Borrowing against art

Types of security interest

In your jurisdiction what is the usual type of security interest taken against art, antiques and collectibles?

The usual type of security interest is a pledge (the creditor has a right to the sale of the pledged asset if the amount due is not reimbursed) or a transfer of ownership as guarantee (the creditor becomes the owner of the asset).

Consumer loans

If the borrower borrowing against art assets in your jurisdiction qualifies as a consumer, does the loan automatically qualify as a consumer loan, and are there any exemptions allowing the lender to make a non-consumer loan to a private borrower?

No, the loan does not automatically qualify as a consumer loan. The Federal Credit Consumer Act provides that a consumer concludes a loan for a purpose outside his or her commercial or professional activity (article 3). The Act does not apply to loans in excess of 80,000 Swiss francs and short-term loans of up to three months. If a borrower qualifies as a consumer, the provisions of the Act may not be waived at his or her expense.

Register of security interests

Is there a public register where security interests over art, antiques or collectibles can be registered? What is the effect of registration? Is the security interest registered against the borrower or the art?

No.

Non-possessory security interests

Can the lender against art collateral perfect its security interest without taking physical possession of the art?

In principle, nothing prevents the lender from having the art stored at a third-party place (such as a warehouse) under its control. With regard to the borrower, it cannot keep possession of the art (or have sole control over access to it).

Sale of collateral on default

If the borrower defaults on the loan, may the lender sell the collateral under the loan agreement, or must the lender seek permission from the courts?

According to the Federal Act on Debt Enforcement and Bankruptcy, the lender is not required to seek permission from the courts if the borrower has not lodged opposition to the payment order. In the opposite event, he or she must file a claim with the courts. The parties may not anticipate and forego this procedure by inserting a clause in the loan agreement.

Ranking of creditors

Does the lender with a valid and perfected first-priority security interest over the art collateral take precedence over all other creditors?

Yes.