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A charge on title

Can you sell a house with a lien in Quebec?

In shortYes, a house with a legal hypothec can usually be sold. The notary pays the charges the price covers and publishes the creditor’s cancellation, so the buyer can take clear title. This is general information, not legal advice.

Montreal house with a lien or legal hypothec, sold so the notary can clear the title

People ask this when someone who did work on the house was not paid, a condo syndicate filed a notice, a judgment was registered, or the tax bill is behind. In Quebec the charge is usually a hypothec, and a published hypothec follows the house. This page follows the Civil Code of Québec, the Gouvernement du Québec’s land-register pages, and Éducaloi. It is general information, not legal advice. A notary reads the lot and the notices before a deed is signed.

Can you sell a house that has a lien or legal hypothec on it?

Yes, usually. Article 2660 of the Civil Code of Québec says a hypothec is a real right on property made liable for an obligation. It gives the creditor the right to follow the property into whatever hands it may come, and a preference on the proceeds of a sale, according to the rank the Code sets (Civil Code of Québec, article 2660). The sale is not forbidden. The charge stays with the house until it is cancelled.

Éducaloi says the seller must tell the buyer about legal hypothecs on the house and must have them cancelled (The Mortgage (Hypothec)). In a signed sale, the usual way to do that is at the notary: the price pays the charges it covers, and the creditor’s quittance or mainlevée is published so the buyer takes the lot without that charge. A conventional hypothec, including a second one, is paid the same way. That payout is the subject of Can you sell a house with a mortgage in Quebec?.

What kinds of liens exist in Quebec?

Article 2724 says only four kinds of claim can give rise to a legal hypothec. They are claims of the State for sums due under fiscal laws, and certain other claims of the State or of legal persons established in the public interest that a specific Act provides for; claims of persons who took part in the construction of an immovable or in work done on it; the claim of a syndicate of co-owners for payment of the common expenses; and claims under a judgment (Civil Code of Québec, article 2724). A second hypothec or a line of credit is not on that list. It is a hypothec the owner granted.

A legal hypothec of the State or of a legal person established in the public interest takes effect only from registration. The notice names the Act that grants it, the property, the cause and the amount, and it is served on the debtor (Civil Code of Québec, article 2725). The syndicate’s hypothec charges the fraction of a co-owner who has been more than 30 days late paying common expenses, and it takes effect only from registration of its notice (Civil Code of Québec, article 2729). A creditor who has a Quebec judgment for a sum of money may acquire a legal hypothec on the debtor’s movable or immovable property by registering a notice that describes the property and states the amount, and the notice must be served on the debtor (Civil Code of Québec, article 2730). An immovable hypothec the owner grants must be made by notarial act en minute, on pain of absolute nullity (Civil Code of Québec, article 2693).

How do you check what is registered on your property?

The Index of immovables in the Registre foncier du Québec groups the transactions and the published rights for a lot: transfers, declarations of co-ownership, and hypothecs and servitudes that can affect it. You need the lot number. For an older lot you also need the cadastre name and the registration division. The free interactive map on the land register’s home page works for lot numbers of 1,000,000 and higher. For an older lot, the same page says to ask the municipality, or to consult the municipal assessment roll online if the city offers it. Reading the index needs a client account, and the page says a fee is charged. It also says that reading the index is not always enough, because the deeds themselves have to be read, and that a legal professional’s opinion may be required (Consulter l’historique d’une propriété). The online register is the Registre foncier du Québec en ligne.

The Register of personal and movable real rights, the RDPRM, is a different book. The Gouvernement du Québec says it indicates whether certain property, and it gives road vehicles and company assets as examples, has been given as security or is affected by a debt (Legal registers). It is not the register of the house. In a sale, the notary’s file is the reading the Gouvernement du Québec says the index alone may not replace. The papers that file uses are in What documents do I need to sell a house in Quebec?. One limit belongs in the same sentence: a construction legal hypothec can exist for 30 days after the work is completed even though it has not been published, so an empty index is not proof that no charge exists.

How does a construction legal hypothec work, and when does it expire?

