Real Estate vs Movable Mortgage: Two Distinct Regimes in Quebec
The Civil Code of Quebec recognizes two main categories of hypothecs, each adapted to the nature of the property serving as security. The immovable hypothec applies to immovable property — single-family homes, condos, revenue properties, land — while the movable hypothec applies to movable property — vehicles, equipment, inventory, receivables, and even securities. This distinction, though it may seem technical, has major practical consequences for borrowers and creditors.
The Immovable Hypothec: The Pillar of Residential Financing
The immovable hypothec is the most common form for Quebec borrowers purchasing or refinancing a residential property. It is governed by articles 2693 to 2695 of the CCQ. Article 2693 stipulates that an immovable hypothec must be constituted by notarial act en minute. This requirement, specific to Quebec civil law, provides enhanced legal protection for all parties. The notary verifies the signatories' identities, ensures their legal capacity, explains the scope of the commitment, and ensures the deed complies with the law.
The Movable Hypothec: Financing Movable Property
The movable hypothec, governed by articles 2696 to 2714.7 of the CCQ, applies to movable property. It is commonly used in commercial and industrial financing: a manufacturer borrowing to acquire equipment, an automobile dealer financing inventory, or a business pledging its accounts receivable as security. Unlike the immovable hypothec, the movable hypothec can be evidenced by a private writing (a contract signed between the parties, without a notary). However, it must be published in the Register of Personal and Movable Real Rights (RPMRR) to be enforceable against third parties.
Comparing the Two Regimes
- Nature of the secured property: The immovable hypothec encumbers an immovable (house, condo, land, revenue property). The movable hypothec encumbers a movable (vehicle, equipment, inventory, receivables, securities).
- Form of the constituting deed: The immovable hypothec requires a notarial act en minute (art. 2693 CCQ). The movable hypothec may be constituted by private writing, with exceptions provided by law.
- Publication registry: The immovable hypothec is published in the Quebec Land Registry. The movable hypothec is published in the RPMRR (Register of Personal and Movable Real Rights).
- Associated costs: The immovable hypothec involves notary fees ($1,000 to $2,000) and Land Registry publication fees. The movable hypothec involves RPMRR publication fees, which are generally lower.
- Creditor's remedies: Both types offer the right to follow and the right of preference, but the procedures for exercising hypothecary remedies differ depending on the nature of the property. Remedies on immovable property are more strictly regulated by the CCQ.
The RPMRR: An Essential Verification Tool
The Register of Personal and Movable Real Rights (RPMRR, or RDPRM in French) is a publicly accessible online registry that allows verification of whether movable property is encumbered by a security. Before purchasing a used vehicle or second-hand equipment, it is prudent to consult the RPMRR to ensure the property is not hypothecated. A registration in the RPMRR means a creditor holds a right over that property. Consultation fees are modest and the process is quick.
Relevance for Residential Borrowers
For the majority of Quebec borrowers taking out a loan for the purchase or refinancing of a residential property, the immovable hypothec applies. However, knowing about the movable hypothec is useful in several situations: purchasing land with a trailer, acquiring a factory-built home not yet affixed to the ground, or mixed financing for a commercial building including equipment. The AMF oversees brokers and intermediaries offering financing products involving movable hypothecs, ensuring Quebec consumer protection. If you are unsure about which type of hypothec applies to your situation, a notary or AMF-certified mortgage broker can guide you.