ACQUISITIVE PRESCRIPTION (POSSESSION/USUCAPIO) JOSHUA KRANE a. 921 POSSESSION relates to an exercise in fact, which corresponds to a real right. The possessor will show that he is exercising, in fact, a real right (“corpus”). The possessor must have the intention of acting as the titulary (“animus”). The law presumes (#1) animus with the establishment of corpus – the legal title can provide an explanation as to who is the owner. For example, the lease will destroy the presumption, which will 1 otherwise explain the material control over the object . a.921 DETENTION occurs when the titulary has mere control over the object without the intent to control it. A lease is an example of a detention. A lessee might appear to have corpus, but the lessee has a personal right (not simply a situation in fact). Possession is different from ownership because POSSESSION IS NOT A RIGHT. The owner does not need to act within his right, but the possessor must exercise his possession. Possession is also different from administration of the property of another (like a tutor) who appears to act as the owner, but the tutor only has the power of administration. Possession is also different from “apparent ownership” (colour of right) since the law will attach the effect of a right, even if the right is not valid. For example, a third person who acquires title from an apparent owner, rd then the 3 party’s claim will be valid, even against the legal owner. The rd effects of appearance, however, will protect the 3 party but not the apparent owner. a.922 - For possession to produce the effects that the law requires must be: 1. Peaceful, where the possessor exercises corpus without force 2. Continuous, where the exercise of corpus is active and is established after 1 year where the possessor has not been deposed in that time 3. Public, where the possessor is exercising corpus openly so that it can be noticed by others 4. Unequivocal, where the possession is clear (do several persons claim to possess the right?) The possessor is presumed (#2) to have possessed in the four qualities, therefore the burden who contests the utility must disprove one of the qualities. 1 A person cannot gain possession over a real servitude. Consider a.927 where thieves are possessors, but the thief cannot benefit from the possession since the acquisition was not peaceful nor was it in good faith. However, the acquirer from the thief can have a useful possession. Effects of Possession Good faith will enable certain effects. a.932 explains requirement of good faith possession when possession begins – meaning that possessor must have some form of a title, even if it is defective. The possessor feels that he is exercising the real right to which he thinks he is entitled, until he is informed otherwise. A possessor will be in good faith until that person is informed that their title is not valid. Where a contract is defective, and no one knows, there might still be good faith. 1. a.931 depending on good faith, the possessor can keep the fruit/income and the costs incurred to produce. If the possessor is in bad faith, the net income goes to the rightful owner. 2. a.933 the owner may have to pay an indemnity to the possessor for improvements/repairs to the property, where good faith helps to determine the disbursement. 3. a.929 explains that the possessor, after 1 year can file for an action en complainte complaining of disturbance or an action en reintegrante to be placed back within possession (which must be done within 1 year). 4. a.928 creates a presumption (#3) where the possessor is presumed to hold the very title of the real right. Most of the time the possessor is the titulary making it easier to show possession rather than title. 5. a.2910-2920 allows for the possessor to claim the title after 10 years; however good faith is not relevant. A shorter prescription is possible such as the acquisition of the right of ownership of a moveable if it is in good faith. A judgment is required to show ownership of an immovable. Therefore, for acquisitive prescription, one needs to possess the object, possess it in good quality, and fulfill the time requirement. Sivret v Giroux  Facts: An unmarried couple splits up. One spouse owns land, in which the couple built a cottage. The couple used the cottage as a secondary residence. Since they have parted company, the owner of the land denies access to the cottage to the other house. Issue: The spouse files for possession of the house as owner, and access to the land as superficiary. Can those actions be maintained? Held: Reasoning: The plaintiff is within a year of dispossession. The possession is equivocal, meaning that it fails one of the qualities required to establish possession. Therefore the spouse cannot benefit from the effects of possession. The court would find it unimaginable that people could share possession after a break up. The possession of the other spouse would be equivocal as well. However, all the defendant must do is show that the other spouse’s claim is invalid. Under a.955, the court makes a presumption that the owner of the land owns the constructions built upon