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The Notice of Exercise of Hypothecary Recourse (hereinafter referred to as the ” Notice “) is the final step in the process of exercising the privileges of a legal hypothec resulting from a judgment. This last step is also the final extrajudicial step (without having to open a court case) that the creditor can take to take the debtor’s property in payment of the judgment. This notice is the last warning sent to the person in default, requiring them to repay their condemnation, failing which they will be dispossessed of their property. Moreover, the notice period is part of the process after the formal notice has been served and the mortgage registered.
Consequently, when a legal hypothec arising from a judgment is duly registered and published in the Land Register, and when it is clear that the person in default does not intend to pay his debts, the law requires that notice be served to ensure that the rights arising from the legal hypothec are preserved.
Once this step has been completed, the process of abandoning the building can begin.
Throughout this process, it is the same person who must comply with the procedures arising from the legal hypothec of the judgment. It is therefore the person who sent the letter of formal notice and theregistration who is obliged to serve the notice. In itself, therefore, it is the person who suffers the default.
Article 2757 of the Civil Code of Québec sets out the obligation to serve prior notice in order to exercise rights arising from a legal hypothec:
2757. A creditor intending to exercise a hypothecary right must file a notice with the registry office, accompanied by proof of service on the debtor and, where applicable, the grantor, as well as any other person against whom he intends to exercise his right.
The registration of this notice is terminated in accordance with the book De la publicité des droits.
So it’s vital to send the notice and serve it on the person in default. Article 2758 of the Civil Code of Québec also sets out certain criteria that must be included in the notice:
2758.
The notice of exercise of a mortgage right must denounce any failure by the debtor to perform his obligations and recall the right, if any, of the debtor or a third party to remedy such failure. It must also disclose the amount of the claim in capital, and in interest, if any, and the nature of the hypothecary right which the creditor intends to exercise, furnish a description of the charged property, and demand from the person against whom the hypothecary right is to be exercised that he surrender the property before the expiry of the period specified in the notice.
That period is 20 days after registration of the notice in the case of movable property, 60 days in the case of immovable property, or 10 days if the creditor intends to take possession of the property; however, the period is 30 days in the case of a notice relating to movable property charged with a hypothec constituted by an act accessory to a consumer contract.
As a result, once the notice has been duly served and published in the Land Register, the person in default will then have a period of time in which to either pay his debts or voluntarily surrender his property in payment of his debt, depending on the nature of the mortgaged property.
As stated inarticle 2758 of the Civil Code of Québec, the beneficiary must specify the nature of the hypothecary right he intends to exercise. As such, Hypotek allows beneficiaries to exercise the two (2) mortgage remedies most frequently used in construction mortgages, namely sale under court supervision or taking in payment.
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