Registering a legal hypothec is an excellent way for a creditor to enforce his rights in the event of non-payment by the debtor. For example, a legal mortgage may be relevant if a materials supplier or architect wants to guarantee payment by the owner. However, for the registration of a legal mortgage to be effective, it must certainly be properly registered.
Legal construction and co-ownership mortgages
Registering a legal construction mortgage in the Land Register of Québec
First, before answering the question, it is important to specify who can take out a
legal construction mortgage
. According to thearticle 2726 of the Civil Code of Québec (hereinafter “C.c.Q.”) [1] architects, engineers, architects and materials suppliersworkers, contractors and other employees who participated in the construction or renovation of a building can register legal construction mortgages. They must, however, comply with the registration procedure and steps. What’s more, underarticle 2728 C.c.Q., the hypothec serves to guarantee the added value of the building, whether through materials, services or work. So, before registering the mortgage, the creditor must ascertain whether the property has increased in value.
Article 2727 C.c.Q. is important to analyze in order to understand the steps involved in registeringa legal hypothec. Paragraph 1 of the same article stipulates that ”thelegal mortgage in favour of persons who have participated in the construction or renovation of an immovable remains in force, even if it has not been published, for 30 days following completion of the work.
However, thearticle 2727 al.2 C.c.Q. specifies that the hypothec will be preserved only if, before the expiry of the 30-day period, “a notice designating the charged immovable and indicating the amount of the claim has been registered”. It is important to note that the notice of registration must be served on the owner of the immovable. The notice must be sent by bailiff.
The first step in registering a legal construction mortgage is to enter it in the land register within thirty days of completion of the work. If this is not possible, it is essential to register a notice and serve it on the building owner.
According to thearticle 2727 al.3 C.c.Qthe legal mortgage will lapse after 6 months following the end of workunless, in order to preserve the hypothec, the creditor publishes an action against the owner of the immovable or registers a hypothec on the immovable. notice of exercise of a mortgage right.” The notice must first be signed by the owner and, if two separate persons are involved, by the co-contractor. The purpose of the notice is to inform the owner of the mortgagee ‘s intention to enforce its payment guarantee.
So, the second step in securing the registration of the mortgage is to ensure that it does not lapse naturally after 6 months, by publishing an action against the owner. It should also be remembered that before exercising his hypothecary recourse, the hypothecary creditor must give prior notice of exercise to the person against whom he intends to exercise his recourse.
Registering a legal hypothec of co-ownership in the Land Register of Québec
Registering a legal hypothec in favor of a co-owner generally follows the same steps as registeringa legal construction hypothec. However, there are a few differences and particularities to bear in mind.
Article 2729 C.c.Q. provides that thelegal hypothec of the syndicate of co-owners “is acquired only upon registration of a notice indicating the nature of the claim, the amount due on the day of registration of the notice, the amount foreseen for charges and claims for the current fiscal year and those of the two following years.” Furthermore, according to the same article, a mortgage may be taken on the fraction of the co-owner only if the latter has been in default of payment for more than 30 days.
To register a legal hypothec of co-ownership in the land register, you must register a notice, determine the amount due and respect the thirty-day time limit.
Conclusion:
Finally, for a legal mortgage to be effective, it must be properly registered. The steps involved in registering a mortgage are governed by the Civil Code of Québec and differ slightly depending on whether the mortgage is a legal hypothec of construction or co-ownership.
[1] Civil Code of Québec, RLRQ, c. CCQ-1991, (hereinafter “C.c.Q.”).
