CANADA – QUÉBEC Law and Practice Contributed by: Eleonora Eusepi, Sabrina Guillot, Janie Chaloux and Nicolas Gosselin, BCF Business Law LLP
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate Commercial real estate acquisitions in Québec are typically financed through a mix of secured debt and equity, consistent with Civil Code requirements and market practice. Senior mortgage financing remains the primary tool, whether through a bilateral loan or, for larger transactions, a syndicated facility. In the multi-residential sector, CMHC-insured loans continue to provide higher leverage and competitive pricing. When senior debt does not fully meet funding needs, buyers often supplement with bridge loans, mezza - nine financing, or preferred equity, particularly in insti - tutional or partnership structures. Equity contributions generally range from 20–40%, although certain lend - ers may finance up to 90–100% of a property’s value in specific cases. Large-scale or portfolio acquisitions typically involve more complex structures, combining several layers of financing and addressing timing, due diligence considerations, and the overall sophistication of the transaction. 3.2 Typical Security Created by Commercial Investors In Québec real estate financing, lenders typically require security tailored to the asset and borrower. The main security is an immovable hypothec registered in the Land Register, often supplemented by an assign - ment of rents for income‑producing properties. Lend - ers also take movable hypothecs over equipment, receivables, contracts, or all present and future mov - able property, which must be registered in the Reg - ister of Personal and Movable Real Rights (RPMRR) to be enforceable against third parties. Depending on the project and risk profile, lenders may also require personal or corporate guarantees or insurance‑based protections to mitigate specific project risks. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions on granting security over real estate to foreign lenders. What does matter is that the security must comply with Québec’s civil law formalities.
3.4 Taxes or Fees Relating to the Granting and Enforcement of Security In Québec, the registration of a hypothec entails only nominal statutory filing fees and notarial fees, and the subsequent enforcement of such security does not give rise to any additional registration charges beyond the ordinary legal and procedural costs associated with exercising remedies. 3.5 Legal Requirements Before an Entity Can Give Valid Security Before an entity can validly grant security over its immovable property in Québec, it must first ensure that it has the requisite corporate powers and internal authorisations, and that the granting of the hypothec is in the best interests of the corporation. Directors must also consider any solvency implications, as well as potential issues relating to preferences or trans - fers made in the vicinity of insolvency. In addition, all mandatory formalities must be complied with, includ - ing executing the hypothec in the proper form – typi - cally by notarial act en minute – and registering it at the Québec Land Register to render it opposable to third parties. While Canada does not impose statu - tory financial assistance restrictions, directors remain responsible for assessing corporate benefit, solvency and the impact of the transaction on stakeholders. 3.6 Formalities When a Borrower Is in Default In Québec, enforcement of a hypothecary right follow - ing a borrower default requires that the creditor com - plete the prescribed formalities, including issuing and publishing a préavis d’exercice (notice of exercise of a right of hypotec) in the Land Register and proceeding with one of the Civil Code’s enforcement remedies. Beyond these statutory requirements, no exceptional hurdles generally arise, and ranking issues are gov - erned primarily by the order of publication, so addi - tional steps to secure priority are uncommon at the enforcement stage. Depending on the remedy pur - sued and the level of court oversight, realisation on an immovable property can take several months to more than a year. All temporary COVID‑related limita - tions on foreclosures have long been lifted, and while many lenders are actively enforcing, others still opt for negotiated forbearance depending on the commercial context. The market for non‑performing real estate
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