We have come across a new-build (house in Zurich with 20 flats, to be completed in 1.5 years, not started yet). The company which sells this flat is set-up buy individuals, the total capital of approx. 25,000 CHF. They owners of the company are architects/enineers etc who do the project of the house.

How I understand they operate is: buy land with/without house, demolish old house, make a project, build a new one and sell it. I suppose they get their financing for construction from the bank, and maybe from buyers' deposits (although not sure if these deposits are paid to them for their use, or are held in escrow until the house ic completed).

Somehow I do not like the idea of buying something which does not exist from a little ltd company, but I've heard that in Switzerland it's common for architects to set up this type of business. Apparently the company's bank will guarantee our money in case this company woudl go bust or nt complete the project.

Is anyone familiar with this type of arrangements?
thank you
Lana

Beware of your deposit. If they go bust or disappear it's gone, and you are left with nothing.
I suggest you ask them for a bank guarantee, so you have a guarantee for the money. It costs them something to get it but I wouldn't do it without.

We nearly brought off plan, the deposit was 50K but there was a problem with planning which held the project up for 18 months, during which time the global financial problems started.

We got our deposit back but a Swiss Lawyer told me we were lucky as deposits do go missing, try and get some sort of guarantee or agreement which reserves your apartment but without the deposit being handed directly over or handed to a Solicitor to be held on account.

Good luck, also just a note banks are tightening their lending policy and our agreement was for 20% deposit, not sure what they would want now.

That is how I bought my appartment. We bought it from a company called Gasser & Partner in Bulach and everything was 100% correct and on time. Out of the 12 appartments (in two houses) all but two where sold before or during construction. I think I payed up front ca 200.000.- and got titles to the land at that time. This seemed a bit weird to me at the time, but apparently is quite common here. The good thing about this approach is you get to modify the appartment to your needs.

I tried to haggle the price, but just got a blank stare, and was told that if I bought a second parking space, I could perhaps get 10% off that.

One week today we will get the keys for our new house.

We bought it off plan over a year ago from a very small firm, basically set up by an architect and a builder. They bought a large piece of land (there were still cows grazing on it the first time we saw it), and got permission to put up 18 houses.

We were the first people to place a deposit, and the amount required was very small. They only wanted CHF 5000, and we then handed over another 20% of the final price just after the building work started.

The whole thing has gone amazingly well. The house is spectacular, running totally on time, we have had 100% input at every stage of the build, and it would even be almost on budget if DH hadn't got carried away with the bathrooms.

For us it has been a very positive (if somewhat stressful at times) experience, and we are looking forward to moving in and actually living there.

As a further point of interest, 90% of the houses (even those not yet built) are now sold, and the deposit required is much larger. They must be good though, because both the tiler and the painter have bought one for their families!

The company explained to us how the selilng process is organised:

we sign a 3 page intention document, pay reservation fee of CHF 30,000 and they take house off the market. After that they supply a full contract which we have to study and then to sign at the notary and pay another 170,000 which in total (200,000) will be a deposit for the flat. Another 80% will be paid on completion in 1.5 years, and then the ownership will be transferred to us.

Prior to that the ownership of the land on which they will build will remain with them, this is for tax reasons, as they explained. The deposit (plus their funds+loan from the bank) will be used to finance the construction. For our comfort they will provide a letter from their bank that the bank provides them financing for the project (they already agreed the price with the general contractor). This bank guarantee will however not guarantee our deposit in case they go bust or do not complete the project. This fact I do not like, as well as paying 30,000 reservation fee without having anything in exchange except for taking the flat off the market.

Can anyone recommend a lawyer/solicitor/notary they used and liked in the house purchase process, as well as interpreter German/English interpreter?


thank you

Sounds risky : even if the housing crunch won't be as severe in Switzerland (if any) as it is will be other countries, you still have the risk from the financial market (how will the company be able to raise capital, how will other potential buyers in the project be able to borrow) plus the risks from the economy slowing down.

I wouldn't do it without a bank guarantee.

We've done this twice here now. CHF25K deposit (which is returnable for genuine reasons and the solvency of the developers) with the total cost spread over 4 traunches. (You may not be able to negotiate on the price, but you may find them more flexible of the payment times.)

Yes, the risk is will the developers stay solvent as the build using your cash. But it seems to work in Switzerland - and I don't expect the financial crisis to hit the Swiss property market , at least not in hot spots like Zurich...

I have just been in the same position with buying a house - being asked to pay a deposit upfront. If the seller pulls out they say we get our money back. If we pull out, they deduct their expenses (which we later found out would be CHF 6000). That is before we have even seen the terms of the main contract. So essentially we would have been in the position where we wither accept something in the terms we didn't like or refuse and lose CHF6k. Also we found out such reservation contracts are actually not legally binding - the only legally binding contract for a house purchase is the one done with the notary. So with a lot of resistance form the agent it was accepted that we would only pay the first payment once we have an official signed contract. We are glad we stuck to our principles there was a lot said or promised which didn't materialise in the contract and other terms added that were against the norm / our interests.
So it's not just the risk of the builder or agent going bust - you also lose your negotiating position.

The Swiss property market, despite recent declines in other countries, appears to remain the 'un-market' that it always was. This means the 'hot-spots' it remains a sellers market. If you really want a property and your bank, who after all are taking 80% of the risk usually, say it's OK, then fooling about with the deposit is likely going to lose you property.

We sold our house privately earlier this year. We asked for a CHF25,000 deposit without any written agreement and a verbal agreement that we would deduct our advertising and any legal expenses if the buyers pulled out. They paid the deposit into my private bank account (no 'stake-holder' involved) the next morning and we took the house off the market.

The deposit was written into the contact of sale and I could actually use the money in the purchase of somewhere new. If our buyers had haggled over the deposit or refused to pay one, we had a queue of potential buyers at the door and would have moved on to one who would pay the deposit...

Who checks whether the land belongs to the seller, if they have construction permit etc. Is it a bank which provides a mortgage or a solicitor, as in UK?

If a solicitor, can anyone recommend one in Zurich?

Has anyone come across a description of the flat sale/buy procedure in canton Zurich, which I can read?

thank you
lana

General rule:
Make sure they have available resources before starting project:

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