Article 2726 says this hypothec may not charge any other immovable. It exists only in favour of the architect, the engineer, the supplier of materials, the workman, and the contractor or subcontractor, for the work the owner requested, or for the materials or services they supplied or prepared for that work. It is not necessary to publish it for it to exist (Civil Code of Québec, article 2726). Article 2728 says it secures the increase in value given to the immovable by the work, materials or services. Where those persons did not themselves contract with the owner, it is limited to the work, materials or services supplied after written notice of the contract to the owner. A workman is not bound to give that notice (Civil Code of Québec, article 2728). Article 2952 ranks these hypothecs before any other published hypothec, for that increase in value, and concurrently among themselves in proportion to the value of each claim (Civil Code of Québec, article 2952).

Article 2727 says the hypothec subsists, even if it has not been published, for 30 days after the work has been completed. It subsists if, before those 30 days expire, a notice describing the immovable and indicating the amount of the claim is registered, and that notice must be served on the owner. It is extinguished six months after the work is completed, unless, to preserve it, the creditor publishes an action against the owner or registers a prior notice of the exercise of a hypothecary right (Civil Code of Québec, article 2727). Article 3061 is the application to cancel the registration. Any interested person may ask, where within six months after the later of the registration and the completion of the work, no action has been brought and published and no prior notice has been published. The application must state the reasons and be presented with proof that it was served on the creditors at least 10 days before it is presented to the Land Registrar (Civil Code of Québec, article 3061). This page does not invent a date for “completed.” The notary reads the file. Éducaloi’s example, for a condo bought from a plan, is that people hired to do the work have up to 30 days after the work is finished to publish the hypothec, and that a buyer can ask the notary to hold some of the money until 30 days after the end of the work (Buying a Condo From a Plan). That example is not a rule this page extends to every resale.

What about unpaid condo fees, or unpaid municipal or school taxes?

The current text of articles 2724 and 2729 speaks of common expenses. The syndicate’s notice must indicate the nature of the claim, the amount owing on the day it is registered, and the expected amount of charges and claims for the current financial year and the next two years. It has effect only from that registration, and only against the fraction of a co-owner more than 30 days late. Article 3061 says the registration is cancelled, on the application of any interested person, three years after its date, unless an action was previously brought and published. Article 1069 says a person who acquires the fraction is bound to pay the common expenses due for it at that time, with interest. A person contemplating the purchase may ask the syndicate for a statement. The syndicate gives prior notice to the owner, and the prospective buyer is bound to pay those common expenses only if the syndicate provides the statement within 15 days of the request. The statement is adjusted to the last annual budget (Civil Code of Québec, article 1069). Éducaloi says that if the fees are still unpaid at the sale, the buyer is responsible, and that you can withhold part of the sale price to pay them.

Unpaid property taxes are a prior claim, not automatically a published hypothec. Article 2651 names, among prior claims, the claims of municipalities, school service centres and school boards for property taxes on taxable immovables, and certain other municipal taxes a specific law provides for (Civil Code of Québec, article 2651). Article 2657 says prior claims rank before movable or immovable hypothecs (Civil Code of Québec, article 2657). The land register’s own notification page lists two tax events that can produce a letter: a warning about the sale of an immovable following the non-payment of municipal taxes, and an immovable that was auctioned and sold for failure to pay property tax (Notification from the Land Register). How the year’s taxes are adjusted at the signing is in The real costs of selling a house in Quebec.

What if you dispute the charge?

A registration is cancelled with the consent of the holder or beneficiary of the right (Civil Code of Québec, article 3059). Article 3065 says total acquittance of a claim entails consent to cancellation, and partial acquittance entails consent to only an equivalent reduction. The creditor must register the acquittance if given enough to pay the registration fee and the cost of sending the application, and may not claim any other amount (Civil Code of Québec, article 3065). The land register explains the two voluntary paths. A total quittance is the creditor’s acknowledgement that the sums due were received. A partial quittance acknowledges only part, and the hypothec stays for the balance, so the amount of the reduction has to be stated. A mainlevée is the creditor’s consent to give up the benefit of the registration, and the rights to be cancelled must be identified (Quittance et mainlevée). Negotiating a release means obtaining one of those acts.

