The contractors' and tradespeople's statutory mortgage is one of the most powerful protection tools available to the construction sector under Swiss law. It allows any contractor or tradesperson who has worked on a property to register a mortgage over it to secure payment of their claim, even without a direct contract with the owner. Governed by art. 837 para. 1 no. 3 CC, this real security is subject to a mandatory four-month deadline that obliges creditors to act promptly. PBM Avocats assists contractors, tradespeople and clients in all matters relating to this institution, in Geneva and the canton of Vaud.
The Legal Basis and Beneficiaries (Art. 837 Para. 1 No. 3 CC)
Art. 837 CC recognises several categories of statutory mortgages, among which that of contractors and tradespeople occupies an essential place in construction practice. It benefits any person who has supplied materials and labour, or only labour, to construct or demolish a structure. This definition is broad: it covers not only the general contractor, but also subcontractors, independent tradespeople (electricians, plumbers, heating engineers, tilers, joiners) and suppliers of construction materials.
One of the most remarkable aspects of this regime is that the beneficiary of the statutory mortgage may have no direct contractual relationship with the property owner. A subcontractor working on behalf of the general contractor may register a statutory mortgage on the client's property, even if the client has already paid the general contractor. In this case, the client bears the burden of the statutory mortgage and will need to seek recourse against the general contractor to recover the amounts paid twice. This reality obliges clients to carefully monitor payments made by contractors to their subcontractors.
The Four-Month Deadline and Its Calculation (Art. 839 Para. 2 CC)
Art. 839 para. 2 CC sets a mandatory four-month deadline for requesting provisional registration of the statutory mortgage. This deadline runs from the completion of works carried out by the relevant contractor or tradesperson. The Federal Supreme Court interprets the concept of completion of works restrictively: it refers to the end of the actual services of that contractor or tradesperson on the site, not the end of the overall project or the official acceptance of the structure. Correction or finishing works carried out after the completion of the main works may, subject to conditions, extend the starting point of the deadline.
The four-month deadline is a period of forfeiture: it cannot be suspended, interrupted or extended, except by operation of law in exceptional circumstances. Failure to comply results in the permanent loss of the right to the statutory mortgage. It is therefore crucial for contractors and tradespeople to identify the exact completion date of their works and to promptly instruct a lawyer to prepare the application for provisional registration. PBM Avocats implements monitoring procedures for its construction sector clients to ensure this critical deadline is never missed.
The Provisional Registration Procedure and Its Judicial Confirmation
The application for provisional registration is submitted to the competent land registrar (of the canton where the property is situated). It must be accompanied by documents justifying the existence and amount of the claim: contract or accepted quotation, delivery notes, issued invoices, correspondence with the debtor. The registrar registers the provisional mortgage in the day book and main register without prior hearing of the owner.
Provisional registration must be confirmed within a period set by the court (generally three months from registration), failing which it lapses. This confirmation is obtained through legal proceedings aimed at having the secured claim recognised and converting the provisional registration into a definitive registration. If the claim is disputed, the matter is brought before the competent civil court which rules on the merits. PBM Avocats manages all of these proceedings, from the registration application to the confirmation judgment.
Protection Strategies for Property Owners
The property owner can protect themselves against the risk of statutory mortgages in several ways. They can insert into the contract with the contractor a clause requiring the production of attestations of payment of subcontractors and suppliers before each instalment payment. They can retain part of the contractor's price (retention) until the four-month deadline has expired and all attestations have been produced. Art. 839 para. 3 CC also allows the owner to obtain cancellation of the provisional registration by offering equivalent security (bank guarantee) to the creditor. PBM Avocats drafts the appropriate contractual clauses and accompanies property owners in managing these risks within the framework of Swiss real estate law.
Frequently Asked Questions on the Statutory Mortgage for Contractors and Tradespeople
Who benefits from the statutory mortgage for contractors and tradespeople?
Under art. 837 para. 1 no. 3 CC, the right to register a statutory mortgage belongs to any contractor or tradesperson who has supplied materials and labour, or only labour, for the construction or demolition of a structure. Covered parties include general contractors, subcontractors, independent tradespeople (masons, electricians, plumbers, carpenters, etc.) and suppliers of materials. The property owner (client) may not be the direct debtor of the tradesperson or contractor — a subcontractor working for the general contractor can still register a statutory mortgage on the client's property, without having a direct contractual relationship with them.
What is the deadline for registering the contractors' statutory mortgage?
Provisional registration of the statutory mortgage must be requested from the land registry within four months of the completion of works performed by the relevant contractor or tradesperson (art. 839 para. 2 CC). This deadline is mandatory and its violation results in the permanent loss of the right to the statutory mortgage. Completion of works means the completion of the actual services of that contractor or tradesperson on the site, not the completion of the overall project or the official acceptance of the structure. In case of doubt as to the exact date, one should act without delay. PBM Avocats assists contractors and tradespeople in identifying the completion date and filing the application within the statutory period.
What is the procedure for provisional registration?
Provisional registration is obtained on simple application to the land registrar or, in case of refusal or dispute, by court order (art. 961 para. 1 CC). The contractor or tradesperson files their application together with documentation justifying the claim (contract, delivery notes, invoices, correspondence). Provisional registration is entered in the day book and main register of the land registry without prior notification of the owner. The applicant must then have the provisional registration confirmed by the court within a period set by the tribunal (generally three months), failing which it lapses. Confirmation requires the introduction of legal proceedings aimed at having the secured claim recognised.
Can the owner oppose the registration of the statutory mortgage?
Provisional registration may be requested without the property owner's agreement and even without prior notification to them (ex parte procedure). However, the owner may oppose the judicial confirmation of the registration by contesting the existence or amount of the claim. They may also offer alternative security (bank guarantee, cash deposit) to obtain cancellation of the provisional mortgage (art. 839 para. 3 CC). In practice, owners wishing to sell or refinance their property have an interest in promptly resolving these registrations to prevent them from blocking the transaction.
Does the statutory mortgage rank before conventional mortgages?
The rank of the contractors' statutory mortgage is in principle subsequent to the limited real rights already registered in the land registry at the time of its registration (art. 972 CC and art. 840 CC). However, the contractors' statutory mortgage has a particular feature: even if multiple contractors or tradespeople register their statutory mortgages on different dates, all their mortgages rank equally among themselves and collectively take priority over rights registered after the first registration (art. 841 CC). If the proceeds of the forced sale are insufficient to pay all of them, they are paid in proportion to their respective claims.