Purchase option in Geneva: priority notice, term, cost and exercise

Signing a purchase option (right to buy) commits the owner of a Geneva property to sell at the agreed price, as soon as the beneficiary decides and for the whole term set in the deed. The beneficiary, for their part, remains free to buy nothing at all.

Article 216 paragraph 2 of the Swiss Code of Obligations reserves this commitment to a notarised deed, article 216a caps it at ten years, and article 959 of the Swiss Civil Code allows it to be entered as a priority notice in the land register, making it binding on any right subsequently acquired over the property.

This article covers the boundary with rights of pre-emption and repurchase, Geneva practice around the agreement, the priority notice in the land register, the full cost, exercising the right — including against an owner who refuses — and the clauses to check before signing.

What is a purchase option?

A purchase option, or purchase option agreement, is a notarised contract by which the owner of a property undertakes to sell it to a named beneficiary, at the agreed price, if the beneficiary declares that they will buy it within the fixed term.

Both names describe the same transaction: the Code of Obligations speaks of a "pacte d'emption" (purchase option agreement) in article 216 paragraph 2 to name the contract, and of a "droit d'emption" (purchase option) in article 216a for the right that arises from it.

The commitment runs only one way: the owner is subject to the decision, the beneficiary makes it. Three features define its scope.

• The owner is bound from the moment of signing: they cannot withdraw before the agreed deadline.
• The beneficiary is never obliged to buy: they exercise the right or let it lapse, without having to justify it.
• The price is fixed in the deed itself, either as an amount or as a calculation formula: the Code of Obligations treats the price as sufficiently determined when it can be established from the circumstances (article 184 paragraph 3).

This diagram contrasts what each party signs up to: the beneficiary alone chooses the moment and can walk away without justification, while the owner remains bound for the whole term and is subject to the exercise of the right.

Exercising the right is a formative act: the option holder — that is, the beneficiary of the right — exercises it by a simple unilateral declaration of intent that takes effect on receipt, and from that moment stands in the position of a buyer who has signed a sale (Federal Supreme Court, decision 121 III 210).

Rights of pre-emption and repurchase are triggered differently.

What is the difference between a purchase option, pre-emption and repurchase?

The difference lies in what triggers it: a purchase option is triggered solely at its beneficiary's initiative, pre-emption presupposes a sale to a third party, and the right of repurchase belongs to whoever sold the property.

The table below compares them on the two points that determine their scope, with terms taken from article 216a of the Code of Obligations.

Right	What triggers it	Maximum agreed term
Purchase option	The beneficiary's declaration, on the date of their choosing	10 years
Right of pre-emption	A sale to a third party or any act economically equivalent to a sale	25 years
Right of repurchase	The declaration of the seller who reserved the right to repurchase	25 years

All three agreements require a public deed, except a pre-emption agreement with no price fixed in advance, for which written form is enough (article 216 paragraph 3). The purchase option and the right of pre-emption bind the current owner; the right of repurchase binds the buyer who has become owner, who is obliged to return the property to their seller.

A purchase option puts the beneficiary in control of the timetable: they buy once their financing, their permit or their building project is ready, without waiting for the owner to decide to sell.

When do people sign a purchase option in Geneva?

The cases where a purchase option is signed in Geneva are land in a development zone, the assembly of adjoining plots, transfers within a family, a tenant looking to buy, and exiting a co-ownership, all built on the same need: reserving a property without buying it.

• Land in a development zone. In a development zone, planning permission presupposes a local development plan (plan localisé de quartier) approved by the Council of State, which can only waive this requirement in the cases listed by law (article 2 of the general act on development zones). The purchase option ties up the land for the duration of this process.
• Assembly of adjoining plots. A project needs three neighbouring plots; a single hesitant owner is enough to sink the deal. The purchaser signs a purchase option on each one and exercises them only as a single block.
• Transfers within a family. Parents want the house to pass to a child without selling it today. The purchase option reserves it at the price fixed in the deed.
• A tenant looking to buy. The tenant has their eye on the home they occupy, without financing yet in place. The purchase option fixes the price while the lease runs.
• Exiting a co-ownership. Two co-owners are splitting up without selling to a third party. The one who stays obtains a purchase option over the other's share.

In each of these cases, signing happens today and the transfer of ownership later, at the moment the beneficiary exercises the right.

Why must a purchase option be notarised?

A purchase option must be notarised because article 216 paragraph 2 of the Code of Obligations reserves purchase option agreements over real estate to the public-deed form: an agreement executed without a notary is void.

