Deed of Hypothec on Movables Template

In plain language: Names the grantor (debtor) and the hypothecary creditor as legal entities, states their addresses, and briefly describes the underlying obligation being secured.

Common mistake: Using a trade name instead of the full registered legal name. A mismatch between the deed and the RPMRR registration invalidates publication and can void the hypothec's priority against third parties.

In plain language: Sets out the principal amount of the loan or obligation, the interest rate, repayment schedule, and a reference to the underlying loan agreement or promissory note.

Common mistake: Describing the secured obligation too narrowly — limiting it to a fixed principal only. If the loan is later increased or restructured, the hypothec may not cover the additional amounts without a new deed.

In plain language: States the maximum amount for which the hypothec is granted — which must be a fixed sum under Quebec law — and the rate of interest secured.

Common mistake: Setting the hypothec amount equal to the loan principal without adding a buffer for interest, fees, and enforcement costs. Best practice is to set the hypothec amount at 125–150% of the principal to cover all ancillary amounts.

In plain language: Identifies with precision the movable assets subject to the hypothec — either by specific item or as a universality of assets of a defined category.

Common mistake: Using generic descriptions like 'all business assets' without specifying the category of movable. An insufficiently defined description can be challenged at registration and may fail to attach to specific assets.

In plain language: The debtor confirms ownership of the charged assets, the absence of prior encumbrances other than those disclosed, and the authority to grant the hypothec.

Common mistake: Omitting a schedule of prior encumbrances. Undisclosed prior hypothecs discovered after execution can trigger an event of default and expose the grantor to a fraud claim.

In plain language: Requires the debtor to maintain, insure, and preserve the charged assets, and restricts the debtor from disposing of or further encumbering them without creditor consent.

Common mistake: Allowing ordinary-course-of-business exceptions for inventory without defining what constitutes ordinary course. A debtor can sell substantially all inventory and claim ordinary course if the boundary is left undefined.

In plain language: Lists the specific events that trigger the creditor's right to exercise hypothecary remedies — typically payment failure, insolvency, breach of covenants, or material adverse change.

Common mistake: Cross-referencing events of default in the loan agreement without reproducing them or attaching the loan agreement as a schedule. If the loan agreement is amended, the default provisions in the deed can become inconsistent.

In plain language: Sets out the four remedies available to the creditor under the Civil Code of Quebec upon an event of default and confirms that written notice requirements will be followed.

Common mistake: Omitting the 20-day prior notice requirement for taking in payment (Article 2758 CCQ). Failure to comply with statutory notice periods voids the remedy and exposes the creditor to a claim for damages.

In plain language: Requires the creditor to register the hypothec in the RPMRR and confirms the Grantor's cooperation with registration formalities.

Common mistake: Failing to specify who bears the registration cost. If left silent, disputes arise — and if the creditor bears the cost but fails to register, the hypothec is enforceable only between the parties and not against third-party creditors or a trustee in bankruptcy.

In plain language: Confirms that Quebec law governs the deed, includes the entire-agreement clause, severability, and waiver provisions.

Common mistake: Choosing a common-law governing jurisdiction for a movable hypothec over Quebec assets. Quebec courts apply CCQ rules regardless of a foreign choice-of-law clause, and a mismatched governing law creates unenforceable remedy provisions.

A deed of hypothec on movables is a formal security agreement under Quebec civil law that grants a creditor a real right — a hypothec — over a debtor's movable property, such as equipment, inventory, receivables, or intellectual property, as collateral for a loan or other financial obligation. Unlike a mortgage, which covers immovable property such as land, a movable hypothec attaches to personal property and must be published in Quebec's Register of Personal and Movable Real Rights (RPMRR) to be effective against third parties. It is the Quebec civil law equivalent of a security agreement or general security agreement used in common-law provinces.

Under the Civil Code of Quebec, almost any movable property can be hypothecated — including physical assets such as machinery, vehicles, and inventory; financial assets such as receivables and bank accounts; and intangible assets such as intellectual property, software licences, and goodwill. A hypothec can be granted over specific identified assets or over a universality of assets of a defined category — for example, all present and after-acquired inventory — which allows the debtor to continue using and replacing assets in the ordinary course of business.

