Dear Forum Members,

We are in the initial stages of a property purchase and have secured a sample contract which will eventually be customised and used in our final contract.

I was going thru the sample contract this morning, when I came cross the following paragraph, which sounded a bit odd. I have pasted below the original German paragraph and the translated English one.

Can someone please advise on whether the below statement is normal for property sale contracts and if no, what are the points that I should question/find out more/clarify, before drawing up the final sale contract?

Thanks as always to everyone.

Original German content:
Die Parteien, insbesondere die Käuferschaft, verzichten ausdrücklich auf eine Sicherstellung der Grundstückgewinnsteuer. Sie bestätigen gleichzeitig, vom instrumentierenden Notar ausdrücklich über die Bedeutung und den Umfang dieses Verzichts, insbesondere bezüglich der gesetzlichen Pfandrechte für die Immobiliensteuern aufgeklärt worden zu sein.

English translation:
The parties, especially the buyers, expressly waive the property gains tax. At the same time, they confirm that they have been explicitly informed by the instrumental notary about the meaning and scope of this waiver, in particular with regard to the legal lien for real estate taxes.

The property gains tax has to be paid by the seller. If the seller fails to do so the real estate can be charged, or in othe words the current owner has to pay the bill.

The clause says that the estimated tax will not be held in an escrow account.


In other words there is a slight chance that the buyer has to pay the the tax if the seller goes bankrupt.

Not an issue if the seller intends to buy a new home in Switzerland (as the tax will be deferred anyways)
An issue if the seller intends to move abroad soon after the sale.

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Thanks! The seller is one of the largest (and probably the most reputable) Swiss insurance companies so the chances of either going bankrupt or moving somewhere else after the sale are quite low.

Just wanted to be sure of the exact meaning of the statement before we take it up for moving ahead.

If there is anything else that we should clarify regarding this statement, please advise. Thanks.

Since you're working from a template, why not strike out any language you don't like?

Most firms won't accept any contract changes: take it or leave it. I guess especially the big ones, but we found that even with a small one

I have a mate who has worked at the Notary Zurich for years, he warns to be very careful about this or try to get the money into a locked account. The capital gains tax liability does default to the property (ie current owners) if it is not paid. In the normal settlement the fee is paid direct to the Canton at the time of settlement but the owners can defer paying this as they want to roll the gain into the next property so they get the fee back. If the seller then does a runner or goes bankrupt you, the new owner will have to pay this fee again. The fee is normally calculated once the sale contract is registered and paid direct at the time of transfer, under no circumstances do not pay this directly to the seller. The only way to completely protect yourself is to pay this fee into a locked bank account until the seller buys another property or if they don't within two years then pay the fee from this account. In reality this should not be a problem for honest sellers (fees paid into a locked account) so question them why if they refuse this change in clause.

As my mate writes the contracts as instructed by the seller he sees all manner of dodgey stuff written in contracts and agreed to by naïve buyers (and been burned badly!) in the rush to get a sought after property. Further to this a lot of real estate agents submit contracts with glaring mistakes as well, it is not the job of the notary to make sure this is fair or morale, only that you understand (supposedly!) what you are signing.

Because what you said, an I before, applies foremost to private sellers.

However,

Not all cantons transfer the liability for non-paid capital gains tax back to the purchaser. House purchases, for example, in Aargau don't involve this risk.

Wrong. § 234a StG-Aargau. But it is limited to 3% of the real estate value.

https://www.ag.ch/media/kanton_aarga...pfandrecht.pdf

Indeed you are right. The information I provided was 6 months out of date:
https://www.ag.ch/de/aktuelles/medie...ils_120451.jsp