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Old 23.04.2018, 14:20
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Legal pitfalls under Swiss Rental Law

My first relocation into swiss property has taught me done interesting lessons which I think it's important to record. So here are my findings from this whole experience.

1) The estate agency is not your friend

1.1 You are the customer, there are many more like you, you have no power or leverage on the discussion unless the property has been difficult for the agency to move, and then only because they're sick of showing people around it and having it on their books is costing then time/money. So find out! When did the last tenant leave? This will also give you an idea of how difficult it will be to find a replacement tenant, if you need to. If the property has been on the market for longer than 2 or 3 months, there's probably a good reason.

1.2 There is a personality type in real estate, and they know a lot more about the space that you do, and use a variety of techniques in their business routine; not all are transparent and scrupulous. Don't trust anyone. The industry in Switzerland it's just as cutthroat as any other part of the world, and if you're foreign you're a big juicy target.

1.3 The industry is heavily regulated, meaning that everyone in it is very aware of their status and rights, and extremely litigious. You will get presented with your legal constraints, and the law will be used against you, in addition to the variety of other techniques of persuasion these organisations encourage from their personnel.

1.4 Take everything they say with a pinch of salt. Do your own research. The commute time to the nearest town will always be bs, the owner will always be a lovely person, the neighbors will always be charming and quiet, the area will always be calm and convenient with no road noise or disturbances from local youths, and the property will always be in the best possible condition. Don't believe a word of it, and find out for yourself from your own experience.

1.5 New agreements Vs lease takeover
The end result is the same, you can move in, but the agreement is quite different. With a new agreement you can negotiate, take the opportunity to take the price and inclusions etc, but with a lease takeover, you're agreeing to the same terms as the previous tenant and putting your name on their lease instead of theirs. This gives you a lot less room for bargaining, and you can try but the owner doesn't have to entertain the request.

2) don't rush in

2.1 If you get to a point where you're waiting to complete a contract, don't rush. Read it very carefully and take your time. If the agency doesn't have an English version, get it translated our at least cover the whole thing in Google Translate. Some canton have standard contacts, others don't, and those that do still allow the property managers discretion to add whatever they like on top of a standard framework, so make sure you know what you're agreeing to. Points to look out for include:

2.1.1 How many months deposit is required?
The whole concept of a security deposit is an insurance for the owner, but remember that it will be the basis of your closure agreement as well, whether that occurs via the standard notice prices or via some mutual understanding within exceptional circumstances. For example, need to relocate quickly? Lose your deposit. Need to cancel the contract because you can't move in? Lose your deposit plus expenses. You get the idea.

2.1.2 Does the landlord accept SwissCaution?
This is a relatively new option which insures the agreement between the tenant and owner, and replaces the lump sum cost of the security deposit with a yearly insurance payment. So you won't get your money back with interest, but you also won't have to lay down 2 months wages. The online registration is very quick, but the terms and conditions are extensive, so if you go this route make sure you realise you're not necessarily in a better position from a legal standpoint, see point 1.3

2.1.3 Status
'Renovated in...' dates are only partially true as 'renovations' definitely don't need to apply to the whole property, and you're never going to find out what was updated anyway. The previous tenant dabbed the walls with a bit of touch-up paint to pass the handover inspection and kept quiet about the stuff they had broken, and if you're lucky, your owner has used the opportunity of the property being vacant to send the cheapest overpriced bodger they could find to fix some of the things that have become obviously worn and torn, but you're basically making a commitment to pay a significant amount of money over a long period of time under a heavily restrictive agreement, for a property you've walked around once for 15 minutes. If you're committing to a contract, arrange another visit and again, take your time. There will be a long list of things in the contract that you're going to become responsible for repairing, and you'd be surprised what some owners try to say is the responsibility of the tenant.

Similarly, if the owner decided that 'Crime Scene Red' was a great choice for the kitchen, don't expect them to alter it for you before you move in. You can change the colours after you move, at your own expense, but you'll have to repaint it to the original horror-show style when you leave.

