Contracts associated with the sale and purchase of a property
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Notarially recorded instuments or deeds
The sale contracts are only valid if they are concluded in the form of a notarially recorded instrument or deed. Exception: If you buy a Real Estate Company (SI or SIAL), the sale is through the sale of the share capital, because it is the property company that is registered as owner in the land registry. A distinction is made between the following three types of contract:
Sale contract
If the purchaser has all the necessary funds available and the vendor can sell his property freely immediately, the signing of the conveyance and the direct payment to the notary take place simultaneously.
Forward sale contract
The execution of the sale is deferred. It is associated with an assured future event, for instance a date of entry into possession if the vendor can free his property for sale only at a later date.
Preliminary sale contract or promise to sell
If a future event is not yet assured, for instance obtaining a building permit for a mortgage loan, the sale contract is subject to one or more conditions. In this case, the contracting parties can sign a promise to sell. The actual sale conveyance is signed when the conditions are satisfied. The parties are held to commitments they undertake to fulfill. If the buyer were not to fulfill his commitment, he would often be subject to an agreed penalty of around 10 % of the purchase price in the vendor's favour.
In Geneva, it is the buyer who must pay the transaction charges (registration charges, mortgage arrangement costs, notarial fees). These costs amount to several thousand Swiss francs (see sample budget).
Other contracts
In certain cases, other contracts are associated with the sale or purchase of a property, for example:
- Contracts associated with finance (mortgage, pledging of 2nd or 3rd security funds, etc.)
- A general or total contract for services for buildings
- Contracts concerning the renovation of the property
- Contracts concerning a matrimonial property system or PACS (legal recognition of adult cohabiting couples)
- Insurance contracts (the building, civil responsibility, contingency, etc.)
- Maintenance contracts (heating, lifts, etc.) and supply contracts (water, electricity, gas)
- Leases
- Property management contracts
- The surface rights contract
- etc.
© Esther Lauber, Real Estate Trustee with Advanced Federal Diploma of Professional Education and Training, real estate broker