it. OCCUPATION Recall a.914, 934, things without an owner belong to no one. Objects without an owner can be appropriated without occupation. Immovable without an owner belong to the state. An occupant can appropriate the object by taking it into his control to become its immediate master. Tremblay v Boivin  Facts: Tremblay goes hunting moose with his friends, where they have a right to hunt on the territory. They find a moose and shoot it. Boivin arrives on the scene and claims to have right to the moose. The defendants take the moose, alleging that they had shot animal first and that it had limped away. Issue: Who owns the moose? Held: The plaintiff owns the moose and is entitled to damages for the seizure of the carcass. Reasoning: Hunting rights can be defined as being the right to acquire savage animals through occupation. Therefore, the first person to seize such an animal becomes the owner. A hunter who hunts on land where he is forbidden from hunting may be pursued for “trespass”, but he does not become an owner. Wild animals are not fruit, and can be acquired only by occupation. Objects, which have not yet been subjected to private appropriation, are acquired by the first person who exercises control over them. A person MAY, if he/she has made an act of occupation on his/her own territory, go fetch this animal on a neighbour’s territory. However, they must prove a real act of possession, sufficiently realised. Here, it is necessary to ask which of the two groups injured the moose to the point that it could no longer escape. The defendants did not sufficiently wound the animal to then claim it. Here, the animal was sufficiently far away from the defendant to presume that it would have escaped had the plaintiff would not shot it again (and killed it). Rationale: When two persons occupy and object and claim to appropriate it, the person who occupied it first will be entitled to it, unless the defendant can rebut that presumption to show that the object belongs to him. a.938 deals with “treasure”. If the finder finds it on his/her own land, it belongs to him/her. If it is found on the land of another, one-half belongs to the owner of the land and one-half to the finder, unless the finder is acting for the owner (see Boivin). a.939-946 deal with movables lost or forgotten. Ownership of the movable remains with the owner unless the object is deemed to be abandoned or is of slight value and left in a public place; thieves cannot gain possession, but third parties in exchange (unaware successors) with a thief may gain possession. Boivin v Quebec  Facts: Divers found gold bars at the bottom of a lake. The police did try to identify the owner of the gold bars. Issue: Can the finder claim to occupy the gold bars? Held: The bars are not a treasure and the state has not claim. Reasoning: We have an owner if the thing has not been abandoned. It seems unlikely that someone would abandon/lose/forget gold bars. If the find is a treasure, then the state can claim half of the value of the treasure (applying article a.938). However, for the law to presume that the object is a treasure, it must presume that the object is abandoned, because it is buried/hidden for a long time. People generally do not throw gold bars in the lake, and the object might be stolen. The thief may have wanted to recover the gold bars at some point in the future. Therefore, the operative thing for the court to do is wait to see if the owner can be found – it seems to be the most likely hypothesis. In the court’s conclusion, the court reserves the right for the owner to recover the object. The court will enforce the delay of prescription until it has passed (10 years) for the possessor to become owner since Boivin has not title and is not in good faith. Rationale: Where we do not know if the object has been abandoned, the court can employ the mechanism of acquisitive prescription to transfer the real right. ACCESSION As the owner of movable or immovable property, the person is entitled to all that it produces and all that is joined as an accessory as stated in a.948. This right of accession is not only an attribute of ownership, it is also one of the modes of acquiring ownership. Accession in relation to what is produced by property is considered with ownership and usufruct. “Artificial/voluntary accession” occurs when the ownership of a thing involves the accession of whatever has been joined to it by human action. Artificial accession of Immovables a.951 carries that the owner of the land owns what is below the land and what is above to the land. Air/space cannot be owned. The owner of the land has the full right of enjoyment and can forbid encroachment thereupon. Should the owner be prevented from full enjoyment, the owner can stop the encroachment unless it is expropriated. Municipal laws may place limitations on height of a construction. Lacroix v the Queen  Facts: A claim is being made by the neighbours of the airport that a flight path has been established over their land. Normally, aircraft operate at a height that does not interfere otherwise. Issue: Is appellant entitled to damages on the basis that he