Canada: Priority Of Registered Leases In Québec

Last Updated: April 13 2005

Article by James Papadimitriou, ©2005 Blake, Cassels & Graydon LLP

This article was originally published in Blakes Bulletin on Real Estate & Mortgage Financing - March 2005

Issues surrounding the registration of offers to lease and leases of real property have been the subject of a number of recent cases of interest to mortgage lenders in Québec.

Offers to Lease. The first set of cases address the issue of whether offers to lease constitute leases susceptible of registration and thus protected in the event of a sale or foreclosure of the property. In a 2004 decision, Guzzo v. Fiducie Immobilière M.C.M., the Québec superior court rejected the claim of a tenant that the purchaser of a power centre was bound by an offer to lease signed by the previous landlord, which offer had been registered against title without the landlord’s consent prior to the sale. Two recent Québec Court of Appeal decisions, Industries Ultratainer Inc. v. Rosenberg and Sobeys Québec Inc. v. 3764681 Canada Inc., have also resolved the underlying issue of whether an offer to lease constitutes a binding agreement of lease (coupled with an obligation to enter into a further formal lease agreement) or whether it is simply a promise to lease giving rise to a lease by tolerance pending the execution of a formal lease agreement. In both cases, the Court held that an offer does not constitute a lease. An offer to lease is therefore not susceptible of registration and cannot bind a subsequent purchaser of the property. By way of analogy, an offer to lease would similarly not bind a mortgage or hypothecary lender.

Priority of Registered Leases. The priority of registered leases vis à vis mortgage lenders is governed by Article 1887 of the Civil Code of Québec. The Civil Code provides that the acquirer or the person who benefits from the "extinction" of a landlord’s title may terminate a commercial lease registered after the registration of the acquisition or extinction of the landlord’s title. It is obviously of critical importance to ascertain the time at which the landlord’s title is "extinguished" for the purposes of this provision.

Private Sale. In a 2004 decision, Compagnie Trust Royal v. Pinkerton Flowers Limited, the Québec Court of Appeal had occasion to consider when the landlord’s title is "extinguished" in the context of private sale proceedings by the secured creditor of the landlord. In that case, the tenant’s lease was registered after the creditor’s security, but before the creditor had given notice of the exercise of its hypothecary rights and before the private sale proceedings were completed pursuant to the exercise of the secured creditor’s rights. The trial judge concluded that a private sale, whether by a hypothecary (mortgage) creditor or otherwise, constitutes an "alienation" and it is the execution of the sale agreement that extinguishes the landlord’s title, not the original registration of the deed of hypothec (mortgage). As the lease was registered before the execution of the sale agreement, the trial judge found that the purchaser (in this case, the secured creditor itself) could not terminate the lease.

Taking in Payment (Foreclosure). On appeal, the Québec Court of Appeal concurred with the trial court decision in Pinkerton Flowers and also went on to consider when the landlord’s title is "extinguished" in the case of "taking in payment" of the property by the secured creditor (which is similar to foreclosure in common law jurisdictions). Prior to the reform of the Civil Code, a taking in payment had retroactive effect to the date of registration of the deed of hypothec. However, the Court in Pinkerton Flowers reviewed and confirmed the effect of the provisions of the new Civil Code, which provide that the retroactive effect of a taking in payment reverts back only to the registration of the notice of exercise of the remedy, not to the registration of the deed of hypothec, and that to give effect to a taking in payment a creditor must obtain a judgment or a voluntary deed of surrender. Pinkerton Flowers reversed a line of cases under the new Civil Code which had maintained the old Civil Code jurisprudence that a taking in payment had retroactive effect to the deed of hypothec. According to the Court, none of the hypothecary remedies available in Québec will allow a hypothecary creditor to terminate a commercial lease that is registered after the deed of hypothec, but before a sale or voluntary surrender by sale or judgment.

Consequences. As a consequence of the Pinkerton Flowers decision, tenants in Québec are now afforded much greater protection and can seek to rely on this decision to prevent eviction by prior registered secured creditors which have not yet filed notice of the exercise of their hypothecary remedies. Conversely, hypothecary or mortgage lenders in Québec must be aware that they may be unable to evict subsequently registered tenants which have nevertheless registered their leases prior to the filing of notice of exercise of the hypothecary lenders’ hypothecary remedies. The onus is now on mortgage lenders to enforce more strictly their covenants from borrowers not to enter into new lease agreements without the lender’s consent.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
1 Nov 2016, Seminar, Toronto, Canada

What is the emotional culture of your organization?

Every organization and workplace has an emotional culture that can have an impact on everything from employee performance to customer or client satisfaction.

3 Nov 2016, Seminar, Toronto, Canada

Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.

3 Nov 2016, Other, Vancouver, Canada

“Risk” is the new black. It’s on the lips of every CEO, CFO, GC and board member — as it should be. Can you spot it? How do you analyze it? Are you equipped to manage it?

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.