Surprise: the subcontractor hasn't been paid!

Surprise: the subcontractor hasn't been paid!

"We contracted a company to refurbish the windows in our villa. The company carried out the work carefully and diligently, and we paid the invoice for CHF 14,000. We were surprised to receive a letter a month later from the subcontractor who had made the windows, asking us to pay the sum of CHF 7,900, failing which a legal mortgage would be placed on our villa. We refused to pay the invoice and the sub-contractor obtained the registration of the mortgage. Did they have the right to do so?

Contractors and craftsmen who carry out work on a villa or flat create added value for the property, thereby enriching the owner entered in the Land Register. Because of the principle of accession, constructions or alterations automatically become an integral part of the land on which they have been carried out. As a result, unlike the seller, who could retain the property against payment, contractors and craftsmen have no right of retention over the materials supplied and could find themselves at a disadvantage when faced with an owner who is reluctant to pay what is due.

This unequal situation led the legislator to provide for the possibility for contractors and craftsmen to apply, within four months of completion of the work, for the registration of a legal mortgage on the building. This is a privileged type of mortgage, since in the event of compulsory sale of the building, contractors have a preferential right to the added value associated with their work. Not only the contractor who has entered into a contract of enterprise with the owner of the building, but also the subcontractor who has supplied materials or work on behalf of the contractor benefit from this privilege.

The independent subcontractor has a separate right to the registration of a legal hypothec, notwithstanding the absence of a contractual relationship between him and the owner. As a result, the owner runs the risk of being forced to pay the cost of the work twice in order to avoid the completion of his building. However, if the owner has not yet paid the bill to the contractor, he has the option of reducing the amount required, since work subject to a mortgage must be considered defective.

Consequently, even if you have already paid the bill to your contractor, the law requires you to take out a legal mortgage on your house in favour of the subcontractor. As a result, your only defence is to sue the contractor for repayment of the overpayment. In future, to protect yourself against the risk of double payment, you may wish to include a clause in the contract guaranteeing payment to the subcontractor by the contractor before any payment is made to the contractor.