Neither party can rely on it.

Article 11 paragraph 2 of the Code of Obligations makes the validity of the contract conditional on compliance with the prescribed form.

In Geneva, the notary does more than just collect signatures. Article 14 of the Notaries Act requires the name, status, address and legal capacity of each party to be known to the notary or attested in the deed by two witnesses. Article 16 requires the notary to read the deed to the parties appearing before them, or give it to them to read, and to record this reading in the deed.

The public-deed requirement covers the essential elements, price included: the deed states the amount or the objective criteria for calculating it. The notarised deed creates the right; its priority notice in the land register gives it effect against third parties.

What difference does the priority notice in the land register make?

A priority notice in the land register changes the scope of a purchase option, which becomes binding on any right acquired over the property after it: a subsequent buyer and a subsequent mortgage creditor alike must bear it.

Without a priority notice, a purchase option remains a personal right, binding only on the owner who signed it. If that owner sells to a third party before the deadline, the third party is not bound by any contract they are not a party to, and becomes owner through their own registration (Civil Code, article 656 paragraph 1). The beneficiary does not get the property, only a claim for damages against the owner (Code of Obligations, article 97 paragraph 1).

The priority notice is provided for in article 959 of the Civil Code, not in the Code of Obligations. Personal rights such as purchase options are noted there in the cases provided for by law (paragraph 1), and become binding on any right subsequently acquired over the property (paragraph 2).

The priority notice does not lock down the property: it does not prevent the registration of a later-ranking right (Civil Code, article 961a). The owner can still create mortgages and sell, but these later rights are not binding on the beneficiary when they exercise their own right. Charges registered before the priority notice remain attached to the property.

The practical outcome sets the two situations apart on three points.

	Right without a priority notice	Right with a priority notice
The owner sells to a third party	The third party keeps the property	The third party is subject to the exercise of the right
What the beneficiary can claim	Damages from the signatory	Transfer of ownership
If refused	Claim for damages (article 97 of the Code of Obligations)	Judicial award of ownership (article 665 of the Civil Code)

The priority notice must be requested at the time of the deed: it cannot be obtained retroactively against a right already registered.

How long does a purchase option last?

A purchase option lasts ten years at most. Article 216a of the Code of Obligations caps a purchase option at ten years, whereas rights of pre-emption and repurchase may be agreed for up to twenty-five years.

The term chosen follows the reason for the arrangement. Where it backs the securing of financing or a building permit, the right is set to match the time that process needs; where it is granted to a developer assembling a site, it covers the time needed to bring the plots together.

At the deadline, the right lapses without any formality: a beneficiary who has not declared they are exercising it loses it. No extension can go beyond the statutory cap; the parties sign a new purchase option agreement, in the public-deed form required by article 216 paragraph 2 of the Code of Obligations, which opens a fresh ten years.

The term of the right and that of the priority notice do not coincide. The priority notice remains on the property's folio after the right has lapsed, for as long as no one applies to have it cancelled.

This timeline places the five stages of a purchase option agreement, from the public deed at the notary's office to the registration of the transfer in the land register. Between the priority notice and the declaration of exercise lies a window of ten years at most, within which the beneficiary chooses the moment.

How do you cancel a priority notice that has lapsed?

To cancel a priority notice that has lapsed, the owner files a written declaration from the beneficiary of the right with the land registry office. Failing that, the office may cancel of its own motion a priority notice whose registered time limit has run out.

1. Get a written declaration of cancellation from the beneficiary, as required by article 964 paragraph 1 of the Civil Code; paragraph 2 allows the entitled party's signature on the journal to stand in its place.
2. File this declaration with the Geneva land registry, which checks the applicant's standing to act (Civil Code, article 965 paragraph 1).
3. Report the lapsed priority notice to the office if the beneficiary stays silent: article 976 no. 1 of the Civil Code allows, but does not require, the office to cancel of its own motion an entry limited in time whose deadline has passed.
4. Do not pay any additional fee: the Geneva tariff for the priority notice covers its full cancellation.

An owner who does nothing keeps a lapsed priority notice on their folio, which every prospective buyer and every secured creditor reads before dealing with the property. The priority notice comes at a price, set by the Geneva tariff.

How much does a purchase option cost in Geneva?

A purchase option in Geneva costs 3,422 francs at signing for a property worth 1,200,000 francs, notary's honorarium not included. Three items make up this amount, each priced by a Geneva statute.

