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Sale by the creditor

This remedy is only available to creditors who hold a mortgage on the movable or immovable property of a business.

Section 2784 of the Civil Code of Québec states:

“A creditor who holds a mortgage on the property of an enterprise and who has filed a prior notice at the registry office indicating his intention to sell the charged property himself may, after obtaining surrender of the property, proceed with the sale by agreement, by a call for tenders or by public auction.”

The creditor therefore has three options:

  1. Private contract
  2. Call for tenders
  3. Sale by public auction

Private contract

A private sale is one in which the creditor sells the property himself. The creditor acts on behalf of the owner and is bound to declare his capacity to the acquirer.1

Call for tenders

A creditor who proceeds by call for tenders may do so through the newspapers or by invitation.
Sufficient information shall be included in the call for tenders to enable any interested person to make an offer at the proper time and place.

The creditor is bound to accept the highest offer unless the conditions attached to it render it less advantageous than another lower offer, or unless the price offered is not commercially reasonable.2

Sale by public auction

A creditor who proceeds by sale by public auction shall hold it at the date, time and place fixed in the notice of sale served on the person against whom the mortgage right is exercised and on the grantor, and notified to the other creditors who have published their right as regards the property.3

Where the proceeds of the sale are insufficient to pay his claim and costs, the creditor retains a claim against his debtor for the balance due to him.4

The acquirer takes the property as subject to the real rights charging it at the time of registration of the prior notice, except for the mortgage of the creditor who sold the property and the claims which ranked ahead of the latter’s rights. Real rights created after registration of the prior notice may not be set up against the acquirer if he did not consent to them.5

1 S. 2786 C.C.Q.
2 S. 2787 C.C.Q.
3 S. 2788 C.C.Q.
4 S. 2789(3) C.C.Q.
5 S. 2790 C.C.Q


Last updated on: December 18, 2023
Reference number: 266050