For most people, purchasing a condominium is probably a decision of greater consequence in life. Nevertheless, one can sometimes be blinded just by the beautiful position on a sunny slope. Or it is the stylish interior that is decisive. With our “Dos and Don’ts” we can give you tips from practice.
Purchase of condominiums is highly popular. When individuals buy an apartment in a new building today, they usually make first advance payments long before construction starts. They also sign a binding purchase agreement in advance. The example of Hannes Sommer (name changed) shows what risks are associated with this: After 12 months of intensive apartment search, he finally found his dream apartment. Large and bright, a nice environment and especially close to the S-Bahn station, from where he commutes. The seller of the planned superstructure promoted with the slogan “best quality at fair prices.” So they soon agreed.
The Case in German Legalese
Hannes Sommer, however, had overlooked a controversial point in the contract: The “small print” under “Warranty Rights and Guarantees” states that the seller or general contractor assigns all warranty claims “to the purchaser or condominium association.” For non-lawyers it sounds completely safe, even positive. After all, they get certain rights and guarantee claims.
But the fact is: Legally interpreted, such a clause means the general contractor does not want to assume responsibility for defects in the building. If something is defective at the building – which hardly ever can be avoided – the buyers themselves have to deal with the problem: They need to find out who is responsible and who has to fix the deficiency. In this game for responsibilities, however, private buyers of condominiums usually have bad cards. Without a clean contract with a clear responsibility of the entrepreneur they often can do little.
A good dose of black eye, as in Hannes Sommer’s case, is by no means rare. Nine out of ten buyers would sign the contract more or less indiscriminately, warns Dominik Romang. He is a lawyer in Zürich and President of the Swiss Stock Owners’ Association. In practice, it happens that the momentous decision for an apartment must be made under time pressure. Some salespeople argue that they have many other interested parties. “Such time pressure should not be accepted,” says Dominik Romang. A prospective buyer must be given at least 10 to 14 days. So much time is needed to study all plans and contract details. If he also checks the construction company’s references, it may take even longer.
Of course, not everything always has to take the worst possible turn. But investing several hundred thousand Swiss francs for a flat without getting the right picture it is simply naive. Dominik Romang recommends having a look at the relevant documents and contracts very carefully before making a purchase and getting independent advice.
«Location, location, location.» This is the mantra from almost every real estate expert. The location not only determines the long-term value and soundness of an investment; it also proves to be a decisive factor in everyday life: No one wants to spend hours of commuting time in the face of overloaded traffic routes. It does not matter whether on the way to work, to shopping or to visit friends. Pay attention therefore to a good transport stop (S-Bahn connection, public transport, private transport, etc.) and good local supply (shops, culture, leisure). This also includes short distances to schools and work places offers. In all events, the location has an essential influence on housing satisfaction. This, in turn, is related to the habitability of the neighborhood and the surrounding area. The view, sun, peace and emissions are also significant factors. Just think: Owning a condominium is usually an investment for the long run!
The condominium is basically organized differently than living together in a rental house. In condominiums, the residents are the owners at the same time. As condominium owner, you are co-owner of the whole house, and you have a so-called special right to your own home. Outside the apartment, however, the community has the say. Here is a common error: Thus, when many people speak of “their” garden or “their” parking, the fact is they only have an exclusive right of use in these areas, as it is correctly stated. Recommendation: Deal in more detail with the rules of condominiums. Carefully read the relevant documents such as justification deed, regulations, house rules, etc.
The Construction Quality
In brochures when viewing a sample apartment, more and more with the help of digital visualizations almost all apartments look great! But what is really promised to the purchaser of a condominium when he enters his own home for the first time? From a purely formal point of view, it should be remembered that advertising documents are not binding. Ultimately, the contract and construction manual, which are signed as official documents in the certification process, are decisive. Make sure that all documentation, assurances, plans and construction manuals are complete and detailed. If, for example, in the contract you are only promised vague “parquet in the children’s rooms” or “kitchen appliances in Swiss quality,” you can be left hanging with it. Such formulations are so vague that everyone interprets them quite differently. It would be better if the parquet ordered is described very precisely, including the price per square meter of parquet.
The Age-old Question of Money
The acquisition of a condominium also has an economic side. Is the offer market-fair or overpriced? Is there a danger that you will be billed afterwards many extras and special wishes separately? Keep in mind that in the last two to three years many new apartment developments have been constructed. It is therefore quite possible that one or another entrepreneur has calculated the prices in an economically more favorable environment. In any case, from Lake Constance to Lake Léman it can be seen that especially in the case of some higher-quality apartments there is often room for negotiation.
Also pay attention to your bank’s assessment: In order to avoid all too risky financing, today’s lenders often operate on the principle of “caution.” If, for example, the purchase price is higher than your bank’s internal estimate, you will not receive an 80 percent loan today. This means you must be able to contribute more than the otherwise usual percentage of equity.
Realistic and fair assumptions regarding budgets are also important. For example, if the entrepreneur uses a budget of only 10,000 or 15,000 Swiss francs for the kitchen, an evil awakening follows for you: A fully equipped modern kitchen now costs much more.
The Greatest Unknown: Additional Costs
In practice, many questions arise later. Who thinks seriously when first studying the sales documents of the later incidental costs? Nevertheless, you are well advised to ask such questions beforehand. In condominiums, the operating and ancillary costs are relatively closely related to the value ratio: The running costs for heating, service subscriptions, elevators, wages and social benefits for housekeepers, administrators or gardeners are usually distributed according to a certain cost key. This in turn depends on the value of the individual apartments In the building (value ratio). The heating costs are usually high, but they are difficult to plan. Specifically, the costs vary greatly depending on individual consumption, size of apartment and manner of heat generation.
So that you do not fall into the cost trap, especially existing and older buildings should be scrutinized more closely. If you are buying into an existing condominium association in an old building, you should clarify the structural condition: Will major renovations and maintenance work be required in coming years? Ask whether reserves have been created or not within the framework of a renewal fund.
Think about whether the communal aspects of such a housing form pertain to you. If you buy a condominium, you will be a member of the condominium association – whether you want to or not. So think about whether you like to deal with other people, or whether you are prefer the greatest possible individuality.
Apart from the property, you should therefore also thoroughly examine the future neighbors or the community owners. The condominium association functions similar to a society. All co-owners in the house can participate in annual meetings, make proposals, participate in finances, of course exercise their right to vote, etc. If you have trouble bowing to the majority of others, you should opt for a different housing form.
Get an idea of how the condominium association is organized as well as with what kind of culture and what ways of dealing you will be faced. A larger super structure with 100 other condominium owners and a professional administration is probably quite different from a small community – in smaller multi-family houses it is possible that perhaps neighbor Müller or Schmid owns several apartments and does his own administration during his free time.
In the meantime, the above-mentioned condominium owner Hannes Sommer has learned his lesson. Today he says: “Many potential problem areas are not recognizable for lay persons with no experience.” – If necessary, get help. For example, let the construction manual be examined by an expert and the contract by a lawyer. Listen to your circle of acquaintances and friends – after all, the number of condominium owners in Switzerland has increased considerably in recent years.