2.1.4 Inclusions

Parking spaces are optional, but if you take it you can trade with your neighbors or let it to a third party for a profit if you don't use it. Everyone does it, including the agencies.

Appliances! If your apartment comes with the complete Zug range from 1967, you're basically stuck with it. You might have a newer washing machine and dryer, for example, but if there is one in the apartment already, don't expect the owner or agency to care. You will have to move it and store it in your own parking space or cellar yourself, and install your new appliances yourself, and if the existing appliance isn't working when you re-install it, the replacement/repair will cost you. Don't forget to test all appliances when you do your 2nd walk-through as advised in 2.1.3. It will be the only opportunity to find out if the washing machine sounds like a practicing death-metal band, or if the dishwasher creates an aroma from the bowel of hell in your living room when it's running.

Living costs! This is an opportunity for the owner to pad their income quite nicely, because you will never get an itemized list of inclusions within the living cost fee. Electricity is negligible, as is gas and water, estate maintenance is always bloated, and if the property looks like it hasn't seen a paintbrush since the 70's it's likely that the living costs are just going in someone's pocket.

2.1.5 price

All rental agreements are negotiable, and you can often see how much a property was previously let for, using sites like comparis. Other sites will also show you whether there is a deduction in rent value due, so use these to determine the value you offer for the property. Here, the agent just looks after the mediation between you and the owner, unless you're taking over an existing tenancy agreement, in which case there is no reason they have to entertain your negotiations at all.

2.1.6 Notice period
A common inclusion in property agreements is a three month notice period, which the tenant has to give the agency if they wish to move out.

What is a lot less clear, are the various constraints around the periods and intervals where a lease can be relinquished or the notice period given. For example, a contract might say that for the first 3 years, the tenant cannot provide notice, which means the only way to move out is to find a replacement tenant for your lease. Another clause might be, that after this three year period, you can provide your notice, but only once/twice/X times a year on a specific date, otherwise the only way to move out is to find a replacement tenant for your lease.

If you have signed an agreement with these kinds of constraints, and find that your circumstances change and you can't take over the property and you're entering the 'Rock & Hard place process' defined in section 3.1.4, you will be liable for all rental payments due, until the initial 3 year period is complete, after which you can give your notice on the dates defined, and your alternatives are legally, to pay option a) and lose your deposit++, or sit in the lease agreement as per option b) paying rent until a replacement tenant comes along.

3) sign at the last possible minute

3.1.1 negotiations
It's likely that the agency will have to communicate multiple times with the owner in the course of your agreement process. This can be a pain, because many owners are extremely rich and spend large amounts of their time on holiday, and may or may not have someone looking after this kind of thing for them, so expect delays. Use the time to present your negotiation terms about the inclusions, status, price proposal etc in a single email so they can view it and agree or reject them, as you will only get one shot. Don't make it overwhelming either, focus on the key issues, otherwise the agency will intervene as it makes them look bad to the owner as they will never send your requirements for the owners consideration.

You can expect that the agency will take the owners side, and they will push back on everything you're asking for to try to get you to put up with it or take responsibility for changing whatever it is you've highlighted yourself. If you're taking over a lease, you don't have any leverage, but if it's a new lease, still be prepared to be threatened with losing the deal, and experience a high level of indignation that the property is perfect, and as slow and complicated a negotiation as the agency can reasonably create.

3.1.2 Closure
Signature of the contract is a big deal. It means you're on the hook for the property from the moment they've received it. There is no 'cool down period' or any flexibility in the terms, and the discretion of the owner or agency will always fall into self-interest against you. If you've clarified the date the last tenant left, you can assess the level of pressure you're under to conclude the agreement before another potential tenant gets it, and an agency can and will progress multiple tenants towards an agreement at the same time, for a popular property. If you're getting a place in the city centre or for a cheap price and it's only recently become vacant, it goes without saying that you should expect competition, and the agency will act preferentially towards the simpler negotiations, so use your judgement here to balance your requirements against the possibility of losing the property, and if you're not in a hurry, stick to your demands and don't feel pressured to comply with the agency for the property at all.

