Taking possession for purposes of administration

A creditor who holds a mortgage on the property of an enterprise may temporarily take possession of the mortgaged property and administer it or generally delegate its administration to a third person. A trustee acts as the administrator of the property of others charged with full administration.¹

However, although he is responsible for full administration, he may not sell the property, as he is obliged to return it to the person against whom the mortgage right has been exercised, or to his successors at the end of his administration.²

When does this remedy terminate?³

1. When the claim of the creditor is satisfied in principal, interest and costs
2. When the exercise of his right is defeated
3. When the creditor publishes a prior notice of exercise of another mortgage right
4. Under the same circumstances as the termination of the administration of the property of others

The bankruptcy of the debtor does not terminate the taking of possession.

When possession ends, the creditor shall render account of his administration, unless he has published a prior notice of exercise of another mortgage right.⁴ He must also return any surplus remaining in his hands after payment of the debt, the expenses of the administration and the costs incurred to exercise possession of the property.⁵ He registers a notice of return of the property in the appropriate register.⁶

Note of interest

This remedy is only available for business property, referring here to the notion of enterprise as defined in the Civil Code of Québec,⁷ and not to the notions of residential and commercial brokerage as defined in the Real Estate Brokerage and its regulations. Consequently, the notion of enterprise is unrelated to the number of dwellings in the immovable covered by the brokerage contract.
 

¹ S. 2773 C.C.Q.
² S. 2776 C.C.Q
³ S. 2775 C.C.Q.
⁴ S. 2776(1) C.C.Q.
⁵ S. 2777 C.C.Q.
⁶ S. 2776(2) C.C.Q.
⁷ S. 1525 C.C.Q.