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Old 05.07.2021, 22:44
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Is it too risky to buy a partially occupied property?

We are looking at buying a 2-family house as a whole. Currently the owner family live in the significantly larger upstairs part (5.5 rooms), and the grandparents rent the lower floor (1.5 rooms).

We are close to a successful bid, but have been informed that the grandparents have yet to find a new place to live, and will most likely move out during 2022. Allowing them to stay would be a condition of purchase. During this time we would share a garage, washroom and yard/pool.

We personally wouldn't mind this (we'd probably only move in Feb 2022) so long as we can legally secure that they do move out by the end of 2022. Is this possible, or do tenants in CH have some kind of protections we don't know about?
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Old 05.07.2021, 23:33
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Re: Is it too risky to buy a partially occupied property?

I think it’s all down to trust .

In my building there was a tenant who hadn’t payed his rent for many months and furthermore caused all sorts of problems for other tenants through his antisocial behavior .

The landlord tried to get him evicted but it went through all the courts and I think it took them more than a year from the first court hearing until they could legally remove him . And even so the help of the police was required .

But if you’re dealing with reasonable civilized people I imagine you can always find a reasonable agreement .
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Old 06.07.2021, 04:55
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Re: Is it too risky to buy a partially occupied property?

Owners can always give notice to tenants if they want to use the premises themselves. In German this is called "Eigenbedarf" (= own use, or own need). You may not give notice to the grandparents just because you don't enjoy the way they share the laundry or because decided you'd like them to go away, nor becaue you'd prefer to rent that little apartment to your new office colleague, instead. By contrast, you can always give notice if you or an immediate family member is going to expand a hobby, or needs a home office, or you need an extra bedroom for your teenager, and therefore need to use that space four yourselves.

If you decide to allow the grandparents to stay on, then put into the purchase contract the terms upon which the grandparents will become your temporary tenants, and the date by which they will vacate the property, at the latest, the terms by which they could leave earlier if they so chose, that they should leave the apartment properly clean, and the additional cumulative penalties due to you if they do not, in fact, vacate by the agreed date.

In any event, even though they are still living there, ask to inspect their apartment first, before you buy, and before you accept them as tenants. Find out whether they smoke or have pets or listen to TV loudly or whatever else is on your personal list of things that might bother you. They might, however, be lovely, and teach you things about how the house works, and the area, and help you to get to know local tradespeople.

Last edited by doropfiz; 07.07.2021 at 01:46. Reason: typo
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Old 06.07.2021, 08:30
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Re: Is it too risky to buy a partially occupied property?

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Owners can always give notice to tenants if they want to use the premises themselves. In German this is called "Eigenbedarf" (= own use, or own need). You may not give notice to the grandparents just because you've don't enjoy the way they share the laundry or because decided you'd like them to go away, nor becaue you'd prefer to rent that little apartment to your new office colleague, instead. By contrast, you can always give notice if you or an immediate family member is going to expand a hobby, or needs a home office, or you need an extra bedroom for your teenager, and therefore need to use that space four yourselves.

If you decide to allow the grandparents to stay on, then put into the purchase contract the terms upon which the grandparents will become your temporary tenants, and the date by which they will vacate the property, at the latest, the terms by which they could leave earlier if they so chose, that they should leave the apartment properly clean, and the additional cumulative penalties due to you if they do not, in fact, vacate by the agreed date.

In any event, even though they are still living there, ask to inspect their apartment first, before you buy, and before you accept them as tenants. Find out whether they smoke or have pets or listen to TV loudly or whatever else is on your personal list of things that might bother you. They might, however, be lovely, and teach you things about how the house works, and the area, and help you to get to know local tradespeople.
The points sound good, but it would have to be a separate contract for the rental agreement. I'd be very careful about putting in penalties - rental agreements are highly regulated (by Swiss standards) and that isn't normal, the end of a fixed-term contract plus the Eigenbedarf rules should be enough.

Ideally get the current owner to draw this up with the grandparents, then it just gets transferred to the new owner (you) as a condition of the purchase.
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Old 06.07.2021, 10:50
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Re: Is it too risky to buy a partially occupied property?

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The points sound good, but it would have to be a separate contract for the rental agreement. I'd be very careful about putting in penalties - rental agreements are highly regulated (by Swiss standards) and that isn't normal, the end of a fixed-term contract plus the Eigenbedarf rules should be enough.

Ideally get the current owner to draw this up with the grandparents, then it just gets transferred to the new owner (you) as a condition of the purchase.
Thanks to all for the inputs, I seem to this this comment is the most pragmatic. Still, from what I have heard, Eigenbedarf can be contested for 2-3 years through the courts in worst case.

