Changes in the Code of Obligations as of 1 January 2026

Legal situation until 31 December 2025

New as of 1 January 2026

In sales contracts, it is often agreed that the seller is not liable for defects and instead assigns their warranty rights against the planners, contractors, and suppliers they engaged to the buyer. The buyer must then determine whether a defect is due to planning, construction management, or execution, and decide against whom to assert their claim.

The legal revision introduces a mandatory rectification right both in contract for work and services law (Art. 368 para. 2 new CO) and in property sales (Art. 219a para. 2 new CO).

The rectification obligation in property sales covers buildings that are newly constructed or have been built within the last two years. In contract for work and services law, the obligation applies only to defects in movable works integrated into immovable works or defects in works created by an architect or engineer that served as the basis for constructing an immovable work.

It is crucial that this rectification right cannot be limited or excluded. In contract for work law, this applies only if the defect concerns a building component (installations are therefore not included).

For buyers, reporting defects is often difficult due to a strict notification obligation.

Discovered defects must generally be reported “immediately,” usually within 7 days. This period can be extended by contractual agreement. Often, in accordance with SIA Standard 118, a notification right of two years after acceptance is agreed.

If the seller misses the deadline, they lose all claims against the responsible contractors and must cover remediation costs themselves. Buyers therefore often have very little time to decide which party is responsible for the defect.

The law now provides a mandatory notification period of 60 days for defects in immovable works and property sales. This also applies to hidden defects discovered after the handover of the work or property. In such cases, the 60-day period starts from the discovery of the defect.

This statutory rule is more generous than SIA Standard 118. The extension of the notification period is mandatory by law. Direct adoption of SIA Standard 118 from 1 January 2026 is therefore irrelevant.

If a buyer still misses the extended notification period, they lose their claims against the responsible parties. The risk therefore remains.

Many buyers mistakenly assume that notifying a defect automatically interrupts the limitation period. It is further complicated by the fact that sellers or contractors in warranty disputes may argue that the contractual two-year liability limitation from acceptance, combined with the assignment of their warranty rights to the buyer, reduced the limitation period from five to two years. If the court accepts this view, many claims could already be time-barred before the buyer even recognises and reports the defect.

Although courts have previously been very cautious regarding contractual shortening of the five-year limitation period to two years, the current legislative revision now completely excludes this possibility.

The revised law (Art. 219a para. 3 new CO and Art. 371 para. 3 new CO) explicitly states that the five-year limitation period in favour of the buyer or client is mandatory and may not be shortened by contract.

Consequently, the seller is liable for defects in the property sold for five years and is obliged to rectify defects that are reported within this period.