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The legal hypothec of the syndicate of co-owners registered for the payment of common expenses (hereinafter “legal hypothec of the syndicate of co-owners”) is a legal action that allows the syndicate’s representatives to use the fraction of a co-owner as security for the payment of common expenses.
As discussed in the subsections related to co-ownership, various steps can be taken to fully benefit from a legal hypothec of a syndicate of co-owners. Surrender is the last step in this judicial process. Once the formal notice is delivered, the legal hypothec of the syndicate of co-owners is registered and the prior notice to exercise a legal hypothecary right has been delivered, the syndicate of co-owners (hereinafter referred to as the “Syndicate“) can exercise its right upon the fraction of a co-owner who fails to pay the amounts due.
Under Quebec law, the notion of surrender is clear. Surrender is when a co-owner abandons his ownership rights of the immovable or movable property and surrenders it to the person exercising a hypothecary right, in most cases the Syndicate. To this end, article 2763 of the Civil Code of Québec states that surrender is, by its nature, voluntary or forced:
2763. Surrender is voluntary or forced.
Source: Civil Code of Québec, CQLR c CCQ-1991, a. 2763
In this regard, a voluntary surrender refers to the fact that the co-owner voluntarily and knowingly abandons his property to the Syndicate. Article 2764 of the Civil Code of Québec which provides a clear definition of voluntary surrender:
2764. Surrender is voluntary where, before the period indicated in the prior notice expires, the person against whom the hypothecary right is exercised abandons the property to the creditor in order that the creditor may take possession of it or consents in writing to turn it over to the creditor at an agreed time.
If the hypothecary right exercised is taking in payment, voluntary surrender shall be recorded in an act made by the person surrendering the property and accepted by the creditor.
Source: Civil Code of Québec, CQLR c CCQ-1991, a. 2764
In turn, forced surrender refers to the fact that the co-owner refuses to surrender the property voluntarily. The Syndicate will then exercise its hypothecary right toward obtaining the surrender of the co-owner’s fraction of the property. Article 2765 of the Civil Code of Québec provides a clear definition of forced surrender:
2765. Surrender is forced where the court orders it after ascertaining the existence of the claim, the debtor’s default, the refusal to surrender voluntarily and the absence of a valid cause for objection.
The judgment fixes the period within which surrender shall be effected, determines the manner of effecting it and designates the person in whose favour it is carried out.
Source: Civil Code of Québec, CQLR c CCQ-1991, a. 2765
It is the co-owner of the immovable who has to surrender his property. Upon the refusal of the co-owner to surrender his property voluntarily, the court may order the surrender of the property without delay.
As mentioned in article 2758 of the Civil Code of Québec and in the prior notice of the exercise of a hypothecary right, the period for surrendering his fraction of the immovable property is 60 days:
2758. A prior notice of the exercise of a hypothecary right must disclose any failure by the debtor to perform his obligations, and contain a reminder, where applicable, that the debtor or a third person has the right to remedy the default. 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.
Once the prior notice of the exercise of a hypothecary right is delivered, the debtor against whom a hypothecary right is exercised has a 60-day period to remedy the omission or breach. As mentioned in article 2761 of the Civil Code of Québec, the co-owner may remedy his default at any time during the 60-day period:
2761. A debtor or a person against whom a hypothecary right is exercised, or any other interested person, may defeat exercise of the right by paying the creditor the amount owing to him or by remedying the omission or breach set forth in the prior notice and any subsequent omission or breach, and, in either case, by paying the costs incurred.
He may exercise this right before the property has been taken in payment or sold, or, if the right exercised is taking in possession, at any time.
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