What to Do About Defects in Commercial Premises? Rights and Obligations

Whether it's a defective heating system, leaky windows, or mold infestation – defects in commercial premises are not only annoying but can also have a significant impact on your business. Customers stay away, employees are dissatisfied, and in the worst case, operational downtime threatens. But what can you as a tenant specifically do? What are the landlord's obligations, and what rights do you have?

Swiss tenancy law, regulated in the Code of Obligations (CO), provides clear answers to these questions. In this article, you will learn how to proceed correctly when there are defects in your commercial premises, what legal options you have, and what to do if the landlord refuses to rectify the defects.

What are defects in commercial premises?

A defect exists if the rented premises do not have the contractually agreed condition or if their contractual use is impaired. According to Art. 258 CO, the landlord has the obligation to hand over and maintain the rented property in a condition fit for its designated use.

In commercial premises, defects can be diverse:

• Heating or air conditioning failure
• Leaky windows or roofs
• Mold or moisture damage
• Defective sanitary facilities
• Problems with the electrical system or lighting
• Noise pollution from construction work (if avoidable)
• Inadequate security facilities
• Pest infestation

It is important to distinguish between defects that already existed at the start of the tenancy and those that only appear during the lease term. Ideally, when taking over the commercial premises, you should create a detailed handover protocol documenting the condition of the premises. This can serve as evidence later on.

Is the landlord obliged to rectify defects?

The clear answer is: Yes, the landlord is generally obliged to rectify defects. According to Art. 258 CO, they must maintain the rented property in a condition fit for its designated use and be responsible for any defects that impair its use during the lease term.

This obligation applies regardless of whether the landlord is at fault or not. It is a so-called obligation to achieve a result (Erfolgsverbindlichkeit) – the landlord must guarantee the outcome (defect-free premises).

Exceptions to the obligation to rectify

However, there are exceptions where the landlord is not obliged to rectify defects:

1. Minor defects (trivial damage): According to Art. 259 CO, tenants must repair minor defects that arise during normal use themselves. This can include small light bulbs or clogged drains.
2. Defects caused by the tenant: You must bear the cost of damages caused by you or your employees.
3. Contractually agreed exceptions: In commercial lease agreements, certain maintenance obligations can be transferred to the tenant. Such agreements are more common in commercial leases than in residential leases but must be clearly formulated.

Note that there is greater freedom of contract in commercial leases than in residential leases. Therefore, check your lease agreement carefully for clauses regarding maintenance and repairs.

How to proceed with defects: A step-by-step guide

The correct procedure in the event of defects is crucial to protect your rights. Here are the most important steps:

Step 1: Document defects

As soon as you notice a defect, you should document it immediately. Take photos or videos, note the date, and describe the defect in detail. This documentation can become important as evidence later on.

Step 2: Notice of defect to the landlord

According to Art. 257b CO, you are obliged to notify the landlord of defects without delay. This notice of defect should be made in writing – preferably by registered mail or email with a read receipt. Describe the defect precisely and set a reasonable deadline for rectification (usually 10 to 30 days, depending on urgency).

Important: If you fail to give notice of the defect, you may lose rights later on, especially claims for damages in the event of consequential harm.

Step 3: Set a deadline

In your notice of defect, you should set a specific but reasonable deadline for the defect to be rectified. In the event of a heating failure in winter, for example, this would be shorter than for a cosmetic defect. The deadline gives the landlord the opportunity to take care of the repair.

Step 4: Announce further measures

In your notice of defect, you can already announce what steps you will take if the defect is not rectified by the deadline. These can include:

• Rent reduction (Art. 259d CO)
• Carrying out the repair yourself at the landlord's expense (Art. 259g CO)
• Depositing the rent with the competent conciliation authority

What to do if defects are not rectified?

If the landlord does not respond or refuses to rectify the defects, various legal options are open to you:

Rent reduction

According to Art. 259d CO, you can reduce the rent to the extent of the impairment. The amount of the reduction depends on the severity of the defect. In the case of a complete heating failure in winter, for example, this could be 30-50%, and correspondingly less for minor defects.

Important: The rent reduction occurs by operation of law; you do not have to apply for it from the landlord first. However, you should be careful not to exaggerate the reduction, otherwise rent arrears may occur. In case of doubt, professional legal advice or depositing the rent with the conciliation authority is recommended.

Depositing the rent

You can deposit the rent or parts of it with the competent cantonal conciliation authority. This is particularly useful if you are unsure whether and in what amount a rent reduction is justified. The deposited amounts will then only be paid out after the legal situation has been clarified.

Note that procedures and forms may vary depending on the canton. Inform yourself at your cantonal conciliation authority about the exact procedure.

Substitute performance

According to Art. 259g CO, after an unsuccessful deadline, you may have minor defects repaired yourself and demand the costs back from the landlord. For major repairs, you should always obtain judicial approval beforehand, as you could otherwise be left to foot the bill.

This option should be used with caution. Document all steps carefully and keep all invoices.

Claims for damages

If the defect causes you further damages (e.g., spoilage of goods due to cooling failure, loss of revenue due to business interruption), you can claim damages from the landlord according to Art. 259e CO. The prerequisite is that you reported the defect in a timely manner.

Here too, detailed documentation of the damages and their causes is essential.

Early termination

In the case of severe defects that significantly impair the contractual use, you can terminate the tenancy extraordinarily (Art. 259g CO). However, this should only be considered as a last resort and should be legally well secured, as an unjustified termination can have significant financial consequences.

Special situations and cantonal differences

With commercial leases, there are some special features to consider that do not apply or apply differently to residential leases:

Exclusion of warranty in commercial leases

In contrast to residential leases, certain warranty rights can be contractually excluded or restricted in commercial leases. However, such clauses are only valid if they are clearly and unambiguously formulated. Check your lease agreement carefully for such provisions.

Cantonal conciliation authorities

Before initiating judicial proceedings, a conciliation procedure is mandatory in most cantons. The competent authorities and procedures can vary depending on the canton. Inform yourself in good time about the responsibilities in your canton.

Burden of proof

As a tenant, you bear the burden of proof that a defect exists and that it impairs usability. That is why careful documentation is so important. The landlord, on the other hand, must prove that they have fulfilled their maintenance obligation.

Conclusion: Actively exercising your rights

Defects in commercial premises are not a fate you simply have to accept. Swiss tenancy law gives you clear rights and options for action as a tenant. The landlord is generally obliged to rectify defects that impair the contractual use.

The be-all and end-all is the correct procedure: report defects immediately, document them in writing, set reasonable deadlines, and know your rights. Whether it's a rent reduction, substitute performance, or claiming damages – you have various options to react to inactive landlords.

However, it is also important to maintain proportionality. Not every minor defect justifies drastic measures. Dialogue with the landlord should always be the first step. In many cases, problems can be solved amicably without leading to a legal dispute.

For complex cases or major disputes, it is advisable to consult a lawyer specialized in tenancy law. The cantonal tenants' associations can also offer valuable support. Do not hesitate to seek professional help – your business activities should not have to suffer from avoidable defects.

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Note: This article is for general information purposes and does not constitute legal advice. For specific legal questions or problems, you should consult a lawyer specialized in tenancy law. The legal situation may vary depending on the individual case and cantonal specifics.