Real Estate Law

Question 1

Define possession as a legal term (in one sentence) and
then differentiate possession from ownership (also in one sentence).

Answer 1

Possession is the factual rulership and is expressed via the effective control over a thing.
In contrast to possession, ownership is the legal rulership over a thing and means that a person may freely dispose over it (within the limits of law) from a legal perspective.

Question 2

What is a “thing”?

Answer 2

A “thing” is defined as ** impersonal physical (tangible)** object which can be subjected to human domination and is different from a human person.

Question 3

How is ownership in chattel (movable things) transferred?
Is the transfer of **real estate **facilitated in the same way? If not, what is the difference?

Answer 3

Ownership in chattel is transferred to the new owner by transfer of the possession (effective control) with legal cause.
No. Immovable property must be transferred by a ** Public Deed **and filing an application to the land register, the land register then changes the record in the land register reflecting the new owner.

Question 4

What is the legal consequence if a contract, which by Law was required to be drawn up as a Public Deed, was agreed only in writing?

Answer 4

The contract is invalid.

Question 5

How are co-ownership rights measured / quantified?
Do condominium owners have a right of pre-emption by Swiss Law?

Answer 5

The co-ownership is regulated by a ** value quota**, which has to be defined for each exclusive right when the Condominum is established.
No. The condominium owners only have a right of pre-emption if it has been explicitly agreed. (Art. 712c Para. 1 CC).

Question 6

Define a what a pre-emption right is and explain the particularities with regards to formal requirements of a pre-emption right.

Answer 6

The right of pre-emption entitles the purchaser to acquire a specific chattel or immovable property by unilateral declaration of consent if the purchase is entered into with a third party. Only legal transaction which is to be considered to be economically equivalent to a sale qualifies as a pre-emption scenario.
The preliminary contract must comply with the same formal requirements as the main contract.

Question 7

Explain the differences between a real estate SICAV and SICAF from an investors perspective.

Answer 7

The SICAV is an investment company with variable capital (open investment form) whereas the SICAF is an investment company with a fixed capital (closed-ended investment form). If an investor in a SICAV wants to divest his investment, the SICAV has to re-purchase the shares from him. With a SICAF, the investor must find a buyer for his shares.

Question 8

Is it possible for a normal private indirect real estate investor to establish a Real estate investment
foundation?

Answer 8

No. This investment vehicle is reserved only for tax-exempt pension facilities of the second and third pillar.

Question 9

What’s the difference between rights in rem and obligations?

Answer 9

obligation
- duty of a particular person (debtor)
- to provide another person (creditor)
- a certain performance

right in rem
- based on property law
- must be generally observed by all persons and legal entities
- most important right in rem is ownership/ property

Question 10

What’s also treated as a “thing”?
- energies
- distinct and permanent rights
- animals
- aggregates

Answer 10

• energies, yes, if they are controllable
• distinct and permanent rights, yes
• animals, no, but property rights are still applicable
• Aggregates (e.g. share package), don’t habe an independent legal status. For this reason, each individual share must be transferred

Question 11

What are the requirements for direct investment in property?

Answer 11

• Sufficient equity capital allowing for appealing investment objects
• adequate risk diversification

Question 12

What’s the difference between direct possession and derivative possession?

Answer 12

direct possession:
- owernship an possession is one person

derivate possession:
- owernship and possession are related to different persons

Question 13

In which cases does the acquirer becomes the owner even before registration in the land register of an immovable property?

Answer 13

in case of a appropriation, inheritance, compulsory purchase, debt enforcement or court judgement

Question 14

Which two types of collective owernship are distinguished under Swiss Law?

Answer 14

• co-ownership
• joint ownership

Question 15

Does the community of condominium owners have a legal personality? Can it aquire under its own name the revenue derived from its administrative activities, including sue and collect debts in its own name?

Answer 15

No legal personality

yes it can.

Question 16

What is the key purpose of the land register?

Answer 16

• document the ownership situation of land
• including associated rights and obligation
• transparency
• public available (if there is a legitimate interest)

Question 17

What is the content of the land register?

Answer 17

1. parcels of land and the building thereon
2. distinct and permanent rights
3. mines
4. co-ownership shares

Question 18

What is the difference between notings (Anmerkungen) and priority notices (Vormerkungen)?

Answer 18

notings
- inscriptions of legal situations which are not created by the inscription, but are to be brought to the knowledge by the inscription only
- example: commentary on accessories

priority notices
- personal rights may be combined with effect of a right in rem
- bsp. registration of a rental agreement in the land register
- possible to include restrictions

Question 19

What’s a limited right in rem? Which types exist?

Answer 19

• like right in rem, which only concern certain legal aspects in a thing
• can also be enforced against everyone
• if expired, the ownership rights “expands” again

Three types:
1. Easements (Dienstbarkeiten)
2. Real burdens (Grundlasten)
3. Charges (Grundpfand)

Question 20

What kind of easements (Dienstbarkeiten) exist?

What’s the formal requirement?

Answer 20

• personal easements
• real easements
• Usufruct
• General building right
• distinct and permanent building right

Formal requirement: entry in the land register by public deed.

Question 21

Give me an example for a real easement

Answer 21

• right of passing
• right of passing through, grazing or watering
  other way around also possible by obligation
• bans on construction
• omission of certain commercial activities

Question 22

What is a usufruct and how do you formally create one? And when does it end?

Answer 22

• usufruct may be held over (1) chattel, (2) immovable property, (3) rights or (4) assets -> only easement which may be established over chattels or claims
• only the naked property remains with the owner

Formal requirements:
-> legal basis is a written usufructuary agreement
- in case of immovable property: entry in the land register (inkl. public deed)
- in case of other: transfer to the acquirer

End:
- by death or dissolution
- latest after 100 years

Question 23

What kind of limited right in rem is the general building right? How long is the duration?

Answer 23

• an easement
• at least 30 years, up to 100 years

Question 24

What’s the difference between usufruct and the right of residence?

Answer 24

right of residence -> only comprises the use of the property and NOT the revenue
usufruct -> only naked property belongs to owner

Question 25

Why are there formal requirement and by whom implemented?

Answer 25

Implemented by legislator to:
- protection of the contracting parties
- legal certainty by providing evidence or facilitation for the conduct of proceedings
- important and reliable basis for the management of public registers
- ensure information and awareness of the contractual parties
- publicity function

Question 26

What kind of formal requriements exist?

Answer 26

1. simple writing
2. qualified writing
3. public deed

Question 27

What’s the definition of a collective investment scheme?

Answer 27

• asset raised from investors
• for the purpose of collective investment
• and which are managed for the account of such investors
• while the investment requirements of the investors are met on an equal basis

Question 28

Real Estate funds: which kind of investments are allowed?

Answer 28

• property, including fixtures and fittings
• investnemts in claims on real estate companies whose sole objective is the purchase and sale and/or rental and lease of their own property, provided that at least 2/3 of their capital and voting rights are incorporated in the investment fund
• units in other real estate investment funds and listed real estate investment companies amounting to no more than 25% of the fund’s total asset
• foreign real estate securities whose value can be adequately valued