We may blow our chances by not "trusting" them, but to me the such a big investment is too risky not to have things legally covered.
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Old 06.07.2021, 10:55
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Re: Is it too risky to buy a partially occupied property?

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We may blow our chances by not "trusting" them, but to me the such a big investment is too risky not to have things legally covered.
Do not rely on trust at all. Have everything on paper and have it checked to ensure it is legally binding before it it signed by relevant parties.

Check your mortgage allows you to rent out half the property too.

You don't know these people. It's amazing how really nice people can be not so nice when push comes to shove.

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Old 06.07.2021, 11:36
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Re: Is it too risky to buy a partially occupied property?

An idea, but not sure if legally feasible:

When you transfer the purchase price, hold on to an amount which is equivalent to 1-2 years of rent. Put it into escrow if needed giving you access to the full amount if they don’t leave within 1 year, or them access to the rest minus the due rent whenever they leave early.
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Old 06.07.2021, 12:19
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Re: Is it too risky to buy a partially occupied property?

Regardless of any ‘binding’ agreement you reach, the courts are still going to side with the tenants.

You will succeed, in the end, but it will take some time.

I wouldn’t give them until the end of 2022, I’d give them 12 months, which is plenty of time. And I wouldn’t give them access to the garage or Yard/Pool.

I’d also ask them for three months damage deposit, like any other landlord would.
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Old 06.07.2021, 12:31
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Re: Is it too risky to buy a partially occupied property?

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We are looking at buying a 2-family house as a whole. Currently the owner family live in the significantly larger upstairs part (5.5 rooms), and the grandparents rent the lower floor (1.5 rooms).

We are close to a successful bid, but have been informed that the grandparents have yet to find a new place to live, and will most likely move out during 2022. Allowing them to stay would be a condition of purchase. During this time we would share a garage, washroom and yard/pool.

We personally wouldn't mind this (we'd probably only move in Feb 2022) so long as we can legally secure that they do move out by the end of 2022. Is this possible, or do tenants in CH have some kind of protections we don't know about?
Trust? When buying a house? Naa, neither with the state of a house nor the circumstances of the sales.

The story sounds weird. That house most likely belonged to the grand-parents once? And now the young ones sell up and expect them to find something new (which they haven't yet, maybe because they're not keen on looking or due to their age is not easy). Are the young ones leaving the country or why do thy want out? Did you meet those grand-parents? Are the young ones expecting them to move to a retirement home? Did you check whether the grandparents have a "lebenslängliches Wohnrecht" (life estate) in that house?

If you wanted to base this buy on trust you'd need answers to all these circumstances (you, not me/us ) And even then ... I know a case where life long friends did not stick to a written (contract) promise of selling the house in the end.

Unless you think it's a good/okay thing to have tenants downstairs and willing to have them for years or decades (which could be worth a thought) I personally would not buy this place. You might have to put up with "we've always done it like that" things though.
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Old 06.07.2021, 12:34
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Re: Is it too risky to buy a partially occupied property?

Or perhaps you could ask the sellers to put 10 years rent into a blocked account, to be refunded on the flat being returned to you. Trust goes both ways.
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Old 06.07.2021, 12:39
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Re: Is it too risky to buy a partially occupied property?

I am beginning to see it as a deal-breaker.

We did meet the tenants but not the owners. They seemed nice but not like they owned much. So it could be:

1. They can't really convince other landlords of their liquidity
2. The owners are moving out because the tenants won't/can't.

or both.

Either or both are red flags, and in worst case, we would be on the disadvantaged side. And with two small kids, I am not risking being under the same roof as hostile tenants.
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Old 06.07.2021, 13:05
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Re: Is it too risky to buy a partially occupied property?

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Or perhaps you could ask the sellers to put 10 years rent into a blocked account, to be refunded on the flat being returned to you. Trust goes both ways.
Again, this still risks being under the same roof as hostile tenants.

Another strategy would be to offer an additional amount to the value of 1-2 years rent of the occupied space on condition the tenants relocate prior to purchase (we think the house would still be worth this). If this was refused, then it would clearly be time to walk away.
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Old 06.07.2021, 13:20
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Re: Is it too risky to buy a partially occupied property?

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We did meet the tenants but not the owners. They seemed nice but not like they owned much. So it could be:
That's the tagline for so many Hollywood thrillers and horror films...
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Old 06.07.2021, 14:44
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Re: Is it too risky to buy a partially occupied property?

