Whether you’re a person or company looking to enter into a non-possessory movable hypothec contract, or whether you’re a person or company already party to a non-possessory movable hypothec contract but facing difficulties, we’re here to help!
While many questions can be answered with the help of the guides, sample letters and forms in our legal toolkit, an independent jurist affiliated with PSP Legal will always be happy to help you by answering any questions you may have.
Of course, if you prefer to have an experienced practitioner take charge of your situation and intervene directly and quickly on your behalf, you can also request that one of the independent jurists affiliated with PSP Legal represent you by clicking here.
What is a non-possessory movable hypothec?
A non-possessory hypothec is the creation of a mortgage on movable property by a debtor, without having to hand it over to the creditor.
A hypothec without dispossession can cover a variety of tangible and intangible assets. This type of hypothec does not require delivery of the mortgaged property to the creditor.
When granted by a company, this type of hypothec can apply to a universality of goods. In this case, the hypothec could cover the company’s inventory, professional tools and equipment, and goodwill. The non-possessory movable hypothec can also be taken out by natural persons, although their capacity to do so will be limited. In fact, natural persons can only grant a hypothec without dispossession on assets listed by the legislator. These include:
- Road vehicles with an identification number;
- Precious goods within the meaning of the Taxation Act;
- Securities and intermediated securities within the meaning of the Securities Act;
- Property constituting an investment within the meaning of the Securities Act.
Non-possessory movable hypothecs
A non-possessory hypothec is constituted in writing, either by private deed or by notarial act. Once constituted, it must be entered in the Register of Personal and Movable Real Rights and contain a sufficiently detailed description of the property to which it relates, in accordance with article 2697 of the Civil Code of Québec.
In addition, registration in the Register will make it enforceable against third parties and creditors. Certain errors in registering a non-possessory movable hypothec could prove fatal and render it unenforceable. However, these errors will not affect the validity of the hypothec between the creditor and the debtor.
For example, the following errors could be fatal:
- Error in the name of a company made up of numbers;
- A spelling error in the name of a natural person;
- Insufficient description of the property.
Hypothecs on securities and intermediated securities
Companies and individuals who do not operate a business can take out a non-possessory hypothec on transferable securities and intermediated securities. However, certain intermediated securities are not eligible for a hypothec without delivery:
- Assets constituting a Registered Retirement Savings Plan;
- Registered retirement income funds;
- Registered education savings plans;
- Registered disability savings plans as defined in the Taxation Act;
A non-possessory movable hypothec ranks according to the date, hour and minute of its registration in the Register of Personal and Movable Real Rights. However, in the case of a hypothec on property represented by a bill of lading or other negotiable instrument, the hypothec may be set up against third parties and other creditors as of the day the creditor has performed his obligations, provided the hypothec has been registered within the following 10 days.
How we can help
Our legal toolkit includes a variety of online resources and links to templates and guides to help you better understand your obligations.
However, should the Legal Toolkit prove insufficient in your situation, you can obtain additional assistance by speaking with one of PSP Legal’s affiliated jurists:
Of course, if you prefer to have an experienced practitioner handle your situation, you can always request that one of the independent jurists affiliated with PSP Legal intervene on your behalf by clicking here. He or she will then be able to intervene directly and rapidly on your behalf by:
- Preparing, negotiating and drafting applications, procedures or any other legal documents related to your situation;
- Assisting and advising you on your legal rights and obligations;
- Representing you before the courts when legal action is taken;
- Guiding you through the choices available to you, leading to a fair and satisfactory solution.
PSP Legal, because you deserve expert advice!
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