The table adds, as a fourth row, the sale duty, which is due only on the transfer of ownership.

Item	Basis of calculation	Who pays it in practice
Fee for the constitutive deed	One third of the banded scale for transfer deeds, minimum 200 fr. (REmNot — the Geneva notarial fee schedule, art. 10 para. 1 and art. 12 para. 1)	The beneficiary of the right
Registration duty on the agreement	1‰ of the property's market value, with no deduction for debts or charges (LDE — the Geneva Registration Duties Act, art. 50 para. 1)	The party the deed benefits, namely the beneficiary (LDE, art. 163 para. 2)
Priority notice in the land register	Flat fee of 255 fr. per priority notice, full cancellation included (REmORFDIT — the Geneva land registry fee schedule, art. 6)	Whoever applies for the priority notice (REmORFDIT, art. 1 para. 3)
Sale duty, due at the time of transfer	3% of the price in the deed or of the market value (LDE, art. 33 para. 1 and art. 35 para. 1)	The buyer (LDE, art. 163 para. 1)

For a market value of 1,200,000 francs, the banded scale in article 10 REmNot reaches 5,900 francs for a transfer deed, split across five brackets.

• 1,400 francs on the first bracket of 200,000 francs, at 7‰
• 1,200 francs from 200,001 to 400,000 francs, at 6‰
• 1,800 francs from 400,001 to 800,000 francs, at 4.5‰
• 800 francs from 800,001 to 1,000,000 francs, at 4‰
• 700 francs on the remainder up to 1,200,000 francs, at 3.5‰

The one-third reduction provided for in article 12 paragraph 1 REmNot brings the fee down to 1,967 francs. The 1‰ registration duty adds 1,200 francs and the priority notice 255 francs, making 3,422 francs at signing.

This chart compares the three items due on the day of signing for three market values: 2,522 francs for a property at 800,000 francs, 3,422 francs at 1,200,000 francs, 5,072 francs at 2 million. The notary's fee rises in decreasing bands, the registration duty tracks the price, and the priority notice stays flat.

The beneficiary bears all of it: the agreement benefits them within the meaning of article 163 paragraph 2 LDE, and it is they who apply for the priority notice. A different split stipulated in the deed remains unenforceable against the registration authorities (article 163 paragraph 3 LDE).

The fee tariff is not negotiable, subject to the reduction article 5 REmNot allows depending on the circumstances; the notary's honorarium, kept separate from the fee on the invoice under article 8 REmNot, is negotiated before the deed is drawn up.

A right that is never exercised is never refunded: the Geneva Registration Duties Act provides no offset of the 1‰ against the sale duty. The 3,422 francs stay with the State and the notary's office for good. If the right is exercised, 36,000 francs in sale duty become payable in full on the day the sale is concluded.

How do you exercise a purchase option?

A purchase option is exercised by a written declaration at minimum, sent to the owner before the deadline fixed in the agreement. The sale is perfected as soon as it is received.

1. Reread the agreement: it sets the deadline, the form the declaration must take and who it must be sent to; parties who agree on a form are presumed to have intended to be bound only once that form is satisfied (Code of Obligations, art. 16 para. 1).
2. Send the declaration to the registered owner, without condition or reservation: a unilateral declaration is enough, and nothing is required from the owner at this stage.
3. Send it by registered letter: what counts is when it reaches the owner, not the date on the letter.
4. Have the owner sign the application for registration at the notary's office: entries are made on the strength of their written declaration (Civil Code, art. 963 para. 1).
5. Wait for the entry in the main register: ownership is acquired through it (Civil Code, art. 656 para. 1), with effect backdated to the filing in the journal (art. 972 para. 2).

No statutory deadline applies: the Federal Supreme Court refuses to extend to purchase options the three-month time limit in article 216e of the Code of Obligations, even where the right depends on a condition (ATF 138 III 659). Only the agreement sets this deadline, within the ten-year limit of article 216a. No step taken can suspend or extend it.

The costliest mistake is to exercise the right without proof of dispatch: whoever relies on a right subject to a deadline must prove they acted in time.

What if the owner refuses to sign?

Apply to the court for the right of ownership to be awarded: the beneficiary obtains it by judgment, without the owner's signature.

A person holding a title to acquire the property applies to the court for the right of ownership to be awarded when the owner refuses to have the registration carried out (Civil Code, art. 665 para. 1).

