In certain provinces, the law specifically permits the registration of a security interest on collateral prior to the execution of the security agreement by the debtor. By way of example, pre-registration is permitted by the Personal Property Security Act13 and the Bank Act14 under certain conditions. However, lenders should be cautious when attempting to pre-register a hypothec in the province of Québec as neither the Regulation respecting land registration15 nor the Regulation respecting the register of personal and movable real rights provide for the pre-registration of hypothecs.
In fact, the Civil Code of Québec prevents the registration of an immovable hypothec prior to its signing, as it requires that a copy or authentic extract of the deed of hypothec be presented to the land registry office for registration. Following registration of the immovable hypothec, a copy of the deed constituting the hypothec is published in the land registry and becomes available to any third party. Therefore, the registration of a hypothec against an immovable property located in Québec, prior to its signing by the debtor, is clearly prohibited.
As to hypothecs on movable property, there is no specific requirement that obliges the presentation of the agreement constituting the hypothec for purposes of registration. However, the Regulation respecting the register of personal and movable real rights requires that the application for such registration contain, inter alia, the reference to the agreement constituting the security interest, including the date on which the agreement was signed and its place of signature. Therefore, one can reasonably infer that the possibility of registering a hypothec against movable property, prior to the signing of the agreement constituting such hypothec, is excluded.
However, in Mine Jeffrey Inc. (Arrangement of)17, the Superior Court of Québec suggested that it might be possible to pre-register a movable hypothec prior to its creation (prior to its signing) in the case of a security interest resulting from a leasing agreement (“crédit-bail”). This judgement has yet to be followed by other decisions in the province of Québec.