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LEGAL and CONVENTIONAL HYPOTHECS A. Nature Of October 26th and 28th: LEGAL AND CONVENTIONAL HYPOTHECS A. Nature of Hypothecs 2660 A hypothec is a real right on a movable or immovable - tŚĞŶŝƚ͛ƐƐŽůĚ͕ƚŚĞƌŝŐŚƚƐŽŶ the property made liable for the performance of an property remain the same obligation. It confers on the creditor the right to follow -The debts are carried onto that the property into whosever hands it may be, to take property when it is sold and the possession of it or to take it in payment, or to sell it or new owner must assume them. cause it to be sold and, in that case, to have a preference -Object can be repossessed and upon the proceeds of the sale ranking as determined in resold to obtain proceeds. -Other this Code. rights must be payed out according to the ranks of the inscriptions Example: financing of a car, in exchange for giving money you have to oblige to pay them back. o Real right ŵĞĂŶƐŝƚŝƐŵĂƚĞƌŝĂů͗ĐĂƌƐ͕ƉƌŽƉĞƌƚŝĞƐ͕ďŽŶĚƐ͕ĞƚĐ͙ o /ƚŝƐĂƐƚŚŽƵŐŚŽŶĞ͛ƐŚĂŶĚƐƚĂLJƐŽŶƚŚĞƉƌŽƉĞƌƚLJ o Creditor and debtor is necessary o One can take possession of a movable or an immovable /ŶƉĂLJŵĞŶƚŽĨŽŶĞ͛ƐĚĞďƚƚŚĞĐƌĞĚŝƚŽƌĐĂŶƚĂŬĞŽďũĞĐƚƐƚŽĐŽŵƉĞŶƐĂƚĞ Can only take what is there once Can sell it and take proceeds of the sale 2661 A hypothec is merely an accessory right, and subsists -If the debt is paid in full, then only as long as the obligation whose performance it your rights on the property no secures continues to exist longer exist - If the debt does not exist ĂŶLJŵŽƌĞƚŚĞ͚ƌŝŐŚƚ͛ŝƐĚĞĂĚ͖ŝƚŝƐ accessory to the debt 2663 The hypothecary rights conferred by a hypothec may be -Register for movables and set up against third persons only when the hypothec is register of immovables: If you published in accordance with this Book or the Book on ĚŽŶ͛ƚƌĞŐŝƐƚĞƌƚŚĞproperty, then Publication of Rights. ƚŚĞƌŝŐŚƚǁŽŶ͛ƚďĞƉƌŽƚĞĐƚĞĚ͘ Example: buy a GM car and ĨŝŶĂŶĐĞŝƚ͘/Ĩ'DĚŽĞƐŶ͛ƚƌĞŐŝƐƚĞƌ͕ then the dude who sells his car ƚŽĂĨƌŝĞŶĚ͘'DĐĂŶ͛ƚƌĞƉŽƐƐĞƐƐ the car from the new owner. RDPRM: personal property registry in Quebec Land Registry: Shows you the history of a property; (previous owners and hypothecs) to find out who owns the property. /ƚ͛ƐŝŵƉŽƌƚĂŶƚƚŽŬŶŽǁǁŚŽƚŚĞƚƌƵĞŽǁŶĞƌŽĨƚŚĞƉƌŽƉĞƌƚLJŝƐ B. Kinds of Hypothec 2664 Hypothecation may take place only on the conditions Conventional hypothec: you and according to the formalities authorized by law. have to draft your own contract A hypothec may be conventional or legal. Legal hypothec: provided by law 2665 A hypothec is movable or immovable depending on Examples: An elevator can be an whether the object charged is movable or immovable ŝŵŵŽǀĂďůĞŽŶĐĞŝƚ͛ƐƐŽůĚ͘tŚĞƌĞ property or a universality of movable or immovable ĚŽLJŽƵƌĞŐŝƐƚĞƌŝƚ͍/ƚ͛ƐƚŚĞƚŝŵĞ property. frame that makes it different. In the case of the elevator, it A movable hypothec may be created with or without becomes and immovable and delivery of the movable hypothecated. Where it is should be registered (ǁŚĞŶŝƚ͛Ɛ created with delivery, it may also be called a pledge. installed?) You have movable and immovable, And movable can be with or without delivery on a universality of goods that you can register a hypothec Universality of immovables: ŵĞĂŶƐƚŚĂƚƚŚĞďĂŶŬŚĂƐĂŚLJƉŽƚŚĞĐŽŶŽŶĞ͛ƐŝŶǀĞŶƚŽƌLJĂƚĂŶLJƚŝŵĞ Universality of goods: all the goods at once and not an element