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The legal hypothec of persons who have participated in the construction or renovation of an immovable (hereinafter referred to as ” legal construction mortgage “) is the legal privilege that allows people who have participated in the construction or renovation of a building to take that building as security for payment.
This privilege granted to people who have participated in the construction or renovation of a building can have serious consequences for the owner of that building. In fact, the owner could have his building seized by an unpaid person or company for construction or renovation work.
Surrender of the property is the final step in the mortgage recourse process, and occurs once all the prior steps have been completed by the creditor. Indeed, once the denunciation of the contract (when required), theregistration of the mortgage, the sending of the formal notice and the publication of the notice are completed, the creditor will be able to exercise these rights on the owner’s property.
Surrender means that the owner of the property must surrender it to the person exercising a hypothecary recourse on the property. Surrender is the final step in the process and can be voluntary or forced underarticle 2763 of the Civil Code of Québec :
2763. Surrender is voluntary or forced.
Source: Civil Code of Québec, CQLR c CCQ-1991, a. 2763
Voluntary relinquishment refers to the fact that the owner of the property voluntarily relinquishes, or even gives, the property to the beneficiary following notice of the exercise of a hypothecary recourse. Article 2764 of the Civil Code of Québec sets out the terms of this 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
Conversely, forced relinquishment refers to the fact that the owner does not relinquish his property on his own initiative. The beneficiary of the legal hypothec is then obliged to take legal action to have the owner surrender the property.
Article 2765 of the Civil Code of Québec sets out the terms of this 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
The owner of the property must relinquish it. If he fails to cooperate, the property may also be surrendered by court order, requiring it to be relinquished and handed over to the creditor.
The law states that the time limit for surrendering an immovable is sixty (60) days under the second paragraph ofarticle 2758 of the Civil Code of Québec:
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.
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.
Source: Civil Code of Québec, CQLR c CCQ-1991, a. 2758
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