3.1.3 Timing
New properties come and go all the time, and often, a better one will be available closer to the date you need it. Don't sacrifice on your demands or rush yourself into an agreement before you really need to. For example, if you are taking a new job, don't look to relocate during your probation period. Find an Airbnb, negotiate a long term, cheap arrangement with the hosts, and work out your probation before you ask your SO to relocate. Who knows, maybe your boss is a jerk and a completely different person day to day to the person you met at interview. You'll only find this out after you've started, and if you've arranged your property in advance, you'll be liable for 3 years of rent if you change your mind about the role.

3.1.4 Cancellations
Don't think the agency will just let you off if you want to cancel the lease agreement, for whatever reasons. Your job might change, you might get disabled, you could probably die, and the lease agreement will still stand. Agencies delight in these circumstances, because it's just money in the bank for them. You'll have the following two options;

a) 'the rock', lose your deposit (or whatever financial commitment you made with the SwissCaution), plus whatever expenses either the owner or agency parties decided to add to their demands for the discretionary closure to the lease, or

b) 'the hard place', finding a new tenant to take on your existing lease, current terms etc in your place.

Even if your property is super-desirable, don't think that you'll get out easily through option b. You will be liable for the costs of advertisment on the property boards (between 100 and 200 francs per advert with additional recurring monthly charges) and any support that the agency provides, which they will invoice at several hundred francs per hour. This includes paperwork, viewings, you name it. You will not be allowed to reuse the promotional 'intellectual property' created by the agency which you received when you were the prospect in your own advertisements, so floorplans, photos, descriptions and documentation will be your responsibility to create afresh. Through your efforts, you will receive a few enquiries for your adverts, for which you will be responsible for arranging the schedule and showing the prospective tenant around, and assuming you get any applications from the dozens of viewings you might conduct, the agency is allowed to take up to 1 month to assess any prospective tenants applications, each. They may also require a choice of 3 candidate applicants to choose from, before agreeing to release you from the agreement. As a wrist-case, you may also find yourself entrapped in a situation where you've attempted option b) and incurred all the costs and effort involved, but still have to take option a) ultimately to avoid some other legal clause taking effect.

For example, if you sign an agreement in month 1, to move in on month 3, then find your circumstances change during month 1 and prevent you from taking the property, you will be liable for the rental of the property from date of signature, and liable for paying the rent of the property from the agreed month 3 date, and subject to the 'Rock or Hard Place' situation if your circumstances change. If you're not local to the property, you won't be able to show prospective tenants around and won't be able to rely on the agency to assist you in any way, and may not even be able to take photographs for your advert since you won't receive the keys for the property until month 3. If you don't take the option a) you can guarantee that all stakeholders involved will make every decision at their discretion, against you, and be fully legally entitled to do so. If you decide to take option b and create the adverts and documentation required for the advert, you will have about 6 weeks to find up to 3 applicants willing to take over your lease. Unless the agency quickly assess those candidates you will run into the rental period, and will have to pay the monthly rent each month.

3.2.1 Relocation Specialists
If at all possible, get your employer to coordinate the property for you, or as a minimum, pay for the services of a relocation agent to navigate the minefield before you. The relocation agent will be 'a leopard who has changed their spots' and found a subsistent niche in frontrunning the costs/effort of their client base, and likely knows the property agency community you're going to have to deal with on a first-name basis, as well as the property regulations and the variety of pitfalls you could fall into working with these businesses alone. They won't be cheap, and they won't necessarily protect you in any unpredictable circumstances, but at least you'll have someone on your side who speaks the particular dialect of whoever is causing your problems, and presents their costs transparently.

