Legal construction mortgage definition
The legal construction mortgage is a right granted to those involved in the construction or renovation of a building. It allows them to guarantee their payment by using the property itself as collateral. In other words, if someone has worked on a construction or renovation project and hasn’t been paid, he or she can use this lien to recover the sums owed for the added value added to the building.
Legal mortgage construction deadlines
According to article 2727 of the Civil Code of Québec (hereinafter C.C.Q.), a legal hypothec granted to persons involved in the construction or renovation of an immovable remains in force for 30 days after the work is completed, even if it has not been published. However, to be considered valid, the mortgage must be taken in payment.
Thus, if suppliers of materials wish to benefit from a legal mortgage, they must officially inform the owner of the building and register it in the land register within 30 days of completion of the work, in accordance with article 2727 al.2. C.c.Q. A notice of legal hypothec must therefore be issued.
In addition, article 2727 al.3 C.c.Q. provides for a maximum period of 6 months from completion of the work to give notice of the exercise of the hypothecary recourse. In other words, if the notice is not published within six months of completion of the work, the legal construction mortgage will lapse and become null and void. It is therefore important to pay particular attention to the expiry of the deadline for completion of the work, and to follow the procedure for taking payment, in order to guarantee the validity and enforceability of this legal mortgage.
How to register a legal construction mortgage online in 5 steps?
- Contract termination notice (when required by law)
À qui s’adresse cette première étape?
In general, anyone who has entered into a contract directly with the owner must terminate the contract. The only question to ask when determining whether a contract should be terminated is: what is the direct legal link with the owner? There is, however, an exception to this rule, set out in article 2728 C.C.Q., which specifies that the worker is not obliged to denounce his contract. - Notice of registration of a legal hypothec.
This stage involves publishing a notice in the Land Registry and communicating it to the parties concerned. This registration will maintain the legal construction hypothec on the building in question, so that it can be used as security for payment of sums owed to those who contributed to its construction or renovation.
Who registers?
In general, it is the responsibility of the beneficiary of the legal construction mortgage to ensure that it is registered in the Land Register. Although the Civil Code of Quebec does not explicitly define the term “beneficiary”, article 2726 C.c.Q. mentions that the legal hypothec of construction benefits the persons who participated in the construction. In practice, registration is generally carried out by a lawyer or notary, as article 2991 C.c.Q. requires the deed to be authenticated by a legal professional.
How do I register a mortgage?
The legal construction mortgage is published by sending a notice to the Land Registry. In addition, the notice must be served on the owner of the building to be valid. Finally, once the legal construction mortgage has been registered, it becomes public knowledge for all interested parties and has full legal effect. - Formal notice.
To notify the debtor of non-payment, a formal notice must be sent. Thus, the beneficiary of the legal construction hypothec must write a letter to the owner informing him of his default and giving him a reasonable time to comply with his obligations and rectify the situation. It’s important to give the owner enough time to remedy the defect, as failure to do so would defeat the purpose of the formal notice. - Notice of mortgage recourse.
What is advance notice of exercise?
Once the legal construction mortgage has been registered and made public in the Land Register, and where it is clear that the owner does not intend to remedy his default following receipt of the letter of formal notice, the law requires that notice be served on the owner in order to preserve the rights and benefits deriving from this form of security.
The procedure:
The beneficiary is required to file a notice with the registry office. According to the first paragraph of article 2727 C.c.Q., this notice must be accompanied by proof of service on the owner of the property. Once the notice has been published in the Land Register within the allotted six-month period, the owner has sixty days to pay the debt or voluntarily surrender the property in payment. As specified in article 2758 C.C.Q., the beneficiary must specify the nature of the hypothecary right he wishes to exercise. - Neglect.
Abandonment is a procedure whereby the owner of the property is forced to abandon the building and hand it over to the person claiming a mortgage on the property. This is the final stage of the process and may be voluntary or forced, in accordance with article 2763 C.c.Q.
Conclusion
In conclusion, the legal hypothec in favor of construction workers is a legal mechanism that enables people involved in the construction or renovation of a building to secure their payment by using the property itself as collateral. However, for the exercise of a mortgage right to be enforceable, it is essential to comply with specific deadlines and procedures.
The process of registering one or more legal construction hypothecs involves several steps, such as the notice of denunciation of a contract (when required), the notice of registration of the legal hypothec, the notice of default, the notice of exercise of a hypothecary recourse and, eventually, the surrender of the immovable. Each stage has its own legal requirements and obligations.
To learn more about legal mortgages and the registration process, please visit the following link: https: //educaloi.qc.ca/capsules/les-hypotheques/
