The legal mortgage of construction guarantees claims of builders and renovators arising from their work in a building. It relates and affects the building where the work was carried.
Debts are secured by the mortgage. In fact it will be legal to sell the property on which the mortgage is registered. The judicial selling price is then affected in whole or in part to the payment of the debt of the builder, renovator or material supplier.
Beneficiaries of the legal mortgage
Article 2726 of the Civil Code of Québec provides that the beneficiaries of legal mortgage of construction are the following:
- the general contractor
- the specialized contractor
- the worker
- the architect
- the engineer
- the materials supplier
The legal mortgage arises from the contract. As for subcontractors and others with no direct link with the owner, they will be subject to a further step, the sending of a notice. This notice is a disclosure to the owner of the existence of a contract for the supply of materials or subcontractors in a project where the owner could only contract with a general contractor. The notice must be in writing and must write briefly of the awarded contract, its price and the intention the one who gives notice to invoke the legal mortgage.
Contract termination allows the owner to deduct sufficient money to cover the value of mortgages that may be published on its building. In addition, the notice allows the owner to identify from which stakeholder to require the receipts before making a payment to the general contractor. To be valid, such a notice shall be given to the Owner of the building before the start of the work of the concerned sub-contractor.
The deadline for publication of the mortgage
Beneficiaries are subject to a mandatory deadline for the publication of their mortgage to the Office of the District Registrar. This period is thirty (30) days after the completion of all Work described in the construction project where the holder of the mortgage has intervened. Obviously, the recent work can be other works than those made by the holder of the mortgage itself. For example, the thirty (30) days to which a masonry contractor who performs his work at the beginning of construction is entitled can be calculated from the date of the last works of the painter contractor, if it’s the painter who makes the last work of construction. Note that the occupancy of the premises that are the subject of works is not absolute proof that the work is completed.
Notice exercise of a mortgage appeal
Upon failure by the holder of the mortgage published to exercise its right against the property; it will cease after six (6) months after completion. After this date, without notice, there can be no recourse mortgage and the mortgage published may be canceled upon request. To make the mortgage extend beyond the period of six (6) months, the holder must issue a “notice of exercise of a mortgage right ” and notify the owner. The notice of exercise is a document given to the Owner and published in the Office of the District Registrar. It informs the owner of the intention of the holder of the mortgage to take advantage of its guarantee.
The legal mortgage of construction is a valuable tool to guarantee the payments due for the work done. Anyone who enters construction would benefit to know this legal mechanism in order to protect themselves.