Module 2 Flashcards
Prior claim definition
Per the law
Creditor has right to be preferred over other creditors even hypothecary creditors
Prior claim characteristics
- Don’t need to be Published to be enforceable to third parties
- rank according to their order amongst themselves
- rank before movable or immovable hypothecs regardless of dates
- real right
- no right to follow (ie follows Person not property)
- cAn verify in land registry
1st ranking prior claim
legal costs and all expenses incurred in the common interest (creditor)
Enforced on movable and immovables
2nd ranking prior claim
Unpaid vendor
For the price of a movable sold to a natural person
Not available if movable is for a business
3rd ranking prior claim
Claims of persons having the right to retain movable property until debt is paid
Ie an unpaid mechanic who keeps the car he repaired
4th ranking prior claim
Claims of state (Quebec)
Amounts due under fiscal law (income tax)
Applies to movables (bank accounts and car if not leased ie owned by someone else)
5th ranking prior claim
Municipal and school board claims for property tax
Applies to immovables only
Follows immovables
Nature of hypothecs
- Permanent Real right on immovable or movable (collateral)
- right to follow regardless of who owns
- indivisible (everything on property)
- opposable to third parties if published in relevant register and surety allows creditors to have preference over proceeds before ordinary creditors
Definition of legal hypothecs
Imposed by law
Creditors with legal hypothecs
Definition of conventional hypothecs
Agreement between Lender and borrower
Definition of movable hypothecs (since 1994)
Movable property charged with a hypothec either with or without delivery
Ie equipment remitted (delivered/pledged) to the creditor as a guarantee or without delivery meaning a property is given in guarantee but kept at the same time (register of personal and movable real rights)
Definition of immovable hypothecs
Immovable property is charged with a hypothec ie guarantee to the creditor
- notorial act in minutes
- Published in land registry
- conventional
Types of legal hypothecs
1. Claims of the state
- Claims of state for sums due under fiscal law charged on movable (register of personal and movable real rights) or immovables (land register) from the date of registration
Incl hydro and income tax
Types of legal hypothecs
2. Claims of persons who constructed or renovated an immovable
- Only the immovable is charged with the legal hypothec
- does not need to be registered
- subsists for 30 days after work done
- before 30 days, creditor can serve debtor with a notice (if unpaid) and register it
Types of legal hypothecs
3. Claim of syndicate of co-owners
- For unpaid common expenses or contingency fund if over 30 days late
- registered at land registry indicating nature of claim and amount payable on day of claim
- can cover claims for current year and following 2 years plus legal costs (bailiffs)
Types of legal hypothecs
4. Claims under judgement
- rendered by a court with jurisdiction in Quebec
- awards a sum of money
- charged on movable or immovable
- register a notice describing the charged property and amount of obligation (good for 10 years)
- notice filed with copy of judgement and proof it was served to the debtor
Order of importance of creditors against immovables (4)
- Prior creditors (2 of 5 affect immovables)
- Legal costs & all expenses incurred in the common interest
- claims of municipalities & school board for property taxes - Hypothecary creditors
- Claims of persons who constructed or renovated an immovable - Legal hypothecs & other hypothecary creditors
- legal hypothecs and conventional immovable hypothecs rank based on date of registration - Ordinary creditors
- In proportion to their claim
Exercise of hypothecary rights - general provisions
Creditor can exercise a personal recourse OR exercise his hypothecary rights (ranked according to date registered and regardless of who owns the property with the exception of construction creditors)
Preliminary measures of exercising hypothecary rights
- Creditor must register a PRIOR NOTICE at the registry office with proof that it was served to the debtor
60 days for immovables
20 days for movables
10 days for possession admin purpose - Surrender
-Voluntary - owner abandons the property to the creditor or consents in writing
-Forced - court ordered
Hypothecary recourses (4)
- Take possession for admin purposes (full admin) administrate the property, use profit to reimburse himself the creditor
- Take in payment
Extinguishes debtor’s obligation
Taking property as is at time of registration AND free of all hypotechs published after his
-if more than 50% has been paid off, creditor needs court issued authorization before taking in pmnt
(2nd ranking creditor should opt for option 3 or 4) - Sale by creditor
Proceed after surrender of property by sale by agreement,call for tenders or by public auction - Sale by judicial authority (most popular)
Court designates a person who will sell it and sets the conditions and charges of the sale and specifies a sale by agreement, call for tenders or public auction
-purges all prior claims
-if proceeds are insufficient, the creditor still has personal recourse or if in excess, they’re remitted to the debtor
Extinction of hypothecs (5)
1. Movables 10 years after registration By loss or expropriation of property Paid off 2. Immovables 30 years after registration By loss or expropriation of property Paid off 3. Release 4. Main levee Lifting after full payment, private act, formal document signed by creditor and registered in index of immovables 5. Radiation Cancellation quittance, debtor is released the moment its registered
Types of legal hypothecs
- Claims of the state
- Claims of persons who constructed or renovated immovable
- Claims of syndicate co-owners
- Claims under judgement
