– February 18, 2021

Do we have to buy into the renewal fund?

We are planning to buy a flat in an existing building. We are wondering, among other things, what our rights and obligations are regarding the renewal fund. Do we automatically participate in the renewal fund by acquiring condominium ownership? Or do we have to buy in?

In questions concerning condominium ownership as a special form of co-ownership, the regulations on the condominium owners’ association apply first. To ensure that they remain unchanged beyond future changes of ownership, they should be recorded in the land register. The regulations supplement the legal rules of the Swiss Civil Code (Article 712a et seqq. CC).

Distribution of common costs and burdens

The condominium owners are required by law to contribute to the costs of the common property and to the costs of common administration in proportion to their share of the value of the property. This includes, in particular, the expenses for the ongoing maintenance, repairs and renewals of the common parts of the land and building as well as the common installations and facilities (Article 712h CC). For larger long-term investments, a so-called renewal fund should – but does not have to – be set up. There is no legal obligation to do so.

Renewal fund

The renewal fund is an earmarked special fund to which the condominium owners are jointly entitled. In this way, the money needed to maintain the fabric of the building and the common technical installations can be saved over the years. A renewal fund is therefore highly recommended.


Regulations define the use of capital

The regulations or a resolution should specify – preferably as precisely as possible – what the money in the renewal fund may be used for (earmarking). This fund is accumulated by regularly recurring contributions from each condominium owner according to their share of the value or according to separate cost regulations.

Contributions remain in the fund

The capital of the renewal fund is common property. Individual parties cannot lay claim to the money they have paid in, even if the flat is sold. In practice, in the event of a sale, the share of the renewal fund broken down by the administration for each condominium owner is often added to the purchase price for the sake of simplicity. The amount paid in advance by the previous owner is thus included in the purchase price in terms of value. In this way, the seller does not lose his investment and the purchaser acquires not only the condominium ownership but also the proportional claim to the fund.

The handing over of the management documents creates security for both parties. Otherwise, the acquirer runs the risk of double payment: the community has a legal lien on the contributions of each individual, which extends to the contribution claims for the last three years (Article 712i CC).