Legal Hypothecs of Craftsmen and Entrepreneurs, Tripartite Relationships, and Enforcement: 3 Key Points
- Right to Real Estate Pledge
The final registration of a legal hypothec by craftsmen and entrepreneurs (Art. 837, para. 1, item 3 of the Swiss Civil Code) grants the creditor a real estate pledge to secure their claim. On this basis, the creditor may initiate debt enforcement proceedings by realization of real estate collateral (Arts. 151 et seq. DEBA and 85 et seq. OFREG), provided that the secured claim is due and the debtor has not fulfilled their obligations—no prior formal notice is required in such a case.
This also applies when a subcontractor benefits from the final registration of a legal hypothec on a third party’s property.
- Notification of the Payment Order
The payment order is served to the personal debtor. The third party, for their part, receives a copy of the same document, bearing the same enforcement case number; it is therefore one and the same proceeding.
The third party and the debtor—thus considered co-enforced parties, not co-debtors—may exercise their rights independently of one another, particularly the right to file an objection, and they may challenge both the claim and the right of pledge.
- Continuation of Enforcement Proceedings
Enforcement by realization of the pledge can only proceed against the third party if it can proceed against the personal debtor. To move forward, all objections must be lifted by a court ruling (provisional or definitive release).
According to case law, a judgment ordering the final registration of a legal hypothec does not constitute a definitive release title for the secured claim within the meaning of Art. 80, para. 1 DEBA. In such cases, the judge examines the claim only preliminarily to determine the amount of the pledge. Therefore, the action for final registration of the legal hypothec against the property owner must be combined with a claim for payment of the debt against the debtor.
The same applies to an enforceable public deed (Art. 349 CPC), which is only valid inter partes and therefore not binding on third parties. For instance, if a general contractor has committed to the debtor through an enforceable public deed, this document cannot be enforced against the third-party owner of the pledged property; a request for definitive release will be denied due to the lack of identity between the co-enforced property owner and the debtor named in the deed.
Conclusion:
The legal hypothec is an effective tool for securing claims but requires careful coordination of actions and respect for the distinct rights of co-enforced third parties. Caution is advised in tripartite relationships.
Written by Me Simon Fornerod