HYPOTHEC OF CONSTRUCTION

WHAT IS A LEGAL HYPOTHEC IN A CONSTRUCTION CONTEXT?

A legal hypothec is a powerful tool provided by law in favor of a person who has taken part in the construction or renovation of an immovable that prevents the owner of the property (i.e. the client) to sell his house, condo or building without paying the creditor for the services.

Consequently, in the event of a sale by your ex-client, the property owner, you will be paid for your renovation services in counterparty to signing a “mainlevée” or release once you obtain your payment.

Once the delay of 30 days has lapsed, you are no longer entitled to file a legal hypothec.

A contractor, a subcontractor, a workman, a supplier of materials, an engineer or even an architect can benefit from this legal tool, for the following works, but not limited to:

a) Renovation, expansion, or other construction works;

b) Supplying of materials for such works;

Some works cannot be the object of a legal hypothec, such as decontamination works or general maintenance or a property.

Moreover, immovable properties owned by Hydro-Quebec, or those owned by municipalities, such as subway stations, schools and libraries cannot be subject to a legal hypothec.

There is a presumption that a work increases the value to the immovable.

DELAYS:

You dispose of 30 days after the work has been completed to publish a legal hypothec.

DENUNCIATION OF THE CONTRACT:

General contractors, workmen, engineers, architects and suppliers of materials who have a direct contract with the owner to which a legal hypothec exists do not require to denunciate their contract.

However, subcontractors need to give the owner a written notice of the contract concerning his immovable prior to the commencement of the renovation work.

PRIOR NOTICE OF THE EXERCISE OF A HYPOTHECARY RIGHT:

As a second step, for a legal hypothec to be valid, one must register a prior notice of his intention exercise a hypothecary right at the registry office within six (6) months from the completion of the renovation.

HYPOTHECARY RIGHTS:

There are four (4) hypothecary remedies available for hypothec creditors wishing to institute legal proceedings to protect their rights, as follows:

i) The repossession of the immovable by the creditor

ii) Taking in payment

iii) The Sell by the creditor

iv) The sale under the control of justice

RADIATION OF A LEGAL HYPOTHEC:

Should one of the conditions essential to the existence of a legal hypothec in favor of the person who took part in the construction or renovation of an immovable not be respected, you are entitled to request its immediate radiation.

For example, if a contractor has proceeded to the radiation work without a valid permit, or if he inscribed a legal hypothec while his permit was no longer valid, the owner of the property can request the radiation of the legal hypothec.

One may request the radiation of a legal hypothec inscribed more than 30 days after the completion of the renovation work.

Furthermore, when a legal hypothec is validly registered, it is possible to radiate the legal hypothec in exchange for a sufficient surety or in exchange for settlement of the file. For instance, one can take a staggered payment agreement with the creditor contractor or even pay a portion or the totality of the debt in exchange for the radiation of the legal hypothec.

FEES:

Fees are applicable for the radiation of a legal hypothec.

If you are looking for a law firm with reasonable rates, quick and efficient turnaround time for your files and who provides personalized and effective follow-ups, call Schneider Attorneys at (514) 439-1322 ext. 112 or email us at info@schneideravocat.com

The above noted text should not be construed as providing legal advice or a statement of your claim. The process highlighted above are merely parameters and barometers and do not constitute any warranties and guaranties with regards to your file at hand. We strongly recommend that you seek legal advice with a licensed attorney from the Barreau du Quebec or a notary at the Chambre des Notaires. Each case must be seen and analysed on its merits as the legal process may be complex and cumbersome.