Contestation and rescission: What happens if something goes wrong?

Foreclosure auctions in Switzerland enjoy an excellent reputation regarding transparency and legal certainty. Nevertheless, it can occur that formal errors, deceptions, or unforeseen defects disrupt the process. Good to know: Swiss law provides a comprehensive safety net, from the appeal of the auction bid to the rescission of the purchase. This article shows you step by step what options exist, how the processes work, and how to effectively assert your claims.

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1 Legal Basis: SchKG, ZPO & OR

Regulation	Subject	Key Points
Art. 134 ff. SchKG	Appeal of the auction bid	Deadline: 10 days, appeal to the cantonal supervisory authority
Art. 135 Abs. 4 SchKG	Suspensive effect	Purchase price remains blocked until the appeal is decided
Art. 77 ff. ZPO	Restoration after missing a deadline	If the deadline was missed without fault: application possible within 30 days
Art. 23 OR	Error & Defects of Will	Appeal due to a fundamental error (e.g., accidentally clicking a million)

“The combination of short deadlines and clear responsibilities ensures that ambiguities are quickly resolved, a plus for all parties involved.”

2 Appeal of the Auction Bid

2.1 Typical Reasons

• Formal errors: incorrect publication or missing collateral from a bidder
• Procedural errors: incorrect call order, bidding below the minimum offer
• Deception or collusion: agreements among bidders ("rings") or false statements by the debtor

2.2 Summary of the Process

1. Submit an appeal within 10 days to the auction supervisory authority
2. Request access to files and submit evidence (witness statements, photos, excerpts from protocols)
3. Observe the suspensive effect: land registry office blocks property transfer until decision
4. Authority decision, confirms or overturns the bid (re-auction)

3 Rescission after Successful Land Register Entry

3.1 When is This Possible?

If the bid is legally binding and the land register entry has been made, essentially only the appeal due to defects of will (Art. 23 ff. OR) or the recovery based on a breach of contract (e.g., fraudulently concealed construction defects) remains. The procedure then takes place in civil court.

3.2 Rescission Procedure

1. File a lawsuit for declaration of contract or rescission
2. Gather evidence: expert reports on concealed defects, witnesses, etc.
3. Court decides on annulment & refund of purchase price
4. Re-transfer in the land register → deletion of the property transfer
5. Compensation for expenses (Art. 208 OR) between the parties

4 Financial Security: What Happens to the Purchase Price?

• Before Legal Validity, the purchase sum is held in a notarial escrow account or with the debt collection office (Art. 135 Abs. 4 SchKG).
• In case of successful appeal, the money will be refunded interest-free, with any notary fees borne by the losing party.
• Transaction costs (fees, taxes) are allocated by the court, usually according to the principle of causation.

5 Example: Annulment Due to Formal Error

In the canton of Aargau, a single-family home was auctioned in 2023. The second-highest bidder noticed that the highest bidder had only submitted their security as an unconfirmed e-banking statement. He filed an appeal within 10 days. The supervisory authority annulled the bid, and the property was auctioned again three months later. The appellant eventually received it for CHF 40,000 less, while the highest bidder had to bear the procedural costs.

6 Role of Legal Protection & Title Insurance

Legal protection insurance covers costs for appeals, expert reports, and court depending on the policy. Investors increasingly utilize title insurance, which covers the risk of later property disputes and speeds up the release of loans from banks.

7 Checklist: How to Proceed When Irregularities Occur

1. Immediately check and photograph the auction protocol.
2. Gather reasons for suspicion: witnesses, screenshots, bidding history.
3. Mark the 10-day deadline for appeal on the calendar.
4. Contact legal counsel or the tenants' association.
5. If necessary: inform your legal protection insurance.
6. Do not release the purchase price until the decision.

8 FAQ

Can I appeal the bid if I did not bid at all?

Yes. Anyone who can demonstrate a legitimate interest (e.g., creditor, tenant) is entitled to appeal.

Is there a limitation period for concealed defects?

In land purchases, it is generally five years (Art. 219 OR). The period begins with the entry in the land register.

What happens to investments made after rescission?

Expenses that the buyer incurred during the possession period will be replaced or deductible offset according to Art. 208 OR.

9 Conclusion: Security Through Clearly Regulated Legal Remedies

Mistakes can happen, but Swiss law ensures that foreclosure auctions remain fair and transparent. Whether it’s an appeal, rescission, or damages: for almost every problem, there is a proven procedure that protects your investment and strengthens trust in the market.