džĂŵƉůĞ͗LJŽƵ͛ƌĞƉƌŽǀŝĚŝŶŐŝŶǀĞŶƚŽƌLJĨŽƌĂƐƚŽƌĞ;ĞdžĐůŽƚŚĞƐͿ͘zŽƵƌŚĂŶĚŝƐĂůǁĂLJƐŽŶƚŚĞƉƌŽƉĞƌƚLJ͘dŚĞ right is on all the goods. Example: shares in a company. You buy shares with a loan. Whoever loans money for the shares keeps possession of them. De-possession: taking the shares away 2671 A hypothec extends to everything united to the property Def of accession: by accession. -Increase by something added -acquisition of additional property (as by growth or increase of existing property) Conventional Hypothecs 2861 A conventional hypothec may be granted only by a Conventional hypothec: you person having the capacity to alienate the property have to draft your own contract hypothecated. It may be granted by the debtor of the obligation secured The person selling the asset has or by a third person. to own the asset. 2683 Except where he operates an enterprise and the hypothec is charged on the property of that enterprise, a natural person may grant a movable hypothec without delivery only on road vehicles or other movable property determined by regulation and subject to the conditions determined by regulation. 2687 A hypothec may be granted to secure any obligation -You can write a hypothec whatever. contract on just about anything. - A hypothec can apply on any tangible good 2693 An immovable hypothec is, on pain of absolute nullity, -To register an immovable granted by notarial act en minute. hyopthec, it has to be done by notary to be valid. -For a movable, it needs to be put in writing. En minute: a notary checks the owner of the house, the seller, the buyer, the bank etc. And writes it on the document. The contents of the document are the minutes of the document. Ranking: 2941-2945: whoever got there first gets paid first 2695 Hypothecs on the present and future rents produced by -Rent is considered an an immovable and hypothecs on the indemnities paid immovable under the insurance contracts covering the rents are -It is an investment considered to be immovable hypothecs. 2696 A movable hypothec without delivery shall, on pain of absolute nullity, be granted in writing. 2702 2702: A movable hypothec with delivery is granted by 2703 physical delivery of the property or title to the creditor or, if the property is already in his hands, by his continuing to physically hold it, with the grantor's consent, to secure his claim. 2703: A movable hypothec with delivery is published by the creditor's holding the property or title, and remains so only as long as he continues to hold it. 2710 2710: A movable hypothec on a claim held by the grantor 2711 against a third person or on a universality of claims may be granted with or without delivery. 2711: A hypothec on a universality of claims, even when granted by the remittance of the title to the creditor, shall be entered in the proper register. 2724 Only the following claims may give rise to a legal hypothec: 1) Claims with the state (taxes) (1) claims of the State for sums due under fiscal laws, and certain other claims of the State or of legal persons 2) Construction hypothecs established in the public interest, under specific provision of law; 3) COOPs (syndicate of (2) claims of persons having taken part in the coowners) construction or renovation of an immovable; (3) the claim of a syndicate of co-owners for payment of the common expenses and contributions to the contingency