Mistakes, Problems and Official Sources
Business loans in Quebec: hypothecs, suretyship, RDPRM and other differences
How business borrowing in Quebec differs from the rest of Canada: movable and immovable hypothecs, the RDPRM, suretyship, prior notices, French-language contracts and Quebec funding bodies.
Borrowing for a business in Quebec follows the same federal rules as elsewhere in Canada (the Interest Act, the Criminal Code's criminal interest rate, the Bankruptcy and Insolvency Act and federal programs such as the CSBFP and BDC), but the security and guarantee law is different because Quebec uses the Civil Code of Québec rather than the common law and the provincial Personal Property Security Acts. Lenders take a hypothec instead of a general security agreement, register it at the RDPRM (Register of Personal and Movable Real Rights) or the land register, call a personal guarantee a suretyship, and must give a prior notice before exercising their hypothecary rights. Contracts of adhesion must generally be offered in French first.
This guide is part of business loan mistakes to avoid. It is general information; in Quebec, consult a lawyer or notary about security documents.
Rest of Canada versus Quebec
| Topic | Common law provinces | Quebec |
|---|---|---|
| Security over equipment, inventory, receivables | General security agreement under the provincial PPSA | Movable hypothec (hypothèque mobilière), often over a universality of property |
| Registry | Provincial PPSA registry | Registre des droits personnels et réels mobiliers (RDPRM) |
| Security over real estate | Mortgage or charge, registered at the land registry | Immovable hypothec, which must be made by notarial deed, registered in the Land Register of Québec |
| Personal guarantee | Guarantee | Suretyship (cautionnement) |
| Enforcement notice | BIA 10-day notice; reasonable notice on demand loans | BIA notice plus a prior notice of exercise of a hypothecary right under the Civil Code |
| Contract language | English or French by choice | Charter of the French Language: contracts of adhesion presented in French first, subject to exceptions |
| Credit unions and caisses | Provincial regulators, for example FSRA or BCFSA | Autorité des marchés financiers (AMF) |
| Provincial financing body | Varies by province | Investissement Québec |
Hypothecs in practice
- A movable hypothec without delivery lets an enterprise keep using its equipment and inventory while the lender holds security. It must be in writing and registered at the RDPRM to be effective against third parties.
- An immovable hypothec on a building must be granted by notarial deed and is prepared by a notary, which adds to closing costs.
- Many lenders take a universal hypothec over all present and future movable property of the business, which is the functional equivalent of a GSA elsewhere.
- Equipment lessors and conditional sellers also register their rights at the RDPRM; a search before you borrow shows who already has rights over your assets.
Prior notice before enforcement
Before a creditor can exercise a hypothecary right, such as taking possession of property to administer or sell it, the Civil Code requires it to register and serve a prior notice. The minimum waiting periods are generally 20 days for movable property and 60 days for immovable property, shorter in some cases such as abandoned or perishable property. For an insolvent business, the 10-day notice under section 244 of the BIA also applies. These periods give you time to pay, negotiate or seek advice; use them. See covenant breach and default.
Suretyship (personal guarantees)
The Civil Code gives a surety some protections by default, such as the benefit of discussion (asking the creditor to pursue the debtor's property first) and, between several sureties, the benefit of division. Lenders' standard forms commonly ask you to waive these benefits, which makes the suretyship work much like a common law joint and several guarantee. Read the waiver clauses and ask whether your suretyship can be limited in amount and to a specific loan, as described in collateral and personal guarantees.
Contracts of adhesion and the French language
Since 1 June 2023, under amendments to the Charter of the French Language, a contract of adhesion, such as a lender's standard loan agreement, must generally be presented in French first; the parties may then choose to be bound by a version in another language. There are exceptions, and the rules for some types of contracts are technical. In addition, the Civil Code allows a court to annul or reduce an abusive clause in a contract of adhesion, and to treat an illegible or incomprehensible clause as void in some cases, even between businesses.
Quebec funding bodies
- Investissement Québec: loans, loan guarantees and other financing for Quebec businesses.
- Desjardins caisses: the largest co-operative financial group in Quebec, supervised by the AMF.
- Local investment funds (fonds locaux d'investissement) and economic development services run through regional county municipalities (MRC).
- SADC and CAE: Community Futures organizations in Quebec, supported by Canada Economic Development for Quebec Regions.
- Federal programs (CSBFP, BDC, Futurpreneur) are available in Quebec as elsewhere; see financing a start-up.
Worked example: closing costs on a Quebec equipment loan (illustrative)
A Sherbrooke machine shop borrows $150,000 for a lathe and secures it with a movable hypothec on the lathe and a universal movable hypothec on the business. Illustrative closing costs:
| Item | Amount |
|---|---|
| Lender's file fee, 0.5% | $750 |
| Lawyer for the borrower, review of loan and suretyship | $1,500 |
| RDPRM registrations and searches | $150 |
| Total | $2,400, or 1.6% of the loan |
On a 5-year loan, $2,400 of costs adds roughly 0.6 points a year to the effective rate, using the method in the true cost of fees. If the shop also hypothecated its building, a notary's fees and land register costs would be added.
Frequently asked questions
Do PPSA rules apply to a business in Quebec?
No. Quebec property is governed by the Civil Code and registered at the RDPRM. A business with assets in several provinces may need both PPSA and RDPRM registrations.
Is the criminal interest rate different in Quebec?
No. The Criminal Code applies across Canada, including the 35% APR limit and the commercial exemptions in force since 1 January 2025.
Can I complain about a Desjardins business loan?
Yes. Use Desjardins' internal process, then the AMF, which can examine the complaint and offer dispute resolution. See the complaints guide.
Do I need a notary or a lawyer?
A notary is required for an immovable hypothec. For movable hypothecs and suretyships, either a lawyer or a notary can advise you.
Sources
- LégisQuébec — Civil Code of Québec and Charter of the French Language
- Registre des droits personnels et réels mobiliers — searches and registrations of movable hypothecs
- Autorité des marchés financiers — supervision of Quebec financial institutions and complaints
- Investissement Québec — Quebec government financing for businesses
- Office québécois de la langue française — French-language requirements for businesses
