most reliable companies in the sector, those offering quality service. Insurers are also working on solutions to cover developers, but this should not significantly impact property prices.
With this new accountability, developers will have every incentive to work with reliable general contractors and subcontractors, potentially leading to improved construction quality across Switzerland. Serious players like the Oaks Group are already implementing such rigorous standards in their projects.
This reform represents a major turning point for the construction sector, offering better protection for buyers while imposing higher standards on developers and general contractors.
The upcoming legislation marks a significant advancement in Swiss construction law. By increasing developer accountability, it will not only provide better protection for buyers but also improve the overall quality of constructions. While some differences remain regarding the exact scope of the law, its expected adoption in 2025 will represent a major shift in real estate practices. The most reliable industry players, who prioritize quality and customer service, stand to benefit from this reform, while buyers will enjoy enhanced legal security in their transactions.
Source: IMMODAY