All about the right of residence in Switzerland

A right of occupancy grants a person the right to live in another person’s apartment or house. The holder of the right of occupancy does not acquire ownership of the property. Often, a right of occupancy is granted for life, but a shorter term can also be specified in the right of occupancy contract. In most cases, the right of occupancy is not associated with any costs other than the registration in the land register – although a different agreement can be made in the contract here as well.

A right of occupancy can be granted either for an entire house or apartment or just parts of it. There are two different ways in which a right of occupancy can be defined:

• Rem right: If the right of occupancy is a rem right, the holder of the right of occupancy may accommodate other people, such as relatives or caregivers. These people may use the premises but are not granted the right of occupancy themselves.
• Limited personal easement: In this case, the right of occupancy applies only to the person for whom it was granted. No other persons may live in the premises.

Even though a right of residence often represents a lifelong, free-of-charge authorization to use a property, the right can be structured in a variety of ways. The possible framework is set forth in the Swiss Civil Code (ZGB). The exact terms and conditions are determined in the individual right of residence contract. There are three main types of right of residence:

• Exclusive right of residence: The person entitled to reside in the house or apartment alone.
• Right of joint use: In this case, the person with the right of residence has no right to use the property alone; the owner retains a right of use.
• Mixed form: In this form, the person entitled to reside in the house or apartment receives the exclusive right to use part of the property or land. The other areas of the property are shared with other people (often a garden, a cellar, or parking spaces).

The right of residence is a right of use and is often compared to usufruct. Thus, some of the paragraphs on usufruct can also apply to the right of residence (Articles 745 et seq. of the Swiss Civil Code). However, the right of residence is more precisely defined in the Swiss Civil Code (ZGB) starting with Article 776 of the Swiss Civil Code. Among other things, this provision states that the right of residence is neither transferable to other persons nor inheritable. If a person with a right of residence dies, the right of residence also expires with their death.

Article 777 of the Swiss Civil Code states that the right of residence applies personally to the person entitled to reside in the property. However, this must be expressly stipulated in the contract – otherwise, Article 777, Paragraph 2 of the Swiss Civil Code applies: In this case, the person entitled to reside in the property may also accommodate family members or housemates. If the right of residence only applies to part of the house or apartment, the person entitled to reside in the property may also use the common facilities (see Article 777, Paragraph 3 of the Swiss Civil Code). For example, if the person only lives in one room, they may still use the kitchen, bathroom or other areas.

A right of residence comes not only with rights, but also with certain obligations or burdens. These are defined in more detail in Article 778 of the Swiss Civil Code. Those entitled to reside in a property must therefore bear the “burdens of ordinary maintenance.” These are the normal maintenance costs associated with living in a property (e.g., water, electricity, garbage). Minor repairs are also included, but not major renovations – these must still be undertaken by the owner. If the right of residence is only structured as a right of shared use, these obligations are waived and remain with the owner.

Furthermore, a person with a right of residence is considered part of the neighborhood. They must therefore adhere to applicable neighborhood laws. This primarily concerns issues such as noise or odor nuisance or other aspects related to living together in a neighborhood.

Those entitled to reside in a property do not have the right to modify the apartment or house without prior agreement. Major renovations and similar projects must always be discussed with the owner. Furthermore, the property may only be used for personal living. Renting or leasing is generally not permitted.

To officially register a right of residence in the land register, a right of residence contract or a testamentary disposition is required. The right of residence contract must always be in writing and certified by a notary. The contract stipulates all the general terms and conditions surrounding the right of residence. The following topics should be covered in particular:

• What type of property is involved?
• What type of right of residence is granted (exclusive right of residence or shared use)?
• Is the right of residence limited to personal ownership or in rem (i.e., can a family member, partner, or other housemate move in)?
• Duration of the right of residence
• Is a payment or compensation due?
• What obligations are incumbent upon the person entitled to reside (e.g., costs for repairs)?
• Value of the right of residence (calculated based on the capital value, rental value, and expected duration of the right of residence)

Both the grantor and the person entitled to reside sign the contract. A notary must notarize it. The contract can then be submitted to the land registry, whereupon an entry is made in the land register.

Rights of residency are often found in wills or inheritance contracts. In these cases, the right of residency is usually granted for life. If the person entitled to residency decides, for example, to move into a nursing home, the right of residency can be revoked. However, a right of residency cannot simply be revoked unilaterally, as is the case with a rental agreement, for example. All parties involved must first consent to this – including the person entitled to residency.

The right of residence is often used when the parents’ home is to be transferred from their ownership to their children during their lifetime. This can bring advantages under inheritance law and simplify several things in the event of an inheritance. In this case, the house changes hands, and at the same time, a lifetime right of residence is registered for the parents.

In general, a right of residence reduces the value of a property. This not only reduces the value, but also simultaneously reduces taxes (e.g., wealth tax, real estate capital gains tax, gift tax in the case of a gift). This can result in tax advantages for the homeowner.

If a spouse dies, the surviving partner has the right, at their request, to a right of residence or usufruct of the jointly owned apartment or house of the deceased (see Article 219, Paragraph 1 of the Swiss Civil Code).

In some cases, however, a right of residence can also have disadvantages. If an owner wants to sell their property, a right of residence registered in the land register reduces its value. The right of residence does not expire upon sale – this can be a deterrent for buyers and thus negatively impact the purchase price and the sales process.