What is a Schuldbrief and what is the land register?

The land register is the official, public register of real estate and the rights attached to it. Registered are ownership, servitudes (easements), mortgage liens, priority notices and annotations. Acquisition of ownership of a property in Switzerland generally only becomes effective with the entry in the land register; the notarized purchase contract is the basis, the entry has a constitutive effect. The land register provides legal certainty and transparency about rights and encumbrances.

Together, Schuldbrief and land register secure financing. The Schuldbrief defines the amount and the rank of the secured claim. By pledging it in favor of the bank, the bank obtains the right, in the event of enforcement, to be satisfied primarily from the proceeds. Rank is important because it determines the order of satisfaction in debt enforcement or bankruptcy; first ranks are considered safer and are cheaper to finance than later ranks.

For property owners the choice between paper and register Schuldbrief is mainly a question of administration. The register Schuldbrief is less burdensome because no physical document must be kept and transfers are effected purely by registration. Existing paper Schuldbriefe can be converted into register Schuldbriefe on request, which simplifies handling and reduces the risk of loss.

The land register also provides important information for purchase and financing. A current land register extract shows ownership relationships, encumbrances, rights of way, building prohibitions or use restrictions. These factors affect value, lending (loan-to-value) and contract design. Careful review of the extract and coordination with the notary and the bank prevent later surprises.