If the creditor will not consent, article 2731 gives a court path, except for a legal hypothec of the State or of a legal person established in the public interest. On the owner’s application, the court may determine which property the hypothec may charge, reduce the number of properties, or allow the owner to substitute other security sufficient to secure payment, and it may then order cancellation of the registration (Civil Code of Québec, article 2731). The article does not say the court reduces the amount of the claim. For a condo bought from a plan, Éducaloi’s holdback example is above. For unpaid common expenses, Éducaloi says part of the price can be withheld to pay the syndicate. A notary says which of these fits the notice that is actually published.

What if the debts are more than the house is worth?

Then a total acquittance is not something the price can buy. Article 3065 limits a partial acquittance to an equivalent reduction, so the registration remains for the unpaid balance. Cancellation without full payment needs the holder’s consent under article 3059, or a court order under article 2731 where that article applies. Éducaloi says that if the sale price is not enough to pay the debt the hypothec guarantees, the creditor can take steps to recover what is unpaid, and gives the example of a bank having the house sold. A creditor is not required to accept less. The consent, or the judgment, has to be in the notary’s file before the charge can be cancelled for a smaller sum.

If payments on a hypothec are already behind, the prior notice of the exercise of a hypothecary right is a separate clock. What that notice does, and what a sale can still pay, is in Behind on your mortgage in Quebec: what happens and can you still sell?.

Does a charge make it harder to sell quickly, or as the house stands?

The charge does not add showings, and it does not require the house to be emptied or put in order first. It does add work the notary cannot skip: the index, the creditor’s statement, and a quittance or a mainlevée for each published charge the price pays. A construction hypothec that is still inside the 30 days of article 2727 can exist without a line on the index, so the notary may also wait out that period or hold money, as in Éducaloi’s example for a condo from a plan. The closing date is real only when that file can be signed.

Bruce Malcolm buys houses himself in Montreal and on the West Island. He holds no broker, agent or appraiser licence, and this page is not legal advice. There is no inspection and no commission. A private buyer can close on a date that leaves the notary time to settle the charges the price covers. What an as-is sale means is in Selling a house as-is in Quebec. Send the address when you want a number (request an offer). The form does not commit you.

Work on the immovable

What the Code says. Only for the named persons, and it can exist unpublished for 30 days after the work is completed (arts. 2726 and 2727). It secures the increase in value (art. 2728).

Where it appears. Land register, once the notice is registered. It ranks before other published hypothecs for that increase (art. 2952).

Syndicate of co-owners

What the Code says. Common expenses only, after more than 30 days late, and only from the notice (art. 2729).

Where it appears. Land register. Cancellation can be asked three years after the registration if no action was published (art. 3061).

Judgment

What the Code says. A Quebec judgment for a sum of money, by a notice served on the debtor (art. 2730).

Where it appears. Land register when it charges the house. The RDPRM is for movable property, not the house.

State or a public body

What the Code says. Only from registration of a notice naming the Act, the property, the cause and the amount (art. 2725).

Where it appears. The register that notice uses.

Property taxes

What the Code says. A prior claim of the municipality, school service centre or school board, ranked before hypothecs (arts. 2651 and 2657).

Where it appears. Not the same as a published hypothec. The land register’s notification page lists a sale warning for unpaid municipal taxes.

Second hypothec or line of credit

What the Code says. Granted by the owner, by notarial act en minute (art. 2693). It is not one of the four legal hypothecs.

Where it appears. Land register. The payoff is the one in the mortgage article.

What can charge a house in Quebec, and where it appears

Sources

Questions people ask

Keep reading

This is general information about how a sale usually works in Quebec. It is not legal, tax or financial advice, and it is not a promise about your price or your date. A notary — and, if your file needs it, a lawyer or a licensed insolvency trustee — applies the rules to your situation. Sending an address does not commit you to sell.