The short answer
Quebec is the one Canadian province where lending runs on civil law. The security is a hypothec, it must be created by notarial deed, enforcement follows the Civil Code of Québec rather than a power of sale, and courts can revise loans they find lesionary. French-language rules also shape the documents. None of this is a barrier, but each point needs Quebec counsel and a Quebec notary from the outset.
The hypothec
A hypothec is a real right on property, movable or immovable, made available for the performance of an obligation (art. 2660 C.C.Q.). It is the Quebec equivalent of a mortgage or charge, but the legal mechanics differ.
Notarial form. A hypothec on an immovable (real property) must, on pain of absolute nullity, be granted by notarial act en minute (art. 2693). In practice, a Quebec notary prepares, receives and publishes the deed. US lenders used to lender's counsel drafting and a title company recording should plan around the notary's role.
Publication. The hypothec must be published in the land register to be set up against third parties (art. 2934 and following). Rank among hypothecs generally follows the order of publication.
Movable hypothecs. Hypothecs on movables, including a universality of present and future movable property, are published in the Register of Personal and Movable Real Rights (RDPRM), Quebec's equivalent of a PPSA registry.
Enforcement: hypothecary recourses
Quebec has no power of sale in the common law sense. Instead, the creditor exercises one of four hypothecary rights after giving a prior notice.
- Prior notice. The creditor must serve and register a prior notice of the exercise of a hypothecary right (art. 2757). For an immovable, the debtor has 60 days to remedy the default or surrender the property (art. 2758), shortened to 10 days if the property has been abandoned.
- Taking possession for purposes of administration. The creditor administers the property and applies revenues to the debt.
- Taking in payment. The creditor becomes owner in full satisfaction of the debt. Court authorization is required where the debtor has already discharged half or more of the obligation (art. 2778). Taking in payment extinguishes the debt, so there is no deficiency claim.
- Sale by the creditor. The creditor sells the property itself, by agreement, auction or call for tenders (art. 2784 and following), with a duty to act in a commercially reasonable way.
- Sale by judicial authority. The court orders the sale and appoints a person to conduct it (art. 2791).
Where the borrower is an individual and the property is residential, additional protections and court involvement apply. Budget realistic timelines.
Lesion and the court's power to revise
Article 2332 C.C.Q. lets a court, in the case of a loan of money, annul the contract, reduce the obligations or revise the terms if one party has suffered lesion, having regard to the risk and all the circumstances. Quebec has no general provincial usury cap, but article 2332 gives courts a flexible tool against abusive pricing. The federal Criminal Code section 347 rate and the Interest Act still apply (Article 1).
Suretyship
Guarantees are "suretyship" under articles 2333 and following. Unless waived, a surety may have rights such as the benefit of discussion (requiring the creditor to pursue the debtor first) and, among co-sureties, the benefit of division. Quebec loan documents normally provide for solidary (joint and several) suretyship with express waivers. Common law guarantee forms should be adapted, not simply translated.
Language
The Charter of the French Language, as amended by Bill 96, requires contracts of adhesion to be presented in French first; the parties may then choose to be bound by a version in another language only after the French version has been provided (s. 55). Negotiated commercial contracts may be drafted in English if the parties expressly choose it. Notarial deeds are commonly prepared in French, but parties can generally request another language; confirm current requirements with your notary. Budget for translation and allow time for parties to review both versions.
Practical checklist for a first Quebec loan
- Engage a Quebec notary and Quebec counsel at term sheet stage
- Use an immovable hypothec in notarial form, plus a movable hypothec on rents and other movables
- Replace common law guarantees with solidary suretyship and express waivers
- Plan enforcement around the 60-day prior notice and hypothecary recourses
- Test pricing against article 2332 lesion as well as section 347
- Address French-language requirements for each document
- Complete a Law 25 privacy assessment before sending borrower data outside Quebec (Article 13)
Frequently asked questions
Frequently asked questions
Is there a mortgage in Quebec?
Quebec uses the hypothec, a civil law security right on property. It serves the same purpose as a mortgage but follows the Civil Code of Québec.
Does a Quebec hypothec need a notary?
Yes. A hypothec on immovable property must be granted by notarial act en minute, or it is absolutely null (art. 2693 C.C.Q.).
How long is the notice period to enforce a Quebec hypothec?
For immovable property, 60 days after registration of the prior notice, or 10 days if the property is abandoned.
Can a Quebec court reduce the interest on a private loan?
Yes. Article 2332 C.C.Q. lets courts reduce obligations or revise a money loan where a party has suffered lesion.
This content is general information for industry professionals and is not legal, tax or financial advice. Laws change and apply differently to each transaction; obtain advice from qualified counsel in each relevant jurisdiction. Legal counsel to the Cross-Border Private Lenders Association: Jasmine Daya & Co. Questions: info@cbpla.com