What are the risks involved in buying a house before signing the contract?

Introduction

Buying a property in Switzerland is a highly formalised process. Weeks of checks and negotiations often pass before the appointment with the notary. This due diligence phase is your most important safeguard. This is because in Switzerland, the principle of " " (purchased as seen) almost always applies to existing properties. This means that the seller excludes any warranty for defects in the purchase contract.

Once you have signed, leaky roofs or damp basements are your responsibility. That is why it is vital to identify the risks involved in buying a house before signing the contract. Whether you are a local or a newcomer exploring the market, you need to know where to look. In this article, we reveal the biggest risks when buying a house and show you how to avoid nasty surprises before they become legally binding.

The danger zones in detail

1. Structural risks: the expensive renovation backlog

One of the biggest financial risks when buying a house is the condition of the building fabric. A freshly painted house can hide serious defects. Since you usually waive your rights to claim for defects in the purchase contract (exclusion of warranty), you need to uncover these risks before buying a house.

• Hidden defects: Damp in the masonry, mould behind built-in cupboards or dilapidated water pipes are classic risks when buying a house.
• Pollutants: Asbestos is an issue in houses built before 1990. Remediation can cost tens of thousands of pounds.
• Energy efficiency: An old oil heating system or poorly insulated windows are ticking time bombs in terms of costs. New laws (e.g. MuKEn) could soon force you to replace them at great expense.

Tip: Don't rely on the property brochure. Take a building surveyor with you for a second viewing. The cost of the expert is minimal compared to the structural risks involved in buying a house, which they can uncover.

2. Legal risks: the small print in the land register

Many buyers focus on the house and forget about the land. However, the land registry often contains legal risks when buying a house that can massively restrict your quality of life.

• Easements: A right of way for your neighbour across your garden or a right to build nearby can reduce the value of the property. Overlooked easements are one of the classic risks when buying a house.
• Contaminated sites: Is the land listed in the register of contaminated sites (KbS)? Perhaps there used to be a petrol station or a paint shop there. The remediation of contaminated soil is one of the most expensive risks when buying a house.
• Public law restrictions: Is the house located in a hazard zone (avalanches, flooding) or is it a listed building? Listed building status may prohibit you from replacing windows or installing solar panels.

Check the land register extract and the register of contaminated sites to rule out these legal risks when buying a house.

3. Financial risks: valuation and ancillary costs

There are also financial risks involved in buying a house that often only become apparent shortly before the appointment with the notary.

• Valuation difference: You and the seller agree on 1.2 million Swiss francs. However, your bank values the house at only 1 million (lower of cost or market principle). You now have to cover 100% of the difference of 200,000 Swiss francs from your own capital. This financing gap is one of the most common risks when buying a house that causes deals to fall through.
• Property gains tax: Normally, this is paid by the seller. If they do not pay, the canton often has a legal lien on the property. This means that you, as the buyer, are liable for the seller's tax debts with your property. To eliminate these risks when buying a house, the purchase agreement must ensure that the tax amount is transferred directly from the purchase price to the tax office.

4. Risks associated with the reservation agreement

Before going to the notary, a reservation agreement is often signed and a deposit paid. Here, too, there are risks involved in buying a house.

• Loss of the deposit: Since reservation agreements without notarisation are often invalid, the legal situation in the event of withdrawal is complex. If you transfer the deposit directly to the seller's private account and they become insolvent or disappear, the money is gone.
• Withdrawal costs: Clauses are often included that impose high costs on you in the event of withdrawal.

To minimise these risks when buying a house, always pay the reservation fee into an escrow account (solicitor or estate agent) and never to a private individual.

5. Location and environmental risks

One of the often underestimated risks when buying a house is changes to the surrounding area.

• Zoning plan: What will happen to the field opposite, which currently guarantees you an unobstructed view of the Alps? A look at the zoning plan will reveal whether a four-storey apartment block may soon be built there.
• Infrastructure projects: Is a bypass or flight path planned? This information is public, but is often ignored. Such external factors are among the long-term risks when buying a house that can drastically reduce its resale value.

Strategies for minimising risk

The good news is that almost all risks associated with buying a house can be eliminated by doing your homework.

• Take your time: don't let yourself be rushed. A hasty purchase increases the risks involved in buying a house exponentially.
• Consult experts: Building surveyors, solicitors and bank advisors are your allies in combating the risks involved in buying a house.
• Check the contract: Have the draft purchase agreement read by a specialist before the appointment to identify legal risks when buying a house, such as unfavourable clauses.

Conclusion

The question "What are the risks involved in buying a house?" cannot be answered in a single sentence, as these risks lurk at a technical, legal and financial level. The biggest risk is ignorance. Those who blindly trust and fall for appearances often pay for it later . In particular, the exclusion of warranty in Swiss law makes it essential to carefully examine the building fabric.

But there is no need to panic. By checking the land register extract, hiring a building surveyor and setting up solid financing (including tax security), you can almost completely control the risks involved in buying a house. Buying a house should be a joyful experience – and it is best enjoyed when you are sure that there are no nasty surprises lurking in the basement.

Take advantage of Loft's expertise to have your dream property assessed impartially and make the purchase process secure.

Glossary

• Disclaimer: A standard clause in Swiss purchase agreements stating that the seller is not liable for defects discovered after the purchase. One of the key risks when buying a house.
• Suspected contaminated sites: Properties where environmentally hazardous activities took place in the past (e.g. landfills, industry). They represent a high financial risk.
• Easement: A third party's right to your property (e.g. right of way, right to lay pipes) that is entered in the land register and may restrict its use.
• Statutory lien: The right of the state to collect outstanding property gains tax by selling your property if necessary if the seller does not pay.
• Lower value principle: Valuation method used by banks. They only finance the lower value of the purchase price or estimate. The difference is one of the financial risks involved in buying a house.