3.2.2 External Legal support
There are multiple organisations in Switzerland who claim to support tenants, but the majority are toothless bureaucratic placeholder organisations who focus on the union-level issues of the wider tenants group, rather than individual disputes. Don't expect their support, particularly in ex-pat or inter-cantonal issues, as you will receive every deviation of responsibility you can imagine when presenting them with a case relating to an individual, and ultimately they will defer to the terms of your agreement.

External property lawyers will be supportive, and after their free initial assessment might recommend you options to use their services or refer you to someone more supportive. Often, a property lawyer is much more interested in large international property investments than your little dispute case, so you'll be lucky to have an offer of support, but if you choose to use their services the costs will very quickly exceed those your trying to avoid, and you aren't guaranteed a favourable resolution.

Thanks to the property agencies in Oberageri, Zug, for this learning process. If anyone wants to discuss more details please feel free to DM
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Old 23.04.2018, 15:16
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Re: Legal pitfalls under Swiss Rental Law

1.1 Actually the house owner is their customer when dealing with a agency.

2.1.4 You have to inform the landlord/agency and they can refuse this if you want to make a profit.

2.1.5. Not all rental contracts are negotiable, it all depends on location, we live in Zürich and the deal was very simple. you have 1 week to return the signed papers, take it or leave it. If you don't want it, hundred others do.

3.1.4. Even tho it always is good to provide 2 or 3 candidates, only one suitable candidate is enough regardless of what the contract says.

3.1.4. You are not forced to advert through the agency's channels when wanting to find a nachmieter, if the object is in a good location just putting up something at work and Facebook is often enough. And even if the agency adverts it, this does not always have to cost money.

For the rest there is a lot of : They keep you to the contract, yes off course they do, and this works both ways.

Still some good tips in it tho.
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Old 23.04.2018, 15:41
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Re: Legal pitfalls under Swiss Rental Law

Very well said & super important for people coming into Switzerland to read! It's true, they do not give one flying fudge about you as a human, so don't expect any mercy, even if they seem nice.

I read, though, is that it's against the law to require 3 applicants, only one has to be provided. But it's one thing that shows how they expect you to follow the letter of the law, but will do whatever they can to try and get around it themselves. Even if that is straight up lie.

I also read that if you die your lease gets transferred to your heirs, and they either have to find a replacement tenant, or give a 3 month notice if they want to move out. I do not understand how forcing someone to take over a contract that someone else signed could possibly ever be legal...
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Old 23.04.2018, 15:50
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Re: Legal pitfalls under Swiss Rental Law

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I also read that if you die your lease gets transferred to your heirs, and they either have to find a replacement tenant, or give a 3 month notice if they want to move out. I do not understand how forcing someone to take over a contract that someone else signed could possibly ever be legal...
Not uncommon, you "inherit" the lease
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Old 23.04.2018, 16:04
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Re: Legal pitfalls under Swiss Rental Law

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Not uncommon, you "inherit" the lease
True, but we are an expat community and for some of us this is something we never heard of.

In the Netherlands where you and I come from this would be impossible and unless there are co-renters (like as is happening in a marriage) the rent gets automatically cancelled on the last day of the second month after dying.
Adult children and other people stil living in the house can go to court to demand the rental contract to be transferred by them but this often fails since they do not fulfil the rulings to be seen as somebody eligible to take over due to the way the household has been run.

To me the situation in Switzerland was new and something I never heard of. And worthy of putting an extra line in the will when making one to inform the heirs.
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Old 23.04.2018, 16:25
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Re: Legal pitfalls under Swiss Rental Law

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In the Netherlands where you and I come from this would be impossible and unless there are co-renters (like as is happening in a marriage) the rent gets automatically cancelled on the last day of the second month after dying.
This just seems like the no-brainer way to do it, and it doesn't protect the business while (at least potentially) harming the people.
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Old 23.04.2018, 16:41
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Re: Legal pitfalls under Swiss Rental Law

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3.1.4. Even tho it always is good to provide 2 or 3 candidates, only one suitable candidate is enough regardless of what the contract says.
Only one suitable and solvent replacement is enough. But this one must either actually sign the contract or turned down for other reasons than insolvency or non-suitability to be relived from the contract (like not offered the very same contract or use of the apartment for other things).

