Family Patrimony: Public Order Protection in Quebec
The family patrimony is a fundamental legal concept in Quebec family law that directly affects mortgage transactions. Established in 1989 by the Quebec legislature, this public order regime applies automatically and mandatorily to all married or civilly united couples in Quebec, regardless of their matrimonial regime. No marriage contract or agreement between spouses can exclude the family residence from the family patrimony. This public order characteristic means the parties cannot waive it in advance, making it one of the most powerful protections in Quebec family law.
Components of the Family Patrimony
- The family residence(s), whether the principal residence or a secondary residence serving as a family vacation property (cottage, country house)
- Furnishings that serve for the use of the household in the family residences, including appliances, furniture and works of art
- Motor vehicles used for family travel, whether in the name of one or the other spouse
- Rights accumulated in pension plans during the marriage: RRSPs, RPPs (registered pension plans), rights accumulated in the QPP (Quebec Pension Plan) and any other retirement savings plan
Direct Impact on Mortgage Transactions
The family patrimony has several direct and crucial implications for mortgage brokers. First, spousal consent is required to mortgage the family residence under article 404 of the Civil Code of Quebec, even if only one spouse is the property owner. This consent must be given by notarial act. Second, during refinancing, the officiating notary must obtain the spouse's signature, even if they are not the owner or co-borrower. Third, upon separation or divorce, the partition of the family patrimony influences both parties' borrowing capacity and can modify the equity available in the residence.
Calculating the Shareable Value Upon Separation
When partitioning the family patrimony following separation, divorce or death of a spouse, the residence's net value is calculated by subtracting the mortgage balance from the property's market value. This net value is then divided equally between spouses, regardless of who is the registered owner at the Land Register. For example, if the residence is worth 600,000 dollars and the mortgage balance is 350,000 dollars, the net value of 250,000 dollars is shared at 125,000 dollars for each spouse. The broker must understand this calculation to properly advise clients in separation situations about their financing options.
Common-Law Partners and Family Patrimony
It is crucial to note that the family patrimony does not apply to common-law partners in Quebec, contrary to popular belief. Common-law partners, regardless of the duration of their cohabitation or number of common children, do not automatically benefit from family patrimony protection or the consent requirement for mortgaging the residence. They must establish a cohabitation agreement drafted by a notary to define each partner's rights over the property and mortgage. The mortgage broker should inform common-law partners of this legal reality and encourage them to consult a notary.
Practical Considerations for the Broker
- Civil status verification: Confirm the client's civil status (married, civilly united, common-law, single, divorced) from the initial information gathering.
- Family residence identification: Déterminé whether the property to be mortgaged constitutes the family residence within the meaning of the Civil Code. A secondary residence used by the family may also be covered.
- Obtaining spousal consent: Coordinate with the notary to obtain spousal consent by notarial act. Plan for this consent in the transaction timeline.
- File documentation: Document the civil status, residence status and consent obtained in the client file for the lender and for your own compliance records.
The family patrimony regime is one of the most distinctive features of Quebec family law and has profound implications for mortgage transactions that are not found in the common law provinces of Canada. Mortgage brokers operating in Quebec must develop a thorough understanding of how this public order regime interacts with matrimonial property rights, hypothecary law and the practical requirements of residential mortgage financing. Brokers who proactively address family patrimony considerations in their client interactions, including verifying civil status, explaining consent requirements and advising on the implications of separation, provide a significantly higher level of professional service and reduce the risk of transaction complications or subsequent legal disputes.
The practical implications of family patrimony rules for mortgage planning cannot be overstated. When spouses jointly own a family residence, both must consent to any hypothec registered against the property, regardless of who holds legal title. This requirement, established under articles 401 to 413 of the Civil Code of Quebec, means that mortgage brokers must verify the marital status of every client and obtain the necessary spousal consents before proceeding with any financing arrangement involving a family residence.
The partition of the family patrimony upon divorce or separation follows a precise calculation methodology. The net value of each asset included in the patrimony is determined as of the date of the institution of proceedings, and the spouse whose patrimony has the lesser value is entitled to a compensatory payment equal to half the difference. For mortgage professionals, this means that outstanding mortgage balances directly affect the partition calculation, making accurate property valuations and mortgage balance statements essential components of the dissolution process.
Mortgage brokers should also be aware that certain exceptions to the equal partition rule exist, including the possibility of reducing the equalizing payment if it would result in an injustice considering the circumstances of the marriage. Courts have applied this exception sparingly, but it remains a relevant consideration in cases where one spouse has disproportionately contributed to the mortgage payments or property maintenance throughout the marriage.