Once the judgment becomes final, it replaces the owner's written declaration: whoever produces it can apply for registration alone (art. 665 para. 2 and 963 para. 2) and, as an exception to the registration rule, becomes owner before that registration takes place (art. 656 para. 2).

In Geneva, the application is filed with the Court of First Instance, which has jurisdiction over all civil-court matters the law does not assign to another authority (Geneva Judicial Organisation Act, art. 86 para. 1), and which sits as a single judge (art. 85).

This action is distinct from specific performance of a promise of sale: here the sale has already been perfected since the declaration of exercise, and the court no longer has to bring the contract into being. This remedy is prepared at signing, in the drafting of the clauses.

Which clauses should you check before signing?

The clauses to check before signing are the description and price, the exercise deadline, the suspensive condition on financing, what happens to the deposit, risk and charges, the option to assign or substitute, the schedule of charges on the day of exercise, and the application for the priority notice. Go through them one by one on the draft deed, before the appointment with the notary.

• The description and price. The agreement contains the same elements as a property sale, with the public-deed requirement covering all objectively essential clauses (Federal Supreme Court, decision 5A_651/2010). Ask for a specific price or a complete calculation formula.
• The exercise deadline. Check that the deed sets one, and that it leaves enough time to obtain financing.
• The suspensive condition on financing. Check that it names the amount to be obtained, its deadline and the evidence to produce. A condition is deemed fulfilled when a party prevents its occurrence in a manner contrary to good faith (Code of Obligations, art. 156).
• What happens to the deposit. The deed states whether the sum paid is set off against the price, kept outright, or refunded. Failing that, it counts as earnest money, given as a token that the contract has been concluded and not as forfeit money (art. 158 para. 1), and whoever received it keeps it without having to set it off against their claim (art. 158 para. 2).
• Risk and charges. Benefit and risk pass to the acquirer as soon as the condition is fulfilled (art. 185 para. 3). For a property, the special rule in article 220 prevails: the transfer is presumed not to occur until the agreed date for taking possession. Have it specified who bears interest, charges and insurance until then.
• The option to assign or substitute. The right is not assignable by default. Have the authorisation to assign written in if the purchase will go through a company.
• The schedule of charges on the day of exercise. Have the list of liens, easements and priority notices fixed at signing, and put the cancellation of any right registered afterwards at the owner's expense.
• The application for the priority notice. Check that the deed instructs the priority notice to be entered in the land register and states who bears its fee.

These eight points are negotiated before signing: once the deed has been executed, each one becomes an amendment that the other party accepts or refuses. Even a flawless agreement still runs into Geneva's authorisation regimes.

What can prevent you from exercising your right in Geneva?

The Geneva and federal regimes that can prevent the exercise of an otherwise valid purchase option agreement are the development zone, public pre-emption, rented housing and foreign buyers.

• Development zone: the State controls prices there for ten years and the department approves the sale plan (articles 2 and 5 of the general Geneva act on development zones). The department refuses an option price higher than the controlled price.
• Public pre-emption: on land in a development zone earmarked for housing, the State and the municipalities can acquire the property in the beneficiary's place, and granting the purchase option is enough to trigger this time limit.
• Rented housing: the department requires authorisation for the disposal of a flat previously let in categories affected by the housing shortage, and refuses it when an overriding public-interest reason stands against it (article 39 of the Geneva act on the demolition, conversion and renovation of residential buildings).
• Foreign buyers: creating a purchase option counts as an acquisition of real estate, just as exercising it does (article 4 of the Federal Act on the Acquisition of Real Estate by Persons Abroad). A beneficiary who is a national of the European Union or EFTA without residence in Switzerland, like a national of another State without a C permit, needs authorisation (article 5), unless the property serves as their main residence at their legal and effective domicile (article 2).

Two further sets of risk come on top of this: a competing right registered against the same property, and what becomes of the agreement if the owner sells, dies or goes bankrupt. The owner who grants the right runs risks of a different kind.

Can a right of pre-emption take precedence over a purchase option?

Yes, a right of pre-emption can take precedence over a purchase option when it is a statutory right, or when its priority notice was entered before that of the option agreement.

Between contractual rights, the conflict is triggered on exercise: exercising the option counts as a sale, that is, a case of pre-emption (Code of Obligations, article 216c), and the pre-emption holder has three months to invoke it (article 216e). Between two contractual rights, the one noted first prevails: the priority notice makes it immune to rights registered after it (Civil Code, article 959 paragraph 2). Statutory rights of pre-emption, for their part, take precedence over contractual rights (Civil Code, article 681 paragraph 3).

