Revision of the construction contract law

The applicable building contract law is appropriate and balanced. In the event of construction defects, however, builders are sometimes insufficiently protected. Based on various motions, the Federal Council sees a need for revision and on August 19, 2020 sent a selective adjustment of the articles of the law for consultation. The revision aims to improve the situation of builders. The preliminary draft is compatible with the standards of the Swiss Association of Engineers and Architects (SIA) that are relevant in practice. The following article is intended to provide an overview of the planned innovations.

Extend the deadline for reporting defects to 60 days:

In the construction of a building, there are always defects. If the customer has identified a defect during the inspection of the building, he must notify the contractor. According to current practice, notification must be made immediately after the defect is discovered. According to the Federal Supreme Court, a complaint period of 7 days applies as a guideline. The draft for consultation now proposes a period of 60 days for complaints about defects in immovable works. This notice period should not only apply to work contracts, but also to property purchase contracts. However, the regulation should remain discretionary law. The contracting parties are therefore free to contractually shorten or extend the notice period. However, unless otherwise agreed, the revision draft mitigates the current severity of the short notice period in combination with the forfeiture of defect rights.

Right to rectification of buildings for personal use:

When buying new buildings or condominium units, the rights to which the buyer or the person who ordered the work is based are often waived. As a substitute for this, the defect rights of the seller or contractor against his subcontractors are usually assigned to him. This contractual situation is unsatisfactory for the buyer or work orderer for various reasons. In the draft for consultation, the Federal Council therefore proposes that the existing right to rectify construction defects can no longer be excluded by law in future if the construction serves personal or family purposes. This rule should also apply to work and property purchase contracts for such buildings.

Substitute security to avert the builder’s lien:

Finally, the situation should be improved in one further point. Under current law, craftsmen and entrepreneurs who have provided work (and material) for a building on a property are entitled to a statutory mortgage on that property for their claim. The property owner can prevent a corresponding entry of the property lien in the land register by providing sufficient security (substitute security) for the claim. There is a risk that a general contractor does not pass on its payments to the subcontractors and they assert such a right of lien. The client can only pay the claim twice or, for example, provide a bank guarantee. In order to improve the situation, according to the draft for consultation, such substitute security should only have to cover default interest for ten years and not, as was previously the case, for an unlimited period.

Construction and real estate law is one of our core competencies. Our experienced lawyers will be happy to advise you on any questions relating to this topic and will help you to represent your interests competently and efficiently.

posted in May 2022 | Noelle Christ

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