There May Be a Hypothec in Your Future!

Barbara McClintock
(Language Update, Volume 3, Number 1, 2006, page 26)

A number of years have passed since the major reform of the Civil Code of Québec (CCQ) in 1994. How have businesses adapted to using English terms from the Civil Code, which differ from those used in the rest of the English-speaking world?

Commerce is governed by civil law—originally based on the Napoleonic Code—for individuals and enterprises domiciled in Quebec and by common law in the rest of Canada. Some CCQ terminology is unique to the province. For the translation of CCQ concepts, the legislators intentionally chose special English terms that differed from common law terms. One major difference is that the legal regime for security interests, such as collateral, liens, encumbrances, assignments and personal guarantees, only applies to prior claims and hypothecs in Quebec. In English civil law, the notions of "assignment by way of security" and "charges on book debts" are obsolete and have been replaced by the mechanism of hypothecs. However, these terms are maintained for the purposes of common law.Footnote 1

I did a quick survey of the long-term debt sections in the financial statements of various companies to see how they refer to the security held by lenders. "Mortgages" no longer legally exist in Quebec as they were replaced by "hypothecs" under the Civil Code of Québec. The expressions "hypothec" and "first hypothec" are used by Quebec-domiciled companies instead of "mortgage" and "first mortgage."

If in translating you use the word "hypothec," it may be necessary to provide additional explanations for English-speaking readers outside Quebec. When referring to one of the types of security that is now called a hypothèque in French, you can use the general term "charge," a frequently used term in common law, e.g. "a charge on property." A quick survey of financial statements reveals the expression "a floating charge on all the assets," which is not to be confused with the Civil Code term "floating hypothec" (hypothèque ouverte, CCQ Art. 2686). Privileges (privilèges) under the old Civil Code of Lower Canada (called "liens" under common law) are now called "legal hypothecs" in some cases. To protect their rights, contractors and sub-contractors working on a building may "publish" (or register) legal hypothecs, which are called "liens" in the rest of the English-speaking world.

Movable and immovable hypothecs

There are two main kinds of hypothecs, movable and immovable. Movable hypothecs (sometimes called "chattel mortgages" or "pledges" in the rest of Canada) apply to property that can be moved, such as personal effects, goods or money, whereas immovable hypothecs (called "mortgages" in the rest of the English-speaking world) apply to real property, like land or buildings, which cannot be moved. The conventional hypothec is treated differently depending on whether the property is movable or immovable and whether or not the grantor is an enterprise.

A movable hypothec with or without delivery of property (avec or sans dépossession) may be created. "Where it is created with delivery, it may also be called a pledge" (CCQ Art. 2665). Under Quebec law, the hypothecary debtor usually holds the title to the immovable, although the bank still has hypothecary rights. Under common law, the bank is the owner if there is a mortgage.

CCQ Art. 2733: A hypothec does not divest the grantor or the person in possession, who continues to enjoy their rights over the charged property and may dispose of it, subject to the rights of the hypothecary creditor.

Financial statements frequently use the expression hypothèque qui grève une universalité de biens (CCQ Article 2674: "a hypothec on a universality of property"). It is common to see a hypothec on "a universality of property," or "all property," to secure debt.

Mortgage versus hypothec

In financial statements, accountants use the usual English expressions "mortgage" or "mortgage loan" to translate hypothèque or prêt hypothécaire and related terms such as "mortgagor" and "mortgagee" for companies whose principal place of business is not in Quebec. However, a quick survey of financial statements reveals the expression "hypothecary loan" and "first hypothec on the immovable" for companies whose principal place of business is in Quebec. More than 10 years after the reform, legal documents in Quebec are now using the correct civil law terms in English, when applicable.


The French verb grever represents a translation problem, as in the phrase hypothèques mobilières grevant du matériel et de l’outillage. Although the English version of the CCQ uses "charge" as a verb, grever does not need to be translated in the above phrase because you can just say "movable hypothecs on equipment and tools." In another context, you might need to translate grever by "hypothecate" or "charge."

Think localization

Localization is sometimes required for French to English legal translations. In other words, you should determine whether civil or common law applies to the text you are asked to translate. It may not be obvious from reading the French document. Generally, civil law applies to all business transactions carried out by natural or legal persons domiciled in Quebec, that is, whose principal place of business is in Quebec. However, the author may want the English version of the document to be distributed to readers outside the province, where the civil law system is not used, so it is essential to find out whether an adaptation using common law terminology is required. It is also a good idea to add a note at the bottom of your translation explaining that the terminology of the Civil Code of Québec has been used. Criminal law, by the way, is the same across Canada.

Summary Table
French Reference English civil law English common law
créancier hypothécaire CCQ Art. 2680, et seq. hypothecary creditor mortgagee
débiteur hypothécaire CCQ Art. 2515, et seq. hypothecary debtor mortgagor
grever CCQ Articles 2665, 2672 charge, vb., e.g. Art. 2665: "The object charged;" Art. 2672: "Movables charged with a hypothec"
[Observation: or drop altogether, e.g. Hypothec on a building.]
mortgage, to
Hypothèque, n. CCQ Art. 2660, et seq. hypothec or charge 1. mortgage, n.; 2. assignment (by way of security), charges on book debts; French common law: cession; (Bijural Terminology RecordsFootnote 2)
hypothèque qui grève une universalité d’immeubles (or de meubles) CCQ Art. 2949 hypothec affecting a universality of immovables (or movables) (CCQ Art. 2949) floating charge on all assets
hypothèque immobilière CCQ Art. 2693–2695 immovable hypothec mortgage
hypothèque légale CCQ Art. 2724–2732 legal hypothec Observation: One possible translation is "construction lien."
hypothèque mobilière avec or sans dépossession CCQ Art. 2696–2714 movable hypothec with or without delivery;
[Observation: A movable hypothec with delivery is also called a "pledge." (Art. 2665)]
chattel mortgage
hypothéquer, vb.   to hypothec, charge create a security interest, to
[Observation: The term "security interest" is a common law term. Although the corresponding term, sûreté, used in French is appropriate for civil law purposes, the term "hypothecate – hypothéquer" more accurately reflects the civil law.]Footnote 3
première hypothèque   first hypothec first mortgage
prêt hypothécaire   hypothecary loan mortgage loan

Note: Scotland has a different legal system from other English-speaking countries which is based on Roman and civil law, among other things. Thanks to Hilary Robertson and Doreen Solin for their advice.

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