owns not only the surface of his land but also what is above and below? Held: No. Reasoning: At the time of expropriation, the owner of the land in question, the land contained no buildings and was used for agriculture only. Since the airspace cannot be appropriated, it cannot be expropriated either. The owner of the soil does not own the space above him (based on the rulings of other foreign courts). Any buildings constructed on the land become part of the land, but does not mean that the airspace is appropriated. Rationale: By putting up buildings or other constructions the owner does not take possession of the air but unites or incorporates something to the surface of his land. The Crown could not expropriate that which is not susceptible of possession. As a point of departure, a claim could be made for neighbourhood annoyance. However, the airport is the creation of statutory authority, which authorizes the airport to operate (therefore creating the nuisance). The owner of the soil can occupy the space above and below his land, but does not own it. a.955 presumes that the owner of the land owns the constructions/tree on it. This presumption can be displaced by bringing forth a title (which would be a granting of a right of superficies). The owner of the land would be different than the owner of the construction/tree. The right can be acquired through expropriation or acquisitive prescription along with contract/succession. a.956 (and a.901) the land owner becomes the owner by accession of the materials used to construct the immovable (the owner must pay for the construction). a.957 deals with the situation where the possessor has made improvements – the owner acquires ownership, but may have to pay an indemnity (based on nature of construction & good faith of possessor). Bornage and Encroachment Bornage is conducted by a land surveyor, which establishes the boundary lines. A neighbour may compel a neighbour to determine the division line, when the land is being subdivided or it has never been divided before. This process is recorded in the register and will suggest where the line falls (will mark the line on the ground). As soon as there is a dispute, the superior court will supervise and adjudicate. Where the construction of one neighbour encroaches on the other, a.953 recognizes the right to stop the encroachment. It would be tantamount to an unlawful expropriation otherwise. Full enjoyment means that the owner can demand the demolition of the encroachment. Themens v Royer  Facts: The encroachment is 6’ on a 25’ land width, which is considerably substantial. The defendant pleaded that it was in good faith. Defendant is warned to cease this encroachment by demolishing the part of the building sitting on the plaintiff’s land. The defendant wanted the rules of possessor to apply to making improvements. The defendant offered to buy the property to solve the issue of the encroachment. Issue: Can the defendant be allowed to pay an indemnity and keep the construction? Held: No. The court orders the demolition. Reasoning: To permit the defendant to keep this land over which he erroneous built, even if paying the actual price of the land, would manifestly violate her right of ownership. Reasons of equity cannot be invoked here (under 417, 418 CCLC), because it cannot truly be said that defendant made improvements to plaintiff’s land. As well, the “good faith” envisioned in these articles cannot be other than that which results from possession based upon a title, the fault of which is unknown to the possessor. The mistake made here cannot give rise to putative title leading to possession in good faith. Although defendant acted in good faith in the ordinary sense of the word, this does not suffice to permit him to invoke the articles. It would have been easy to delimit the boundaries here, and the fact that defendant did not put him in this position. Moreover, plaintiff, acting as administrator for his sister, did not know of the construction until 14 years after its building, but that does not matter. The plaintiff does not consent merely because he does not know of the encroachment. Rationale: Where the encroachment is severe or in bad faith, the court can require the demolition of the construction and payment of an indemnity. Would Themens be decided differently? A six-foot encroachment seems considerable and thus the decision should favour the plaintiff. The possessor in good faith must have a title and does not know about it. In this case, good faith is impossible, because there is no title. Under the new Code, the defendant could claim the property via possession, since good faith is not required. Now, with article a.992, the new Code seems to give considerable favour to the encroacher, unless the encroachment in bad faith, or is severe. This provision is very limited, since it must not be severe and must be in good faith. The first paragraph seems to be contrary to the definition of ownership and the protection of encroachment. GOOD FAITH, as we have established, requires a title, but which is defective. Can good faith (a.2805), in its general sense, can we justify encroachment? There are procedures in Quebec that facilitate property marking (bornage). Accession applied to movables (a-965-970) In relation to purely movable things, accession is dealt with at a.971-975. They decide who owns the movable and how compensation to the other for the loss of his thing or for work performed is determined. 