Aside from not buying it, is there any other fool-proof legal solution to this that you found? Or any advice on how to deal with it? Pitfalls? Worst case scenario?
Many thanks.
Anyone encounter a situation while buying a property in Switzerland, where there were outstanding mortgage deeds (potentially mortgage was paid off) that couldn't be found?
No. You will need to elaborate.
Schuldbriefen are actually worth money, they cost some 1000s depending on the debt and the don't generally go missing unless the debt is cleared...
I thought the actual Schuldbrief was held by the bank to whom it is assigned. Could it be that the bank still has the paper even though the mortgage has been cleared?
Hi AbFab, thanks for the prompt reply.
I am told that the debt was paid off, the Schuldbriefs were returned by the bank, but the owner mistakenly trashed them or misplaced them. If I do indeed want to buy the property, what can I do to protect myself against these Schuldbriefs turning up down the road?
You have to have it publicly declared void. A notary should be able to assist you with that.
Thanks Snoopy.
One more question. Are the Schuldbrief normally bearer in Switzerland?
If you need a mortgage on the property, you will need a Schuldbrief . If there is one or more still about, you can use these and simply have your name added. Otherwise you will be starting from scratch and need to pay again. The owner is effectively adding a few CHF1000s to your purchase costs.
If the Schuldbrief no longer exists, how could you be proved to be responsible for a paid-off debt? I think you need to talk to someone who knows about this - your mortgage lender??
Hi,
If the schuldbrief was for 500,000 CHF I would deduct that amount from the final payment as it's a liability on the property for that amount.
A Schuldbrief gives no indication as to the outstanding amount on a mortgage. You may have a schuldbrief for 500'000 but the mortgage be fully paid up. The schuldbrief basically says how much you can borrow on the property. If a schuldbrief exists on a property when you buy it, it can be transferred. Some sellers will make you pay for it, maybe 50% of what it would cost to set up a new one (and that is a win-win for all involved, the seller gets some of their expenses back and the buyer has less outlay). IIRC the costs associated with setting up a schuldbrief are actually related to the amount, so the higher a schuldbrief the more expensive to set up.
I think that if you acted as fatmanfilms suggested there would probably be a general shaking of heads and groaning and you may well be shown the door....
Not been here too long have you ?
Thanks folks.
I understand that it will cost some money to set up new Schuldbriefs if I am taking a mortgage, that its a small percentage of the value; so for normal amounts, say CHF 1-3k. This is ok.
I also understand that the missing Schuldbriefs have to be declared null & void, as Snoopy suggested. My concern is more as to what is the possible downside here. As Snoopy says, the face value of Schuldbriefs might be completely different from outstanding mortgage. Using the above example of CHF 500k face value, what if:
- I buy the property
- the process of declaring null & void takes 1 year
- during this time, someone who found these missing Schuldbriefs on the street turns up and asks for money. Will I be owe CHF 500k i.e. the face value of these bearer Schuldbriefs to this person? plus some interest?
You are still not posting enough information to give a sensible answer.
Are you saying that the present owner has no mortgage? And he paid this off and somehow got his hands on the Schuldbrief and then lost it? Why has he told you this?
Normally the Schuldbrief will remain at the Grundbuchamt (like Land Registry) even if paid off. The Schuld or debt is owed to a lender - usually a bank. Nobody finding the Schuldbreif in the street would have any claim anyway...
Apologies for not being clear.
The present owner claims that:
- the mortgage was paid off i.e. no currently outstanding mortgage
- that the bank returned the Schuldbriefs to the owner (I am told that this is the usual process)
- the owner lost/misplaced them
The Schuldbriefs are still listed on the property's land registry as outstanding with a certain face value. And in this case it is, Inhaber-Schuldbriefs. So, my concern is that if someone does indeed turn up with them, are they owed face value + certain interest?
I'm not totally sure this would be the case. The Schuldbrief may well still be registered at the Grundbuchamt , but they should be 'empty'. The lender should have informed the Grundbuchamt at the time the loan was paid off.
But it is an odd situation and I wonder why the seller even raised the subject. But since he has, I think he will have a problem selling his property unless he can locate the papers...
Most schuldbriefs are 'Bearer' that means whoever has the document has security of face value, end of story.
The Bank gave back the schuldbrief but the house owner may well have remortgaged giving the schuldbrief as security to somebody else, as I said earlier the price paid must be discounted by the value of the 'missing' schuldbrief.
Generally Swiss mortages don't usually get paid off below 65%, alarm bells are ringing......
Yes, you will owe the value of the schuldbrief, I don't see how it could be made null & void, it's a 'bearer security'
It's quite normal to buy a house with an outstanding schuldbrief, as long as the amount outstanding is less than the purchase price..... I was going to buy a property which had 5 outstanding schuldbrief's they exceedeed the value of the property & the seller could not pay me the difference!
But as I also said, just because there is a schuldbrief in the Grundbuch does not mean that any money is owing on a mortgage.
I suggest that the OP contact a notary who should be able to explain this in detail and suggest ways in which he can protect himself.
That is why you have to have the schuldbrief in your hands, then you know there is no outstanding loan out.
The only way to protect yourself is not pay the value of the schuldbrief......