Introduction

The partial revision of the Swiss Code of Obligations (CO), which will come into force on January 1, 2026 and amend the warranty provisions regarding sales contracts and contracts for work, is intended to improve the legal position of employers and real estate purchasers in the event of construction defects.

The new law will apply to contracts concluded on or after January 1, 2026, while the current provisions will apply to contracts concluded before that date.

New Notification Period for Defects in Real Estate Purchase Contracts and Certain Purchase and Work Contracts

According to the current statutory provisions, to preserve warranty rights, defects must be reported «immediately», i.e., after delivery/inspection of the work or purchased item (in the case of obvious defects) or immediately after discovery (in the case of hidden defects). The new law establishes a mandatory 60-day notification period for defects in the following cases:

• (i) Real estate purchase contract: for both obvious and hidden defects;
• (ii) Purchase contract: to the extent that (obvious or hidden) defects in a purchased item that has been integrated into an immovable work (in accordance with its intended purpose) have caused the immovable work to be defective;
• (iii) Contract for work: for contracts for work concerning an immovable work (for obvious and hidden defects) as well as for the following (obvious and hidden) defects of a work that have caused the defectiveness of an immovable work:
  • defects in a movable work that has been integrated into the immovable work in a manner consistent with its nature and purpose;
  • defects in a work that was created by an architect or engineer and used as the basis for the creation of the immovable work in accordance with its intended purpose.

This 60-day notification period cannot be circumvented by the parties involved. Any shorter period is invalid.

For other purchased items – i.e., items that are not integrated into an immovable work (in accordance with their intended purpose) – as well as contracts for work not meeting the above criteria, the previous rules remain in force and any defects must therefore continue to be reported immediately after delivery/inspection of the item (in the case of obvious defects) or immediately after discovery (in the case of hidden defects).

Right to Rectification

Under the new law, purchasers who acquire a property before construction or within two years thereafter are entitled to rectification in lieu of other warranty rights (price reduction or, if applicable, withdrawal from the contract) and can seek this remedy in addition to any claims for damages.

Rectification must be possible and not result in excessive costs for the seller. The right to rectification relates only to the building and not to the property as such. A purchaser’s right to rectification cannot be restricted or excluded by contract prior to the occurrence of the relevant warranty event.

In the future, this new regulation will prevent the common practice of purchasers waiving all warranty claims, at least for buildings erected within two years of the sale or those that are to be built on the sold property.

The same regulation applies to construction contracts: in the case of contracts for work relating to a building, the employer’s right to rectification can no longer be contractually restricted or excluded in advance.

Minimum Limitation Period of Five Years for Claims Arising From Liability for Defects

Under the current law, a purchaser’s claims for defects expire five years after the transfer of ownership. This limitation period will now be partially mandatory and therefore cannot be changed to the detriment of the purchaser.

The same applies to the five-year limitation period under the law on contracts for work for warranty claims by the employer due to defects:

• (i) of a movable work which has been integrated into an immovable work in a manner consistent with its nature and purpose, and which have caused the immovable work to be defective; and
• (ii) of an immovable work against the contractor and against the architect or engineer who provided services for the purpose of construction.

Substitute Performance in the Event of Rectification without Judicial Pre-Approval

In connection with rectification by the contractor, the new statutory provision stipulates that the employer is entitled (typically after granting a reasonable grace period) to remedy the defect or have it remedied by substitute performance at the expense of the defaulting contractor without requiring judicial authorization or a performance judgment. This amendment adopts an existing practice of the Swiss Federal Supreme Court.

Security for Default Interest by Worker Liens Limited to 10 Years

Along with the partial revision of the CO, an amendment to the Swiss Civil Code (CC) was adopted that will also take effect on January 1, 2026.

Whereas previously, according to rulings of the Swiss Federal Supreme Court, in order to prevent the definitive registration of a worker lien, the lien amount including default interest without any time limit had to be secured, under the new regulation, securing the lien amount including default interest for ten years is sufficient.

Conclusion

The partial revision of the Swiss Code of Obligations will lead to noticeable changes in the law on warranties in sales contracts and contracts for work, improving the overall legal position of building owners/employers and real estate purchasers in the event of construction defects.

However, editorial and conceptual weaknesses are likely to limit the scope of application of certain new provisions.

The new regulations will also have an impact on the (private) SIA standard 118, which is frequently agreed in practice for contracts for work. According to the SIA standard 118, defects can be reported «at any time» within a period of two years from acceptance of the work and must be reported «immediately» after this period has expired. However, the latter part of this regulation will no longer be legally compliant as of January 1, 2026.

It is advisable to familiarize oneself with the new legal framework at an early stage and to adapt internal processes and standard documents accordingly. Depending on the constellation (e.g., for coordination with parallel or subordinate contractual relationships), it may be necessary to agree on applying the new rules before January 1, 2026.