Taking Security In Québec: Guidance For U.S. Lenders

When a lender wishes to take security on assets located in a foreign jurisdiction, it is often required to engage local counsel in order to ensure that its security is enforceable and that, in the event of a default, the lender may exercise its recourses in a manner similar to the way it would enforce its rights in its home jurisdiction.

Taking security in Canada is no different. Canada is divided into 10 provinces and three territories, each with its own personal property security regime. All such regimes have personal property security acts substantially similar to Article 9 of the American Uniform Commercial Code, with the exception of the province of Québec which, due to its unique history, has a civil law system rooted in the Napoleonic tradition.