Mortgage claims are remedies that can be exercised by creditors, whose debt obligation is liquid and payable, to assert his mortgage rights against their debtor who has defaulted, without prejudice to their personal rights and the provisional measures in the Code of Civil Procedure. Discover the different types of mortgage claim in Quebec and their specifics.
The conditions under which mortgage claims can be exercised
Creditors exercise their mortgage rights for however many hands that the property is in, but these rights cannot be carried out before the time period allowed to surrender the property has expired (art 2749 and 2751 CCQ). This period is 20 days from the registration of the notice if it is a movable property. On the other hand, if it is an immovable property, the deadline will be 60 days (art 2758 CCQ).
In addition, earlier ranking creditors have priority over those who come after them when exercising their mortgage rights (art 2750 al 1 CCQ).
Prerequisite measures when exercising mortgage rights
A creditor who intends to exercise a mortgage right must submit a prior notice of the mortgage claim accompanied by proof that the debtor has been served (art 2757 CCQ). Notice of the exercise of a mortgage right must, under pain of inadmissibility, disclose any default by the debtor. In this sense, the creditor must point out defaults such as failure to perform obligations, a reminder of the rights of the debtor or a third party to remedy this default, as well as the amount of the claim in capital and interest, if applicable. The notice must also contain the nature of the mortgage right that the creditor intends to exercise, the description of the charged property and must summon the person against whom the mortgage right is exercised to surrender the property before the specified time period expires (art 2758 CCQ).
The different types of mortgage claim
The Civil Code of Quebec provides for four types of mortgage claim. Each of them has its own distinctive features to be rigorously analyzed by the creditor and their specialized lawyer.
Taking possession for administrative purposes
This claim is for the creditor who holds a mortgage on a business property to temporarily take possession of the mortgaged property and have it administered directly or by a third party. The creditor, or the person to whom they have delegated the administration, then acts as administrator of the property of others charged with full administration (art 2773 CCQ).
Taking in payment
A mortgage creditor takes mortgaged property in payment, after unsuccessful notice, to the debtor without the debtor voluntarily surrendering it. Taking in payment extinguishes the obligation and makes the creditor owner of the property from the time of registration of their notice of the mortgage right being exercised (art 2782 and 2783 CCQ).
Sale by the creditor
This is the sale of a property made by the mortgage creditor after obtaining the surrender. This sale can be made by agreement, calls for tender or auction (art 2784 CCQ).
Sale under judicial authority
This is the judicial sale of property that has been seized in execution of a judgment or where surrender is made or ordered during the exercise of mortgage rights. The sale can take place under the responsibility of the bailiff or that of the designated person (art 2791 CCQ).
Exercising a mortgage claim is a technical process. It is therefore recommended to contact a specialized lawyer to choose the right mortgage claim and prepare the necessary procedures to exercise it successfully under pain of inadmissibility, for the procedure or new notice.
Entrust the exercise of your mortgage rights to a legal professional. Contact the Bérard Avocat law firm. We will provide you with accurate advice and put our expertise at your service.