Why not pay a real estate lawyer to come up with a solution that protects you?
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Old 06.07.2021, 15:34
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Re: Is it too risky to buy a partially occupied property?

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Why not pay a real estate lawyer to come up with a solution that protects you?
I agree on this - and I have a fantastic English/German/Swiss German speaking lawyer that I have been dealing with who that specializes in real estate contracts. Happy to share her details via PM if you are interested.
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Old 06.07.2021, 16:01
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Re: Is it too risky to buy a partially occupied property?

Exactly, the grandparents situation influence the evaluation of property. A lawyer can explain possible risks. A buyer decides what is acceptable for her/him.
And 1-3 months of deposit is standard that work quite well for Switzerland, including other safe guards for tenants / landlords. At the end, you just need to form a mutually acceptable contract, I really don't see why some expat snowflakes would need special treatment with 10 years deposit or any other "innovative ideas".
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Old 07.07.2021, 00:51
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Re: Is it too risky to buy a partially occupied property?

You talk about canton Zürich, the parents will be awarded leniency if things get tough with an ordinary rental contract.
I guess you have two viable options:

1) you buy, with a fixed term rent until November 30 2022 for the parents (December isn't an official day to end rental contracts). I'd contact the Schiedsgericht before signing to ask what they think about it, just to have some additional ammo if it turns ugly. Perhaps give them the one-sided option to leave earlier.
2) you rent-to-buy the house, with the details tailored to the parents moving out. Your option to buy is entered in the land registry. Any prepayment by you is paid into a Sperrkonto (escrow account?) and counts fully towards the purchase price if you actually buy, otherwise it's fully returned to you, without any deductions, at a predefined date after your option to buy has lapsed.

"Harte Geschäfte gute Freunde."
Translates to something like "only toughness in business provides the space to be and remain on friendly terms". If they don't intend to have you over a barrell they'll see and agree to the necessity from your perspective, it's obvious. So if the deal falls through because of it you probably dogded a bullet. It won't hurt to mention that phrase, they'll be familiar with it.
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Old 07.07.2021, 06:37
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Re: Is it too risky to buy a partially occupied property?

We looked at properties where vacant possession was going to be an issue. We walked away. We also looked at properties which were in theory supposed to be 2 --3 family homes yet the layout meant a lack of privacy for each unit.

I assume the grandparents are older people. Typically they don't like change and moving is very high on the list of things they don't want to do.

Given the shared facilities this property sounds more like a "Generationen Haus" than a 2 family house. I suspect there is only one meter for water or electricity. Does it have 2 mailboxes?

While the property market is very competitive at the moment, it is difficult to imagine buyers lined up to buy a property where strangers will live in the same house.
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Old 07.07.2021, 08:00
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Re: Is it too risky to buy a partially occupied property?

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We looked at properties where vacant possession was going to be an issue. We walked away. We also looked at properties which were in theory supposed to be 2 --3 family homes yet the layout meant a lack of privacy for each unit.

I assume the grandparents are older people. Typically they don't like change and moving is very high on the list of things they don't want to do.

Given the shared facilities this property sounds more like a "Generationen Haus" than a 2 family house. I suspect there is only one meter for water or electricity. Does it have 2 mailboxes?

While the property market is very competitive at the moment, it is difficult to imagine buyers lined up to buy a property where strangers will live in the same house.
This is now our thoughts exactly. The highest bid on the property is under what we thought it would be, and we figure it is because other bidders have walked when they discovered they wouldn't be getting vacant possession.

The owners have kids in pre or early teens. My guess is they tolerated the grandparents as babysitters, but now those days are over the only way to get rid of them is to sell and make them someone else's problem.
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Old 07.07.2021, 08:54
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Re: Is it too risky to buy a partially occupied property?

A few thoughts on this.

First, if it is your dream house within your budget it is worth putting in some time and money to explore the options.
Second, meet again with the tenants to gauge their feelings, thoughts and plans. They may have more influence on selection of buyer (and price) than elsewhere, this can work favorably sometimes.
Third, get clarity on the laws as they relate to you as the purchaser and them as the tenants, these maybe directly opposed. One will take precedence over the other and historically laws were to protect the "little people" from the wealthy property owners. So if they want to make it difficult the tenancy can extend beyond any contracts so your relationship to them will play a part. If their rent is very low and they have a low income, you maybe expected to compensate them as they can't find an equivalent property at the same price.
Forth, get law insurance as they can advise you and generally have an expert in every area.
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