If your replacement chickens out or has found a better deal and does not sign you still have the obligation to find a replacement. That is why presenting more than one prospective replacement tenant is a good thing.

2.1.1 The deposit can be legally up to 3 times the rent!
Also way more than just your deposit is at stake if you leave early or do not begin the tenancy at all. In the worst case you are liable to pay the rent up to the next possible cancellation date if the agency/landlord does not find an replacement themselves.

2.1.6 Notice period must be by law at least 3 months. Not much to wiggle around unless it is a furnished single room.
Minimum rent period before first regular cancellation date: 12 months ar not unusual. Anything longer than 24 months and you know it is property which is very hard to rent out and to find a replacement.

3.1.4 a) As before said, not only your deposit but the rent until next cancellation date or until a replacement is found (which ever is earlier.)

Let me add 2.1.7 to your very useful list:
Auxiliary charges: Auxiliary charges normally do not included electricity and telephone. The monthly payment is only a prepayment for the annual final bill. The final bill will depend on actual usage and energy prices. In some cases the monthly prepayment have been set deliberately low. Request the previous year auxiliary charges to get a better understanding or sue at the rental court if it is more than 30% over the projected cost.

2.1.8 Check if the auxiliary charges include cable tv fee. If you do not use or need cable TV, likebecause you use sat, good old areial, or no tv at all or you get your internet through other means such as phone line, or fiber optic. Notify landlord that he cancel the charges.
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Old 24.04.2018, 12:59
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Re: Legal pitfalls under Swiss Rental Law

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Only one suitable and solvent replacement is enough. But this one must either actually sign the contract or turned down for other reasons than insolvency or non-suitability to be relived from the contract (like not offered the very same contract or use of the apartment for other things).
Our landlords are saying their contract is above the law, and if we signed something illegal, like them saying they can reject whomever they want, even a solvent applicant and keep us on the hook (which is what they are saying), that trumps what the law says.
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Old 24.04.2018, 13:06
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Re: Legal pitfalls under Swiss Rental Law

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Our landlords are saying their contract is above the law, and if we signed something illegal, like them saying they can reject whomever they want, even a solvent applicant and keep us on the hook (which is what they are saying), that trumps what the law says.
Just document the process properly, and if they reject your candidate for a non valid reason don't pay up.
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Old 24.04.2018, 13:07
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Re: Legal pitfalls under Swiss Rental Law

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Our landlords are saying their contract is above the law, and if we signed something illegal, like them saying they can reject whomever they want, even a solvent applicant and keep us on the hook (which is what they are saying), that trumps what the law says.
Well, then prove them wrong.
No such thing as a contract above the law. As long as both sides agree, anything can be signed. Once one side disagrees, the law comes in.

They can reject whomever they want. But they can't keep you on the hook = have to leave the flat empty until they find their dream-tenant.
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Old 24.04.2018, 13:56
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Re: Legal pitfalls under Swiss Rental Law

Art. 264 Swiss Code of Obligation (premature return of the rental object) is considered by legal doctrine to have a so-called "one-sided binding" effect, i.e. it can only be changed in favor of the renter (i.e. making it easier and not harder). Accordingly, in this specific area the contract cannot make life more difficult than what the Code of Obligations stipulate.

There are other areas in rental law where the parties can deviate from the default rules of the Code of Obligations (in this case the contractual arrangement is not "above" the law but the law simply allows the parties to find their own arrangement).
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Old 24.04.2018, 14:09
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Re: Legal pitfalls under Swiss Rental Law

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1.1 Actually the house owner is their customer when dealing with a agency.

