By Cantin, Henri
Business Credit , Vol. 103, No. 4
Unlike the Common Law Provinces, it is through its general law that the Province of Quebec governs the protection given to those who have taken part in the construction or renovation of an immovable. Articles 2726, 2727 and 2728 of the new Civil Code of Quebec, in force since January 1st, 1994, especially define the rules and/or guidelines to ensure such protection. For your benefit, we have annexed copies of those sections, which are located on page 62.
Nature of the Protection:
To those entitled by their participation in the construction of an immovable, the law gives a Legal Hypothec, which means:
1. Hypothec: "a general mortgage on the land and the building in construction or in renovation."
2. Legal: "given by the law as opposed to an ordinary mortgage (bank loan) which is a conventional mortgage signed by the borrower and the lender."
3. Immovable: "the premises to which additional value is given by the work done or the materials supplied; that is the land and any building erected thereon forming in law a part thereof."
Nature of the Project:
Construction project: "to erect or to build a certain construction, which gives an added value to the land on which it is built."
Renovation project: "project of substantial renovation work; such as stripping and rebuilding. (But excluding maintenance and/or repair work that does not give an added value to the building, but only maintains the existing value of the building)."
N.B.: If demolition work is necessary for the purpose of a construction project, such work will also give rise to a legal hypothec of construction.
Origin of Contract of Construction or Renovation:
The construction work has to be requested and given by the owner of the land or building in construction or renovation for which the work will be done or the materials supplied.
The law defines an owner as one having the full right of ownership and/or the right to any part of a dismemberment of the right of ownership, such as the usufruct, the use, the servitude and the emphyteusis of the property.
The usufruct, the use and servitude are rarely seen. But emphyteusis is more often used and will be in the future.
Emphyteusis is the right which, for a certain time, grants a person the full benefit and enjoyment of an immovable owned by another provided he does not endanger its existence and undertakes to make constructions, works or plantations thereon that will durably increase its value.
Emphyteusis is established by contract or by will.
A title search will indicate that the owner has given such a right to another person and/or other legal entity.
To Whom Is Such Protection Given?
The civil code gives an exclusive list of those entitled to a legal hypothec of construction, and those are:
* The architect whose plans and/or specifications have been used in said construction (if plans or specifications are not used by the owner for the said construction, no legal hypothec of construction is possible);
* The engineer whose plans and/or specifications have been used in said construction (if plans or specifications are not used by the owner for the said construction, no legal hypothec of construction is possible);
* The workman hired by the owner or by the general contractor for unpaid wages on said construction project;
* The contractor i.e. a general contractor or a specific contractor hired by the owner;
* The subcontractor i.e. a contractor hired by anyone besides the owner, including the one hired by a subcontractor;
* The supplier of materials to the owner, to the general contractor or to a subcontractor (but not a supplier of materials to another supplier of materials);
* The supplier of materials, i.e. the supplier of raw materials or manufactured materials used in the construction of the project or prepared for the work, such as custom built windows, kitchen cabinets, roof trusses, etc. …