Who can take out a legal construction mortgage?
A legal hypothec can be taken out in favor of parties who have contributed to the construction or renovation of an immovable and who have not been paid for their work or for the value they have added to the immovable. This legal hypothec resulting from workers’ contributions is a guarantee of payment for those who have provided services or materials.
According to thearticle 2726 of the Civil Code of Québec (hereinafter “C.C.Q.”) [1] persons who can take out a legal mortgage are architects engineers, material suppliers, labourers, contractors and other workers involved in the construction or renovation of the building in question. These people can take out a legal mortgage to guarantee payment of the value they have contributed. They must, however, follow the procedure for taking out a legal mortgage to guarantee payment of the value they have contributed.
Rules for taking out a legal construction mortgage
It is important to note that “the legal hypothec in favour of persons who have participated in the construction or renovation of an immovable subsists, even if it has not been published, for 30 days following the completion of the work. “(Article 2727 C.c.Q.) Thus, a legal construction hypothec must betaken in payment to be valid. This means that the person taking out the legal mortgage must serve it on the owner of the building and register it in the land register within 30 days of completion of the work.
According to article 2727 al.2 C.c.Q., the legal hypothec resulting from work will be preserved if a notice “designating the encumbered immovable and indicating the amount of the claim” was “served on the owner of the immovable.”
It should also be noted that obtaining a licence to renovate a building does not automatically grant the right to take out a
legal construction mortgage
. However, it is often necessary for renovation work, and can facilitate the process ofregistering a legal mortgage.
Who can take out a legal hypothec of co-ownership?
The syndicate of co-owners of an immovable may also take out a legal hypothec under common charges or contingency fund contributions to guarantee payment of sums owed by co-owners. This legal mortgage is also a payment guarantee for creditors.
Rules for taking out a legal hypothec of the syndicate of co-owners
Article 2729 C.c.Q. sets out the rules for taking out a
legal hypothec of co-ownership
. The purpose of this mortgage is to guarantee the payment of common charges, i.e. the expenses required for the conservation, maintenance and administration of the condominium.
In the event of default by a co-owner, the syndicate may exercise its right of legal hypothec on the fraction of the co-owner who has been in default for more than 30 days. This fraction corresponds to the part of the condominium owned by the co-owner.
In practical terms, this means that if a co-owner fails to pay his share of the common charges for more than 30 days, the syndicate can register a legal mortgage on his fraction of the building to guarantee payment of the sums due. This hypothec has the effect of encumbering the property of the co-owner in question, which can make it more difficult to sell or hypothecate his fraction of the immovable. It is important to note that the syndicate is obliged to notify each co-owner without delay of the due date and the amount of his or her share.
In short, thelegal hypothec of the syndicate of co-owners is an important legal tool for guaranteeing the payment of common charges and ensuring the proper management of the condominium.
Legal hypothec resulting from a judgment
A legal hypothec resulting from a judgment
can also be taken under tax laws. In this case, the legal mortgage is taken to guarantee payment of the property tax or any other amount owed to the State under tax legislation.
In conclusion
People who have contributed to the construction or renovation of a building can take out a legal hypothec to guarantee payment for their work or materials supplied. The rules for taking out a legal mortgage must be respected for the mortgage to be valid. In addition, the syndicate of co-owners may also take out a legal hypothec under common charges to guarantee payment of sums owed by co-owners.
[1] Civil Code of Québec, RLRQ, c. CCQ-1991, (hereinafter “C.c.Q.”).
