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The Notice to Exercise a Hypothecary Recourse (hereinafter referred to as the ” Notice “) is the final step in the hypothecary recourse before having to take an immovable as security for payment by the unpaid person or company. This is the final notice requiring the debtor to pay his claim if he wishes to keep his property. Moreover, notice is given after theregistration notice and formal notice have been served, so the default is unequivocal at that point.
In this sense, once the legal construction mortgage has been registered and published in the Land Register, and once it is clear that the owner does not intend to rectify his default following the letter of formal notice, the law requires that notice be served on the owner to be able to retain the rights and benefits arising from this type of security.
This is the last action to be taken before the building is relinquished.
It is the same person who took the steps toregister the legal hypothec and who sent the notice of default who is obliged to give notice of the exercise of the hypothecary recourse. As a reminder, underarticle 2726 of the Civil Code of Québec, it is the beneficiaries, i.e. the persons and companies involved in the construction or renovation of an immovable, who can initiate the process for this type of security. This means that the person who registers the legal construction mortgage will also be responsible for putting in place the notice of exercise of the mortgage recourse. This is essential for the preservation of the legal construction mortgage.
Under the third paragraph ofarticle 2727 of the Civil Code of Québec, a maximum period of 6 months after completion of the work is prescribed for giving notice of the exercise of the hypothecary recourse. Specifically, the legal construction hypothec will be extinguished and become null and void if the notice is not published within six (6) months of completion of the work:
2727. The legal hypothec in favour of persons who have participated in the construction or renovation of an immovable subsists, even if it has not been published, for 30 days following completion of the work.
It is retained if, before the expiry of this period, a notice designating the encumbered immovable and indicating the amount of the claim has been registered. This notice must be served on the owner of the building.
It expires six months after completion of the work, unless the creditor publishes an action against the owner of the building to preserve the mortgage, or registers a notice of exercise of a mortgage right.
Source: Civil Code of Quebec, RLRQ c CCQ-1991, art 2727
At first glance, the beneficiary is obliged to give notice to the advertising office. In accordance with the first paragraph ofarticle 2727 of the Civil Code of Québec cited above, this notice must be accompanied by proof of service on the owner of the property.
In addition, underarticle 2758 of the Civil Code of Québec, certain criteria must be included in the notice:
2758. The notice of exercise of a hypothecary right must denounce any failure by the debtor to perform his obligations and recall the right of the debtor or of a third party, if applicable, 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.
Source: Civil Code of Québec, CQLR c CCQ-1991, a. 2758
Then, when the notice is published in the Land Register within the allotted six (6) month period, the owner will have sixty (60) days to pay his debt or voluntarily surrender the property in payment of his debt.
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.
Should the debtor fail to pay his debt or voluntarily surrender his property, the beneficiary will have to take legal action for forced surrender.
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