2.1.4 You have to inform the landlord/agency and they can refuse this if you want to make a profit.

2.1.5. Not all rental contracts are negotiable, it all depends on location, we live in Zürich and the deal was very simple. you have 1 week to return the signed papers, take it or leave it. If you don't want it, hundred others do.

3.1.4. Even tho it always is good to provide 2 or 3 candidates, only one suitable candidate is enough regardless of what the contract says.

3.1.4. You are not forced to advert through the agency's channels when wanting to find a nachmieter, if the object is in a good location just putting up something at work and Facebook is often enough. And even if the agency adverts it, this does not always have to cost money.

For the rest there is a lot of : They keep you to the contract, yes off course they do, and this works both ways.

Still some good tips in it tho.
Quite correct, thank you for the updates. I read it back later after writing this on my phone and noticed all the typos and mistakes, including the 'not' in the 1.1 line.
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Old 24.04.2018, 14:19
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Re: Legal pitfalls under Swiss Rental Law

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For the rest there is a lot of : They keep you to the contract, yes off course they do, and this works both ways.
The contract doesn't outline cases for early cancellation, and honestly I've not seen this as a clause in either Geneva or Zug leases. Maybe you have some examples?

Accordingly, the cancellation is an arbitrary settlement, determined by the agency and the owner, and not contractually outlined. In our case, the two parties decided that they had incurred 'expenses' to the tune of CHF 4300 each, and they even tried to charge VAT for the owner as a private individual. Its beneficial in fact not to outline it as a clause, as it is then discretionary whether it is applied or not, and to what extent. Given the frequency of this kind of situation, it seems strange that a standard framework should exist, in Zug at least, but not include terms to mitigate potential abuse.
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Old 24.04.2018, 14:30
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Re: Legal pitfalls under Swiss Rental Law

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The contract doesn't outline cases for early cancellation, and honestly I've not seen this as a clause in either Geneva or Zug leases. Maybe you have some examples?

Accordingly, the cancellation is an arbitrary settlement, determined by the agency and the owner, and not contractually outlined. In our case, the two parties decided that they had incurred 'expenses' to the tune of CHF 4300 each, and they even tried to charge VAT for the owner as a private individual. Its beneficial in fact not to outline it as a clause, as it is then discretionary whether it is applied or not, and to what extent. Given the frequency of this kind of situation, it seems strange that a standard framework should exist, in Zug at least, but not include terms to mitigate potential abuse.
I did not say all you mentioned is covered in the contract, as for early cancellation either the law applies or one makes a more beneficiary agreement with a willingly landlord.
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Old 24.04.2018, 14:42
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Re: Legal pitfalls under Swiss Rental Law

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Accordingly, the cancellation is an arbitrary settlement, determined by the agency and the owner, and not contractually outlined. [...] Given the frequency of this kind of situation, it seems strange that a standard framework should exist, in Zug at least, but not include terms to mitigate potential abuse.
Lets add a 0.0 to your long list.

0.0 The standard legal framework and reference in case something is not mentioned in a contract is the Code of Obligation. An inofficial English version can be found on the official website of the Swiss goverment: https://www.admin.ch/opc/en/classifi...009/index.html
Official languages are Italien Germen and French. You might change the language at the top right hand corner.
For rental contracts important is all the stuff from Art.1 to Art. 183 and from Art. 256 to Art. 273c

0.1 Contractual parties are normally bound to what is written in the contract, save the code of obligation defines certain standard clause as binding or prescibes certain minimum conditions. Those can not be overruled by the contract.

0.2 If you sign you are fully bound to what is defined by contract and code of obligations. Early release apart from the situation prescribed and foreseen by contract or code of obligations is only possible by mutual agreement. Be prepared to offer a substantial benefit in case you are the party at fault. In the worst case the other party might stick to what is prescriped by contract and code of obligations which could cost you a significant ammount of money.

0.3 In some canton there are certain mandatory clauses which go beyond what is defined in the code of obligations. See also 2.1
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