The Civil Code of Quebec, expressly provides in article 2726 as following:
“A legal hypothec in favour of the persons having taken part in the construction or renovation of an immovable may not charge any other immovable. It exists only in favour of the architect, engineer, supplier of materials, workman and contractor or subcontractor for the work requested by the owner of the immovable, or for the materials or services supplied or prepared by them for the work. It is not necessary to publish a legal hypothec for it to exist.”
However, in order to take advantage of it, it is essential that the contractor holds an RBQ (Régie du Bâtiment du Québec) licence.
This legal hypothec exists in favour of architects, engineers, material suppliers, workmen, contractors or subcontractors and guarantees the increase in value given to the immovable by the work, materials or services provided.
Although it exists solely because of the Law, the legal hypothec must be registered in the Land Register within 30 days of the completion of the work.
The completion of the work does not only refer to the services provided by a single entity, but to all work on the immovable.
In other words, the end of work occurs when it is substantially ready for delivery and the deficiencies have been corrected.
After publication in the Book on Publication of Rights, the legal hypothec gives way to a hypothecary remedy. However, the Law requires that the 60-day notice of exercise be published within six months of the completion of the work.
In addition, it is essential that the notice of legal hypothec be served to the owner of the immovable.
It is important to specify that the legal hypothec exists only for agreements entered with the registered owner of the immovable. In the case of contracts concluded with, a general contractor for example, it is mandatory that the owner is denounced in writing before the work or services are performed.
Finally, since this is a hypothecary remedy, the Law allows the owner of the immovable to substitute the legal hypothec by another sufficient guarantee, under certain conditions.
For more information, do not hesitate to consult us.