22 July 2025
From 1 January 2026, there will be a new regulation for the provision of security in place of a builder's lien.
The builder's lien is an effective instrument for contractors to exert pressure on the landowner if the client does not pay for work carried out on a building plot. At the same time, however, it can severely impair the landowner's creditworthiness and restrict his freedom of disposal over the property. The law therefore gives the landowner the opportunity to defend himself against such a lien - by providing sufficient security (Art. 839 para. 3 ZGB). This takes the place of the lien and is intended to offer the entrepreneur equivalent protection.
The law has so far been silent on the conditions under which adequate security is to be affirmed. This will now change from 1 January 2026 with the new provision in Art. 839 para. 3 ZGB. The following now applies: The registration of a builder's lien cannot be requested if the owner provides sufficient security for the registered claim plus default interest for a period of ten years.
This clarification of the legal text was triggered by the ruling of the Federal Supreme Court on 5 October 2016 (BGE 142 III 738). In this judgement, the Federal Supreme Court stated that a guarantee is only sufficient within the meaning of the law if, in addition to the claim, default interest is also guaranteed for an unlimited period. Furthermore, a guarantee must not have a time limit on the period of validity. With this decision - which was heavily criticised by the doctrine - the Federal Supreme Court posed considerable difficulties in practice. Consequently, a bank guarantee without a clear time limit and with an unlimited interest period is hardly available and its issue depends essentially on the liquidity of the landowner. This means that what is probably the most common instrument of security, the (bank) guarantee, has effectively been declared a dead letter.
In the meantime, the Federal Supreme Court has once again had the opportunity to address this issue and its previous case law. In its ruling 5A_323/2022 of 27 October 2022, it confirmed the decision of the lower court (Cantonal Court of Geneva), according to which a security provided by the landowners in the amount of the contractor's claim plus 5% interest for a period of ten years satisfied the requirements for sufficient security. In particular, it stated that an ongoing revision of the law can be considered when interpreting a standard.
The revision of the law, which now provides for the limitation of default interest in Art. 839 para. 3 ZGB, makes the provision of security in the builder's lien practically relevant again, because: The scope of the substitute security to be provided can now be clearly determined again. This is expressly to be welcomed in the interests of legal certainty and a uniform application of the law.