In Geneva, the State and the municipalities hold a statutory right of pre-emption over land in a development zone that can be used for housing. An owner who agrees to dispose of such land together with the grant of a purchase option must notify the Council of State and the municipality.

The Council of State has 60 days from the filing of the deed at the land registry to acquire the property in the beneficiary's place, and the municipality a further 30 days if the Council of State declines. This public right of pre-emption ranks ahead of the option beneficiary (articles 3 to 5 of the general Geneva Housing Act).

What happens to the right if the owner sells, dies or goes bankrupt?

The right survives all three events if it has been noted in the land register; without a priority notice, it is valid only against the original owner and is settled in money.

• They sell. If noted, the right takes precedence over later entries (article 959 paragraph 2 of the Civil Code) and can be exercised against the new owner. Without a priority notice, the buyer remains free and the seller must pay damages (article 97 of the Code of Obligations).
• They die. The heirs acquire the estate as a whole and are liable for the deceased's debts (article 560 of the Civil Code). The right continues against them; if noted, it survives a resale after the estate is divided.
• They go bankrupt. If noted, the right appears in the schedule of charges and the property is auctioned subject to this charge (articles 247 and 135 of the Federal Act on Debt Enforcement and Bankruptcy, by reference from article 259). Without a priority notice, the right is not binding on the bankrupt's estate, to which the property is allocated (article 197), and becomes a money claim paid as a dividend (article 211).

In all three cases, the entry in the land register decides what the agreement is worth.

What does an owner who grants a purchase option risk?

The owner risks having their property tied up for the whole of the agreed term, ten years at most under article 216a of the Code of Obligations.

They must sell if the beneficiary exercises the right, unable either to change their mind or to force the beneficiary to buy.

The priority notice in the land register adds a further layer of restriction. Three transactions suffer for it.

• Selling to a third party. The buyer takes over the encumbered property and is subject to the exercise of the right.
• Creating a new right. An easement, usufruct or right of superficies granted after the priority notice does not take precedence over the beneficiary.
• Refinancing. A mortgage note registered afterwards ranks behind the priority notice.

The consideration for this is negotiated across four parameters.

• The amount of the tie-up compensation.
• The term of the right, within the ten-year limit.
• Whether or not the compensation is set off against the price.
• How the price is fixed, firm or indexed.

These four parameters are negotiated together: a longer term is paid for through the compensation, and a fixed price is paid for through the term.

Is a purchase option assignable?

No, a contractual purchase option is not assignable, unless otherwise agreed; it is, however, transmissible by inheritance, under paragraph 1 of article 216b of the Code of Obligations.

The article covers only rights granted by contract, not statutory purchase options, which are governed by their own special legislation. The agreement can lift the ban; its paragraph 2 makes any assignment subject to the same form required to create the right, that is, a public deed for a property.

Assigning the right triggers the Geneva tax on real-estate profits and gains: the general Geneva Act on public levies makes the proceeds from assigning a purchase option subject to it (articles 80 and 83).

Is a purchase option over shares the same thing?

No, a purchase option over shares or membership interests is not the same thing: it concerns securities, not a property, and article 216 of the Code of Obligations, which requires a public deed, applies only to purchase option agreements over real estate.

A purchase option over securities is a matter of freedom of contract (article 19 of the Code of Obligations): no public deed, and no priority notice in the land register. For a Sàrl (a private limited company), article 785 requires the transfer of membership interests, and any obligation to transfer them, to be in writing.

Should you prefer a promise of sale to a purchase option?

No, a promise of sale should not be preferred to a purchase option when the buyer wants to be able to back out: a purchase option binds only the owner and leaves the buyer free. Three criteria set the two instruments apart.

• Which party is bound: a purchase option leaves the buyer free to withdraw, and gives the seller no such freedom.
• The enforceability sought: once noted in the land register, a purchase option takes precedence over any right subsequently acquired over the property (article 959 of the Civil Code).
• The term: ten years at most for a purchase option (article 216a of the Code of Obligations).

When both parties need to be bound to go through with the sale, the instrument to consider is the promise of sale in its bilateral form, known as a promise of sale and purchase. Have your notary settle this choice with you, timetable and room for withdrawal in hand.

A purchase option in Geneva binds the owner alone, at the agreed price and for the term fixed in the deed.