Can you sell a house with a mortgage in Quebec?

Do you have to pay off your mortgage before you sell your house in Quebec?

No. You do not need the money in hand before the sale. The Chambre des notaires du Québec explains that the notary must make sure the seller’s loan is paid in full before the sale can go ahead, and does it with the sale money: the notary repays your lender directly from the price the buyer pays. In Quebec, a mortgage is a hypothec registered against the property, so the notary also has it struck off the land register (the Registre foncier). This is the radiation.

The FCAC is just as direct: “You must get a mortgage discharge when you sell your property.” The lender does not give up its rights on its own, which is why the notary handles it as part of the sale. If you also have a home equity line of credit tied to the mortgage, the FCAC notes it has to be paid off and closed before the discharge as well.

What does the notary do with my mortgage at closing?

The Chambre des notaires lists the steps it bills to the seller: getting the statement of account from your lender (the payout statement), repaying the loan, preparing the deed that radiates the hypothec, and publishing it at the Registre foncier. The Government of Québec adds that only a notary or a lawyer can prepare that document, and that fees apply to publish it.

The order matters for your bank account. The buyer’s funds go to the notary, the notary pays your lender the amount on the payout statement, and the balance comes to you. Our article on moving out after the sale (When do you have to move out after selling a house in Quebec?) explains why that balance usually reaches you a few days after signing rather than the same day. The payout statement is also on the list in our article on documents (What documents do I need to sell a house in Quebec?). You give the notary your loan details, and the notary asks the lender for the statement.

Quittance or mainlevée: what is the difference?

Both clear the hypothec from the register, but they say different things. The Chambre des notaires explains that a quittance is the creditor’s signed acknowledgement that it has been repaid in full, which then allows the radiation. A mainlevée is the creditor’s authorization to the registrar to strike off the hypothec, without acknowledging any payment.

Mainlevées are now more common than quittances, according to the Chambre des notaires. Which one is used for your file is a question for your notary. The Registre foncier lists both as separate requisitions under the Civil Code of Québec (Civil Code of Québec, article 3065 for a quittance, Civil Code of Québec, article 3059 for a mainlevée).

Who pays the notary to discharge the mortgage?

You do, as the seller. The Chambre des notaires says the radiation of the loan is at the seller’s expense, even though the buyer usually chooses the notary, and the notary acts for both sides. Your share of the invoice covers fees, disbursements such as publication costs, and GST and QST. There is no fixed tariff: the Code of ethics of notaries requires fees to be fair and reasonable, so ask for a quote.

Your lender may charge its own discharge fee. Where the fee is not set by provincial rules, the FCAC says it “typically ranges from no charge, up to $400,” and federally regulated lenders must disclose it in your mortgage contract. Our article on the real costs of selling (The real costs of selling a house in Quebec) puts these fees next to the other costs of a sale.

Will I pay a penalty if I sell before my mortgage term ends?

Often, yes, with a closed mortgage. The FCAC says a prepayment penalty can apply when you pay back your entire mortgage before the end of your term, “including when you sell your home.” An open mortgage can be repaid at any time with no penalty, though the AMF notes it usually comes with a higher rate.

The type of rate changes the usual formula. For a closed variable-rate mortgage, the AMF says the penalty usually amounts to three months’ interest. For a closed fixed-rate mortgage, it is usually the higher of three months’ interest and the interest rate differential (IRD), and lenders often use their posted rates in that calculation. The FCAC adds that the IRD is usually the one used when your rate is higher than current rates and your contract was signed less than five years ago. Our costs article walks through the FCAC’s own example with numbers.

Two other items can be added to the bill. The AMF says administration and other fees can apply, and if you received cash back when you took the mortgage, part of it may have to be paid back. Your contract should say how the penalty is calculated, and federally regulated lenders must show it in the information box. Your lender can give you the exact figure for your closing date. The FCAC also suggests checking whether your prepayment privileges can lower the penalty before you break the mortgage.

Can I take my mortgage to my next home, or pass it to the buyer?

Sometimes. A portable mortgage, the FCAC explains, lets you transfer your balance, rate and terms to the home you buy next, which can avoid the penalty. Check with your lender whether yours is eligible and what restrictions apply. The FCAC notes that if your new home costs less than the amount of your mortgage, you may still pay a prepayment penalty.

An assumable mortgage goes the other way: the buyer takes over your mortgage, and its terms stay the same. The FCAC says this is typically available on most fixed-rate mortgages, but not on variable-rate mortgages or home equity lines of credit. The lender must approve the buyer, may charge a fee, and “in some provinces, the seller may remain personally liable” if the buyer stops paying, unless the lender releases you. The AMF describes the same transfer options and says administrative and legal fees may apply. Ask your lender and your notary how it would work for your contract before you count on either option.

What if I owe more than my house is worth?

Then the sale price will not cover the payout, and the gap has to be dealt with before the notary can close. Because the notary must make sure the loan is paid in full for the sale to go ahead (Chambre des notaires), the difference has to come from somewhere else, such as your own funds at signing, or from an arrangement your lender agrees to. A lender is not required to accept less than what is owed, so speak to your lender early and ask your notary to explain what the deed needs.

If payments have also fallen behind, our page on selling when you are behind on your mortgage (Behind on the mortgage in Montreal) explains the 60-day prior notice in article 2758 of the Civil Code of Québec (Civil Code of Québec, article 2758) and what a sale can still do at that stage.

How does the mortgage fit with the closing and move-out dates?

The payout is worked out for the day the deed is signed, so the notary asks your lender for a statement as of that date. Until then the mortgage contract keeps running as usual. If you are buying another home, the timing of the two deeds is something to plan with your lender, your notary and the people on the other side. Our article on timelines (How fast can you sell a house in Montreal?) covers how long each step usually takes. The move-out article covers the occupancy date and when the money arrives.

Can you sell a house with a mortgage to Bruce?

Yes. Bruce Malcolm is a private buyer of houses in Montreal and the West Island. He is not a broker, an agent or an appraiser. His offer is a cash purchase, not an assumption of your loan, so the notary pays your lender from the price at signing, the same way as any other sale. There are no showings, and you choose the closing date once the notary can sign, which makes it easier to line the payout up with your lender’s figures. You can ask for an offer on your address (request an offer) and compare it with your payout statement before you decide anything.