The renunciation of the legal hypothec... a nuance is necessary!

As you probably already know, legal hypothec for people who participated in the construction or renovation of a building is a powerful weapon allowing architects, engineers, material suppliers, workers, contractors or sub-contractors¹ who participated in the construction or renovation of a building, under certain conditions that will not be discussed in this column, to guarantee their debt.

That said, the dreadful nature of legal hypothec and, even more so, the consequences it has raise an interesting question. Can construction stakeholders, contractually, renounce the right granted to them by law to the legal hypothec in the construction sector?

However, this question requires an affirmative answer, provided that the intention of a party to renounce the legal hypothec is clear from the terms of the contract.².

However, while it is true that the parties to a contract may, contractually, renounce the right to a legal hypothec in the field of construction, an invitation to be careful when drafting and/or analysing this type of clause, insofar as case law recognizes that the “renunciation of the right to publish a legal hypothec” is prohibited.³ ”.

To use the words of the Honourable Justice Martin F. Sheehan in the case 9221-2323 Quebec Inc. v. Excavation L. Martel Inc. v. Excavation L. Martel Inc.⁴ , the nuance between the concepts set out above “is likely to lead to a certain confusion” that this column aims to clarify.

In simple terms, and what should be remembered, is that a contractual clause under which a party renounces the legal hypothec of construction will be fully valid.

In these circumstances, whether you are a general contractor or a subcontractor, we invite you to be careful when drafting a contractual clause providing for the renunciation of the legal hypothec of construction and/or when analyzing a contract containing such a clause, in order to avoid its drafting having unexpected, even undesirable consequences.

Conversely, a clause under which a party renounces its right to register or publish a legal hypothec for persons who participated in the construction or renovation of a building will, for its part, be ineffective, in accordance with the terms of article 2936 of the Civil Code of Quebec, which is of public order and according to which “any renunciation or restriction of the right to publish a right subject to or admitted to advertising, as well as any penal clause that relating to it, are of no effect.”

It is now with the above in mind that you will be able to negotiate and/or draft a contractual clause providing for the renunciation of the legal hypothec. Of course and in case of doubt, we invite you to consult your legal advisers in order to confirm the validity of a clause renouncing legal hypothec for persons who participated in the construction or renovation of a building and the consequences that it has, depending on the way, of course, in which it is written.

1 Article 2726 of the Civil Code of Québec.2 9221-2323 Québec inc. v. Excavation L. Martel inc., 2020 QCCS 4363, at paragraph 40.3 Ibid, at paragraph 41.4 Ibid

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