Quebec hypothec

Under the Civil Code of Québec, a hypothec is how property is made liable for a debt or other obligation. A buyer of Quebec business assets can look for one in the RDPRM or land register; Éducaloi says it is always important to check the RDPRM. See civil law and business sales in Quebec for the wider differences.

How it works

The Civil Code defines a hypothec as a real right on movable or immovable property made liable for the performance of an obligation. Éducaloi explains that hypothecs may be created by contract or arise by operation of law, and that those on cars, equipment and similar property are published in the RDPRM, while those on land or buildings go in the land register. A movable hypothec without delivery must be granted in writing, on pain of absolute nullity. The Code also limits when a natural person may grant a movable hypothec without delivery, except where that person operates an enterprise and the hypothec is charged on the enterprise’s property.

What to check or ask

• Whether any hypothec appears on the seller’s name or the assets in the RDPRM or land register
• Whether the hypothec arose by contract or by law
• Who the creditor is and what release it will give at closing