Due diligence

Legal due diligence

Describe the legal due diligence required in the context of a real estate business combination and any due diligence specific to a real estate business combination. What specialists are typically involved and at what point in the transaction are the various teams typically brought in?

Legal due diligence will focus on the real estate and related issues that are important for the real estate (eg, the agreements, charges and notifications outlined in the Land Register, the lease agreements, maintenance agreements, permits and environmental issues). Sometimes there are (potential) disputes with neighbours or it is important to clarify future construction possibilities. The legal due diligence is interconnected with the technical and environmental due diligence and sometimes includes tax due diligence.


How are title, lien, bankruptcy, litigation and tax searches typically conducted? On what levels are these searches typically run? What protection from bad title is available to buyers, and does this depend on the nature of the underlying asset?

Based on the legal assumption that the Land Register is complete and correct and everyone may rely on it in good faith, no further searches regarding title need to be carried out. Any person is entitled to obtain the following information from the Land Register without showing a legitimate interest:

  • the name and description of the real estate;
  • the name and identity of the owner;
  • the form of ownership and the date of acquisition;
  • the charges and mortgages; and
  • the notifications (subject to exceptions).


A person showing a legitimate interest is entitled to consult the Land Register or be provided with an extract. Furnishing evidence to establish a legitimate interest, however, takes time. In practice, it is more convenient for the buyer to get a complete extract from the Land Register via the seller. Further, the buyer may inspect the records and registers of the debt enforcement and bankruptcy offices and request excerpts thereof if the buyer demonstrates a legitimate interest. There is, however, no tax debt register in Switzerland.

Representation and warranty insurance

Do sellers of non-public real estate businesses typically purchase representation and warranty insurance to cover post-closing liability?

The seller will try to contract away any warranty so that insurance will not be necessary. However, any agreement to exclude or limit a warranty obligation is void if the seller has fraudulently concealed its failure to comply with it. As the risks should be manageable, warranty insurance is uncommon but is increasingly used in big transactions.

Review of business contracts

What are some of the primary agreements that the legal teams customarily review in the context of a real estate business combination, and does the scope vary with the structure of the transaction?

In real estate transactions, the legal teams review agreements that are related to the property that may impact the purchaser in the future. The following agreements are customarily reviewed:

  • lease agreements of current tenants;
  • easement agreements and any associated documents;
  • facility management agreements;
  • various agreements regarding service and maintenance;
  • the present purchase agreement; and
  • the draft of the new purchase agreement.


Depending on the transaction, there may also be agreements with insurance providers, authorities or a neighbour, among others.

Law stated date

Correct on

Give the date on which the information above is accurate.

18 September 2020.