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If you wish to sell your rented flat, there are a number of precautions you should take and a number of possible solutions.
Warning: Don't offer the flat to the current tenant
For legal reasons, you should not offer to sell the apartment to the tenant, because if he does not want to buy it and you then terminate the lease, he can contest the termination and claim that you threatened him to buy the property or to leave. You should avoid giving notice to buy.
What happens to the tenancy agreement when ownership is transferred
According to Article 261 Paragraph 1 of the Swiss Code of Obligations, the rental agreement is transferred to the buyer when ownership is transferred. This transfer is governed by mandatory law, i.e. the parties cannot exclude it by means of a contractual clause. This article of the law is unproblematic for the seller of a block of flats, but not for the seller of a single flat. He should take precautionary measures.
What happens to the tenancy agreement when ownership is transferred
According to Article 261 Paragraph 1 of the Swiss Code of Obligations, the rental agreement is transferred to the buyer when ownership is transferred. This transfer is governed by mandatory law, i.e. the parties cannot exclude it by means of a contractual clause. This article of the law is unproblematic for the seller of a block of flats, but not for the seller of a single flat. He should take precautionary measures.
Precautions
Article 261 of the Code of Obligations stipulates that the new owner may terminate the rental agreement with effect from the next statutory termination date, subject to the statutory notice period, if he can claim urgent personal need for himself, close relatives or in-laws.
The Federal Supreme Court is of the opinion that the seller is in breach of the rental agreement if he sells the property without obtaining an undertaking from the buyer to take over the rental agreement in full, and the tenant can demand compensation from him.
Possible solutions
Sale to an investor
You can sell your flat to an investor who is looking for a flat to generate rental income.
You can include a clause in the purchase agreement stating that the investor undertakes to take over the tenancy agreement in full with all the rights and obligations of the seller. This clause protects you as the seller, as the tenant could demand compensation from you if the buyer cancels the rental agreement in accordance with Art. 261 of the Swiss Code of Obligations.
Waiting for the tenant to give notice
If you are planning to sell at a later date, you can wait until the current tenant cancels the tenancy agreement. Then you no longer look for a new tenant, but for a buyer. If the tenant wants to return the flat before the notice period expires, you can release them from these obligations before the lease expires and put the flat up for sale immediately. In this case, it should be noted that a sale usually takes longer than a letting and the flat may remain empty for some time.
Selling a rented flat to a buyer who does not want to move in soon
Sometimes a buyer does not want to move into the flat in the near future, but possibly only in a few years' time. In this case, you also include a clause in the purchase agreement stating that the buyer will take over the entire tenancy agreement in order to avoid the risk of having to pay compensation to the tenant.
Cancelling the lease to sell the flat on better terms
It is legally possible to terminate the tenancy agreement for a flat in order to sell it on the best terms, but you run the risk of the tenant contesting the termination, in which case you will have to initiate legal proceedings.If the tenant does not contest the cancellation and remains in the property after the expiry of the notice period, the buyer can claim compensation from you if they are unable to move into the property on the agreed move-in date.If you are cautious, wait until the tenant has handed over the premises to you before signing the purchase contract.
You have concluded a fixed-term tenancy agreement
Even a fixed-term tenancy agreement can be extended. As a precaution, you should wait until the end of the lease before signing the definitive sales contract.
Choice to achieve the best market price
On the purchase market, flats are less in demand from investors than from owner-occupiers. The market price of a rented flat is lower than that of a flat that is ready for immediate occupancy.
How can you protect the tenant from premature termination by the buyer?
You can have the lease entered in the land register, as is often the case for leases for business premises with a long lease term. You can conclude a lease agreement for a new longer lease term and agree a clause in the sales contract that the buyer takes over the lease agreement with all rights and obligations from the seller. This allows the tenant to remain in the flat until the end of the tenancy agreement.
Is the tenant obliged to tolerate inspections?
According to Art. 257 h para. 2, the tenant must allow the landlord to inspect the property if this is necessary for maintenance, sale or re-letting. If the tenant refuses viewings without good reason, the landlord can claim damages from him, for example because a prospective buyer withdraws or the sale is delayed. In addition, following a written protest by the landlord, the tenant risks termination of the tenancy agreement subject to a notice period of 30 days to the end of the month.
Conclusions
The various consequences of selling a rental property should be carefully considered before you start looking for a buyer. If the tenant objects to the cancellation, a sale will not be possible for some time. The legal proceedings are lengthy. If you want to sell your rental property, you must allow sufficient time to clarify the situation with the tenant. You should not offer the flat for sale to the tenant.
More information with video that may be of interest to you:
Real estate sales in Switzerland - good to know
Selling your apartment in the canton of Geneva, what are the contraints
© Author Esther Lauber, Property Fiduciary with Federal Diploma of Higher Vocational Education and Training, real estate agent, property broker and manager in Carouge Geneva, Geneva, speaks German, French and English
Translated with DeepL (free version) from Germain to English. In case of doubt, the French version applies to translations.