Changing property manager in Zurich: notice and handover

As a rule, you can end a property management contract at any time, and according to the Federal Supreme Court's case law this also holds during an agreed minimum term. Art. 404 para. 1 CO states that a mandate may be revoked or terminated by either party at any time. The article names neither a notice period nor a form.

The Federal Supreme Court applied the right to terminate at any time under Art. 404 CO on 13.02.2014 in a Zurich case (judgment 4A_284/2013). A cooperation agreement (“Zusammenarbeits-Vereinbarung”) on managing properties with around CHF 20 million in gross rental income a year integrated the owner's management department into the business of the mandated firm. It had been concluded for a fixed five years; the principal gave notice after about two years with a little over two months' notice. The court held that the right to terminate is mandatory, may be neither excluded nor restricted by contract, and exists even where a fixed term was agreed (consideration 3.5.1).

Whether the right to terminate at any time also applies to a mixed contract depends, according to the same judgment, mainly on whether a relationship of trust between the parties is indispensable (consideration 3.5.1). The court found this to be so for the Zurich cooperation agreement, because integrating the department into the mandated firm's business required a heightened relationship of trust compared with ordinary property management (consideration 3.5.2). For the property management contract, the legal portal law.ch names the right to revoke at any time under Art. 404 para. 1 CO; according to part of the legal literature, however, notice given for a date other than the contractual one counts as termination at an inopportune time, which leads to compensation under Art. 404 para. 2 CO. Where possible, therefore, give notice for the contractual date.

Termination at an inopportune time creates a duty to compensate for the damage caused (Art. 404 para. 2 CO); the contract ends in any case. According to the Federal Supreme Court a termination is inopportune under two conditions: the mandated party gave no justified cause for it, and the termination is detrimental to that party because of its timing and the arrangements it had made (BGE 110 II 380 of 12.06.1984, consideration 3b). If you give notice with a notice period, then according to the same court the manager has to show why the termination is nevertheless inopportune and what specific damage it has suffered (judgment 4A_284/2013, consideration 3.6.2). An agreed contractual penalty is owed only if the conditions of this liability are met, i.e. if notice was given at an inopportune time (judgment 4A_284/2013, consideration 3.6.1).

Compensation under Art. 404 para. 2 CO in principle covers the negative interest: expenses incurred for the mandate that have become useless, or profit the manager gave up in order to devote itself to the mandate; the interest in the mandate continuing is not protected (judgment 4A_284/2013, consideration 3.6.1). Lost fees do not count as damage (BGE 109 II 462 of 13.12.1983, consideration 4d). Where notice is given at an inopportune time, an agreed contractual penalty can be owed without proof of damage in that amount; an excessive penalty is reduced by the court if the terminating party shows grounds for doing so (Art. 163 para. 3 CO; BGE 109 II 462, consideration 4d).

In the Zurich case of 2014 the manager, which had neither shown that the termination was inopportune and caused damage nor asserted a claim under Art. 404 para. 2 CO before the lower court, could claim neither damages nor the CHF 200’000 agreed for early termination for good cause (judgment 4A_284/2013, facts A.b and consideration 3.6.2).

Advisable times to change property manager are the end of an accounting period or the contractual termination date, when no re-letting and no renovation is under way. A landlord who charges ancillary costs on the basis of a statement must prepare that statement at least once a year (Art. 4 para. 1 VMWG, the ordinance on residential leases). With a switch at the end of the period, the current manager closes its statement and the new one starts with the next.

If a statement, a re-letting or a building project is in progress when you give notice, record in writing who completes and bills it. Between notice and handover the new manager needs time to determine the account for the rent and to inform the tenants.

alphakey takes over your management on an agreed handover date: a first conversation without obligation clarifies the property, the services and the date, the fee is agreed individually before the takeover, and on that date alphakey takes over contracts and documents. Victoria and Artur Pfeifer themselves manage single houses, smaller properties and let condominium flats in the city of Zurich, on the left shore of Lake Zurich and in the surrounding area, from their base in Wettswil am Albis. alphakey does not manage condominium owners' associations.

After the takeover, alphakey checks incoming rent every month and sends reminders when a payment is overdue, prepares the ancillary cost statement, coordinates maintenance and tradespeople and looks after the tenants' concerns. You see receipts and rent payments in an online overview, and you can reach alphakey by phone, WhatsApp and e-mail. You can likewise end the contract with alphakey at any time under Art. 404 CO.

What ongoing management covers is described on the page property management. For a single let house, see property management for a single-family house; for a change of tenant, see tenant search for owners.