Legal construction mortgage

Among the only claims that may give rise to a legal mortgage are the claims of persons who participated in the construction or renovation of an immovable, commonly known as a legal construction mortgage (art 2724 CCQ).

Article 2724 substantially reiterates former articles of the Civil Code of Lower Canada with the notable change of transforming the worker’s privilege into a legal mortgage. This was consecrated by the legislator of established case-law on this subject. Discover the details of a legal construction mortgage in Quebec.

Legal construction mortgage creditors

Legal construction mortgages are only acquired for architects, engineers, material suppliers, workers, contractors or sub-contractors, as well as project managers and service providers (art 2724 CCQ).

Secured claims

The claims secured by the legal construction mortgage are bound by law. This concerns the work requested by the owner which is construction or renovation work that provides added value to the immovable. Secured claims also cover the materials and services provided or prepared for the work, as well as the work disclosed by the various creditors whether they are subcontractor, architect, engineer or material supplier, with the exception of the worker (art 2726 and 2728 CCQ).

The purpose and extent of the legal construction mortgage

The legal construction mortgage is provided for the building on which the construction or renovation work took place and guarantees the added value. The Civil Code does not define the notion of added value, but it is understood as the difference between the value of an improved building and the value it would have without this improvement (Articles 2726 and 2728 CCQ). In addition, the capital gain for the agreement between the creditors, in case the building is sold, takes precedence over all other mortgages, even those published before, with the exception of outstanding debts (art 2952 CCQ).

Legal construction mortgage implementation

A legal mortgage in favour of persons who participated in the construction or renovation of an immovable subsists, even if it has not been published, for 30 days after the work is completed. This means that the construction mortgage exists without formality of acquisition (art 2727 al 1 CCQ).

However, preservation formalities are necessary to implement a legal construction mortgage. It is preserved if, before this period expires, a notice describing the charged immovable and indicating the amount of the claim is registered. This notice must be served on the owner of the immovable (art 2727 al 2 CCQ).

Once the legal construction mortgage notice has been registered with the owner of the immovable, the creditor must, in order to preserve the mortgage, publish a personal action or register a prior notice of the exercise of a mortgage claim against the owner. Such a procedure must be carried out within six months after work has ended, otherwise the mortgage will expire (art 2727 al 3 CCQ).

In summary

While a legal construction mortgage exists without formality, certain actions still must be taken, both for its preservation and for its implementation. In this regard, understanding whether you are creditors and whether your claim is secured is essential. If you want to preserve, protect and exercise your mortgage rights, it is best to consult a specialized lawyer. Bérard Avocat has developed expertise in the field of mortgages and mortgage claims. Contact us or come and meet us in our Montreal office. We will be happy to provide you with more information about the mortgage process in Quebec.

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