A general security agreement (GSA) is a common-law instrument used in Canadian provinces governed by Personal Property Security Acts (PPSA) — Ontario, British Columbia, Alberta, and others. A deed of hypothec on movables serves the same economic function but is governed exclusively by the Civil Code of Quebec and must follow distinct formal requirements, including publication in the RPMRR rather than a PPSA registry. The enforcement remedies are also different: Quebec law provides four specific hypothecary remedies, while PPSA regimes use a different set of secured-party enforcement rights. For assets located in Quebec, only the movable hypothec provides an enforceable Quebec-law security interest.

It depends on the nature of the transaction and the grantor. A movable hypothec granted by a legal person (corporation) can be created by a deed under private writing — signed by both parties without a notary. However, a hypothec granted by a natural person (individual) in certain contexts may require a notarial deed in authentic form. Even where not strictly required, executing the deed before a Quebec notary provides greater evidentiary weight and simplifies enforcement in court. Always confirm the formal requirements with a Quebec notary or lawyer before execution.

The RPMRR — Registre des droits personnels et réels mobiliers — is Quebec's public registry for personal and movable real rights, including movable hypothecs. Registration (called publication in civil law) makes the hypothec opposable to third parties — meaning it ranks against other creditors, buyers, and a trustee in bankruptcy. An unregistered hypothec is valid between the parties but has no priority over third-party creditors. Priority among competing hypothecs is determined by the date and time of registration, making prompt filing after execution critical.

The Civil Code of Quebec provides four hypothecary remedies: (1) taking in payment — the creditor takes ownership of the charged property in full satisfaction of the debt; (2) sale by the creditor — the creditor sells the property privately or by judicial sale and applies proceeds to the debt; (3) taking possession for administration — the creditor takes over and operates the charged assets to generate income; and (4) sale under judicial authority — a court-supervised sale. All remedies require a prior notice to the debtor (typically 20 days) under Articles 2757–2758 CCQ, and the taking in payment remedy requires the debtor to have no equity in the property or to waive their equity.

Yes. Under Article 2666 of the Civil Code of Quebec, a hypothec can be granted over a universality of present and future movable assets of the same nature, such as all present and after-acquired inventory or all receivables. The hypothec attaches to future assets automatically as the debtor acquires them, without the need for a new deed. However, the universality must be defined precisely — a vague catch-all description may not attach to assets that fall outside the defined category.

Ranking among hypothecs is generally determined by publication date in the RPMRR — earlier registration takes priority. However, certain prior claims under Quebec law — such as employee wage claims, municipal taxes, and certain government debts — rank ahead of all hypothecs regardless of registration date. In insolvency proceedings, federal law (Bankruptcy and Insolvency Act) also affects ranking, particularly for Crown claims and employee super-priority for pension contributions. A creditor should conduct thorough due diligence on existing encumbrances and prior claims before advancing funds.

The movable hypothec is a Quebec civil law instrument and its enforceability in other jurisdictions depends on conflict-of-laws rules applied by foreign courts. Common-law provinces recognize Quebec hypothecs over assets physically located in Quebec but may require re-registration under provincial PPSA rules if the debtor or assets move to another province. For cross-border secured lending involving assets in multiple provinces, lenders typically take both a movable hypothec (for Quebec assets) and a PPSA general security agreement (for assets in other provinces) to ensure full coverage.

For straightforward commercial transactions with a clear asset description and an existing loan agreement, a high-quality template provides a solid structural starting point. However, given the specific formal requirements of the Civil Code of Quebec, the registration process in the RPMRR, and the complex ranking rules among creditors, engaging a Quebec notary or civil law lawyer for at least a review — and execution before a notary where required — is strongly recommended. The cost of legal review ($500–$1,500) is modest relative to the amount typically secured and the consequences of an unenforceable hypothec in default.