fund; (4) claims under a judgment 2725 The legal hypothecs of the State, including those for You have to register in the right sums due under fiscal laws, and the hypothecs of legal register persons established in the public interest may be charged on movable or immovable property. Such hypothecs take effect only from their registration in the proper register. Application for registration is made by filing a notice indicating the legislation granting the hypothec, the property of the debtor on which the creditor intends to exercise it, and stating the cause and the amount of the claim. The notice shall be served on the debtor. 2726-2728: CONSTRUCTION HYPOTHEC (exam question!!) 2726 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 sub-contractor in proportion to the work requested by the owner of the immovable or to 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. o Always know who you are dealing with and when did you come into the project o There is only one end to the project o 30 days to register the hypothec on the immovable registry within the end of a project o One would denounce the contract when dealing with a promoter on a property the promoter does not own in order for the lean to be valid o Lean gives presumption of a right by registering the document o Good reflex is to place stipulation relating to interest on debt owed o If project is never completed, one can only go on the value added o Cannot place a lean on public property Individuals in construction can get hypothecs. Architects, engineers and contractors automatically have a ƌŝŐŚƚĞǀĞŶŝĨLJŽƵĚŽŶ͛ƚƌĞŐŝƐƚĞƌ͘/ƚ͛ƐĂ͞ĐůƵď͘͟ tŚĂƚLJŽƵǁŝůůĐůĂŝŵŝƐƚŚĞĂĚĚĞĚǀĂůƵĞLJŽƵ͛ƌĞƉƵƚŝŶƚŽƚŚĂƚ property. You add value by doing your work. But only if the work has been started. /Ĩŝƚ͛ƐũƵƐƚƉůĂŶƐ ŚŽǁĞǀĞƌ͕ƚŚĞŶŝƚĚŽĞƐŶ͛ƚǁŽƌŬďĞĐĂƵƐĞǀĂůƵĞŚĂƐŶŽƚďĞĞŶĂĚĚĞĚƚŽƚŚĞƉƌŽƉĞƌƚLJLJĞƚ͘/ĨǀĂůƵĞŚĂƐŶŽƚ been added, then you have to sue them with a conventional stĂƚĞŵĞŶƚŽĨĐůĂŝŵ͘zŽƵĚŽŶ͛ƚŚĂǀĞƚŚĞƐĂŵĞ recourses and it will take a lot longer. If general contractor puts his/her ŚĂŶĚŽŶĂƉƌŽƉĞƌƚLJ͕ĐŚĞĐŬŝĨƚŚĞLJŚĂǀĞĂůŝĐĞŶĐĞ͙ŝĨƚŚĞLJĚŽŶ͛ƚŚĂǀĞŽŶĞ ƚŚĞLJ͛ƌĞŶŽƚĂůůŽǁĞĚƚŽĚŽŝƚ͘ 2727 A legal hypothec in favour of persons having taken part in the construction or renovation of an immovable subsists, even if it has not been published, for 30 days after the work has been completed. It is extinguished six months after the work is completed, unless, to preserve the hypothec, the creditor publishes an action against the owner of the immovable or registers a prior notice of the exercise of a hypothecary right. Mechanics of the procedure: džĂŵƉůĞ͗LJŽƵ͛ƌĞďƵŝůĚŝŶŐĂŶĂƉĂƌƚŵĞŶƚďƵŝůĚŝŶŐ͘ƚƚŚĞƐƚĂƌƚŽĨƚŚĞƉƌŽũĞĐƚ͕Ăn engineer is hired and is ĨŝŶŝƐŚĞĚďĞĨŽƌĞƚŚĞĐŽŵƉůĞƚŝŽŶ͘/ŶǀŽŝĐĞϯϬĚĂLJƐ͙ŬĞĞƉĂŶĞLJĞŽŶŝƚĂŶĚŝĨŝƚĚŽĞƐŶ͛ƚŐĞƚƉĂŝĚǁŚĂƚĚŽLJŽƵ ĚŽ͍ĨƚĞƌϯLJĞĂƌƐLJŽƵǁŽŶ͛ƚďĞĂďůĞƚŽĐŽůůĞĐƚŝƚ͙ 30 days after the end is the maximum delay, you can send your stuff before the end? STEP 1: 2727: AFTER THE END OF THE PROJECT, YOU HAVE 30 DAYS TO CLAIM YOUR LEGAL HYPOTHEC r.o.t= if the ďƵŝůĚŝŶŐŝƐďĞŝŶŐŽĐĐƵƉŝĞĚ͕ƚŚĞŶĐŽŶƐƚƌƵĐƚŝŽŶŝƐƉƌŽďĂďůLJ͞ĞŶĚĞĚ͟ Send a notice to the owner through a bailiff to secure your legal hypotheque STEP 2: if nothing in 6 months at the end of the projectͶthen send second document to follow up (served the same way) You can sue or you can use the hypothecary right.
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