Preservation of the right to a construction legal hypothec: What Is the Impact of a Contract Termination?

The concept of completion of work is essential for preserving the right to a construction legal hypothec. Section 2727 of the Civil Code of Québec (“CCQ”) states that a construction legal hypothec must be published within 30 days of the completion of the work. A construction legal hypothec published after this deadline is considered invalid.  

1. Principles applicable to the concept of completion of work 

According to case law, when “the scope of the work is provided for by contract, the completion of the work occurs when the contract of enterprise has been performed in full, including all work that is a logical continuation of the work expressly set out in the contract, as minor as it may be. For work that is not expressly provided for in the contract, only work that is of a certain degree of importance for the usefulness of the building can operate to postpone completion of the work.” Thus, the correction of defects or poor workmanship does not delay the completion of work, nor does non-compliance with plans and specifications. 

Moreover, there is only one date of completion of work, not a separate one for each party involved. Full performance of the work means the entire scope of work specified in the contract has been completed, even if several subcontractors were involved. 

2. Impact of contract termination on the concept of completion of work 

What happens to the completion of work when the client decides to terminate the construction contract, and the contractual work is incomplete? In this situation, what is the impact of the contract termination on the concept of completion of work in calculating the 30-day period for publishing the construction legal hypothec?  

According to case law, termination of the construction contract by the client does not change the principle set out in section 2727 of the Civil Code of Québec, whereby the completion date of the work is the starting point for calculating the 30-day period.  

Case law and legal doctrine confirm that the termination date of the construction contract does not necessarily constitute the completion date of the work. In the event of a contract termination by the client, the completion date of the work is the date when the work specified in the initial contract was completed by the new contractor appointed by the client.  
 
Thus, the construction legal hypothec is deemed valid if registered before the completion of the contractual work by the new contractor. Courts also emphasize that there is only one completion date, regardless of the number of parties involved on the site. 

However, if the client chooses not to have the work completed following contract termination, the completion date is considered the termination date. According to case law, abandonment of work by the owner or client occurs when the resumption of the work is no longer foreseeable. In this case, the date of work abandonment marks the completion date.  

Determining the completion date remains a factual question unique to each case. To assess the completion date in the event of a contract termination, it is essential that the contractor refer to the construction contract to understand the scope of the work planned and inquire about the completion of the work.  

Our Construction Litigation team can assist you in these procedures and provide the expertise needed to protect your rights.