The most important laws and regulations on foreclosure sales in Switzerland
December 11, 2024
Foreclosure auctions (often referred to as enforcement proceedings in the context of debt collection in Switzerland) are a central tool for enforcing unpaid claims. On one hand, they ensure that creditors receive what they are entitled to, and on the other hand, they offer the debtor a clearly regulated process with comprehensible steps. The Swiss legal system is characterized by high transparency and clear regulations, so that in most cases a fair balance of interests is achieved.
Legal Basis: The Federal Act on Debt Collection and Bankruptcy (SchKG)
The cornerstone of the statutory regulations surrounding foreclosure auctions in Switzerland is the Federal Act on Debt Collection and Bankruptcy (SchKG). This law regulates:
- The initiation of debt collections against debtors
- The course of the collection process and options for objections
- The garnishment or foreclosure of assets
- The procedures for foreclosure auctions (for both movable property and real estate)
- The bankruptcy of companies and individuals
Depending on the type of debt and the nature of the affected asset (e.g., movable goods, real estate, company shares), specific procedural steps and deadlines apply under the SchKG. For foreclosure auctions of real estate, the articles in the SchKG that regulate the so-called collection for foreclosure are particularly relevant.
Overview of the Process
1. Initiation of Debt Collection
The first step is always the initiation of debt collection. A creditor submits a debt collection request to the competent debt collection office. The debt collection office issues a payment order to the debtor. The debtor can respond within a specified period, for example, by:
- Paying the claim (or negotiating a payment plan)
- Raising a legal objection (which initially disputes the claim)
- Failing to respond (meaning the payment order is ignored)
2. Continuation of Debt Collection and Garnishment
If payment is not made or the legal objection is successfully eliminated, the creditor can demand the continuation of the debt collection. Depending on the type of claim and the status of the debtor (individual or company), different types of debt collection are distinguished in Switzerland:
- Debt collection for garnishment: For individuals not listed in the commercial register. Here, the debt collection office can seize certain assets.
- Debt collection for foreclosure: When there is already a lien in place (e.g., in the case of a mortgage). The foreclosure is carried out directly through the pledged object.
- Bankruptcy debt collection: For debtors in the commercial register (companies) who can go directly into bankruptcy.
3. Request for Foreclosure and Auction
Once the garnishable asset has been identified – for real estate, for example, the debtor's property or house – the debt collection office can order a foreclosure. In practice, this means:
- Public announcement of the auction date
- Opportunity to review relevant documents such as property register extracts, liens, and SchKG certificates
- Conducting the foreclosure auction at a specified time
These auctions are usually public, meaning that anyone interested can participate. The transparency of the process typically results in a market price that is intended to cover the existing debts – at least in part.
Special Regulations for Real Estate
In the case of real estate, the foreclosure process is particularly complex, as multiple creditors with different liens may be involved, and property law (part of the Swiss Civil Code) may also come into play. Relevant aspects include:
- Priority of Liens: Creditors with earlier registered liens are considered first.
- Publication Requirement: Public announcement of the auction in the official journal as well as often in additional newspapers and online portals.
- Disclosure Requirements: Certain information must be disclosed, e.g., mortgage debts, easements, or building obligations.
- Minimum Bid and Award: The debt collection office sets a minimum bid. If this is not met, a second auction date may be set.
These regulations are designed to ensure that the potential buyer can know which rights and obligations come with the acquisition of the property. At the same time, they allow for a fair order in debt repayment.
Sample Timeline of a Foreclosure Auction
| Step | Measure | Typical Deadline |
|---|---|---|
| 1. Debt collection request | Delivery of the payment order to the debtor | Within a few days after submission of the request |
| 2. Legal objection or payment | The debtor can contest or settle the claim | 10 days after receipt of the payment order |
| 3. Continuation of debt collection | After unsuccessful payment or elimination of the legal objection | Varies, as soon as the legal objection is clarified |
| 4. Garnishment or Foreclosure | The debt collection office identifies garnishable goods or pledged objects | Depending on the complexity of the case |
| 5. Request for Foreclosure | The creditor requests the auction | After the expiration of certain statutory waiting periods |
| 6. Foreclosure auction | Public auction of the object | Date is officially published |
| 7. Distribution of proceeds | Coverage of costs and creditor claims according to priority | After the auction is completed |
Role of Debt Collection Offices and Courts
The debt collection offices oversee the entire process and take care of the formal steps – from the delivery of documents to the execution of the auction. Should legal uncertainties arise (e.g., in the case of objections), the courts decide on the admissibility of claims or measures.
"Swiss debt collection offices enjoy an international reputation for their efficiency and transparency. This significantly contributes to the stability of the legal and economic location of Switzerland."
Typical Challenges and Tips
Acting Early for Both Parties
It is advisable for both the debtor and the creditor to contact each other early on. Often, many disputes can be avoided or at least amicably resolved through payment plans or negotiations.
Seek Legal Advice
In complex cases – for example, when multiple mortgages, easements, or other encumbrances exist on a property – professional advice is helpful. Lawyers and notaries can assist with their expertise in enforcing or defending claims.
Targeted Research Before Purchase
Potential buyers should thoroughly inform themselves before a foreclosure auction:
- What liens are registered?
- What construction restrictions or easements exist?
- Are there any special features (e.g., rental agreements, building rights)?
Such information is usually available at the debt collection office or the land registry office.
Conclusion
Foreclosure auctions in Switzerland are a clearly structured and regulated process that allows both creditors and debtors to handle outstanding claims fairly. The Federal Act on Debt Collection and Bankruptcy (SchKG) serves as the cornerstone of the legal regulations. Thanks to comprehensive transparency and detailed procedures, foreclosure auctions also offer interested parties attractive opportunities to acquire real estate or other assets.
Those who inform themselves early and seek competent advice in good time can optimize the process – whether as a creditor, a debtor, or a potential buyer.
