How can I protect myself against legal mortgages?

How can I protect myself against legal mortgages?

I own a property in Geneva. At the last general meeting of our block of flats, it was decided to undertake major renovation work on the building. I was advised to protect myself against the possibility of legal mortgages being registered by the tradesmen. I intend to propose to all the owners that a legal mortgage be created. Is this possible?

D. Meyrin

A contractor or craftsman who has carried out work on a building may take legal action by applying to the competent local court, in this case the Geneva Court of First Instance, to have a legal mortgage registered in the Land Register on the building, under the conditions set out in Article 837 of the Civil Code. In essence, in addition to proving his status as a craftsman, he will have to provide proof of the existence of a contract of enterprise (concluded with the owner or a general contractor), of the work carried out on the property, of the claim he holds (often unpaid invoices), of the absence of sufficient security provided by the owner and of compliance with the mandatory four-month time limit from completion of the work entrusted to him. This registration can be obtained on an emergency basis when the aforementioned time limit is about to expire.

Such a mortgage constitutes a pledge on the property, which in most cases enables the parties concerned to reach an agreement on their financial dispute. If this is not the case, once the legal mortgage has been definitively registered, the craftsman or contractor who is the beneficiary has the option of applying to the Court for the property to be realised.

Your idea is original but unworkable, because this legal mortgage can only be requested by a craftsman or contractor, with the exception of the owner of the building.

There is no legal way of avoiding the registration of such a pledge on the building, apart of course from not having any disputed debts on it, which is sometimes difficult; on the other hand, the owner concerned can protect himself against the non-performance of the work by the craftsmen or contractors involved on his site. The owner can ask the contractors to provide a bank or insurance guarantee, known as a "performance bond", valid for the entire duration of the project and generally covering 5 to 10% of the contract value. In the event of failure to perform the services to which it is entitled, the client may ask the third-party guarantor to pay the guarantee, which it may use to complete the work in place of the craftsman at fault.