1. Movables belonging to several owners have been intermingled or united in such a way as to be no longer separable…” (a. 971) and 2. A person processed material which did not belong to him…[and] the work or processing is worth more than the material used…” (a.972). Ownership lies with the person whose contribution is most important, subject to indemnification. a.974 provides for the right of retention in favour of the person entitled to compensation. These rules are general and are followed in the absence of an agreement to the contrary. Still, a.975 maintains that the resolution of conflicts “in unforeseen circumstances…is entirely subordinate to the principles of equity.” Fortier v Pacheco  Facts: Fortier rents a truck to Pacheco who defaults on the payments and obtains a judgment for seizure. Modifications were made to the truck, as a chassis was added to the back. Fortier claims ownership of the truck and chassis by movable accession. The chassis is removable. Issue: If the chassis is removable, to whom does it belong? Held: It belongs to the owner of the truck, Fortier, but an indemnity must be paid to Pacheco for some of the value and installation of the chassis. Reasoning: The Court believed that the towing equipment belonged to the company. If the equipment was removed from the truck, it could not be used as before. The defendant changed the condition of the truck. It was impossible to return the truck in the same condition as before and this represented a considerable loss. It would be unjust for the company to be deprived of the equipment it had loaned the defendant in good faith. It would also be unjust for the plaintiff to remove the equipment from the truck. In light of the higher value of the truck it appeared that the plaintiff should pay the company $6 000. Rationale: Additional Notes: SPECIAL MODES OF OWNERSHIP Title V of the Code deals with co-ownership (indivision) and superficies. Summary – L’Indivision [Cantin-Cumyn] UNDIVIDED CO-OWNERSHIP (indivision) – several persons, at the same time, share a right of ownership [a.1010] but the property is not physically 2 3 divided , . Indivision occurs over a limited period (max 30, unless renewed) and then the property is divided. The indivision may arise out of contract, succession, marriage/civil-union (presumption of co-ownership) or co-habitation. Indivision can apply to any type of patrimonial right. Any patrimonial right can be labelled under indivision. Each titulary has a portion of the right, not a portion of the object (the object is whole). The law will presume equality between shares unless otherwise proven [a.1015]. When an indivisaires (co-titularies) plans to sell, and the price is established, the other invidisaires have the right to pre-empt the purchase. Within a certain period of time, the other indivisaires can redeem the shares from an outside purchaser. Likewise, when a share is seized, the other co-owners can pay the debt to prevent 4 the sale in court [a.1022] . Although the shares may not be equal, each co-owner is able to use the object, unless another arrangement has been made. With regard to the income, a.1018 states that the Indivision accrues the income and then the shareholders claims the income as creditors (almost like a separate patrimony); however, owners should be able to claim income right away, since they should have the right of fruit. Income, costs, and added value by accession are distributed proportionately among the indivisaires. Either the property is administered by all of the indivisaires or a manager may be appointed and entrusted with the administration. However, decisions in view of alienating or partitioning the undivided property, charging it with a real right, changing its destination or making substantial alterations to it require unanimous approval [a.1026] – meaning that one indivisaire has an effective veto. 2 These articles did not exist under the CCLC. Traditionally, indivision was seen as incompatible with the notion of ownership. The law granted one solution: a partition can always be demanded. 3 There are other legal techniques to accommodate partnerships (condominium, shareholders, partnerships, co-operatives). 4 The co-owners have 60 days to redeem the shares (after finding out about the sale) within 1 year of the sale. Is the purchaser of a share going to be bound by the agreement of Indivision? Therefore the acquirer of the share is not bound by the contract and must personally oblige himself to abide by it for movables. In terms of an immovable with a registered contract of indivision, however, when someone acquires a share, he is bound to abide by the terms of the indivision agreement [a.1014]. This is an example of a real obligation. Restrictions will likely have to relate to the property in indivision in order to acquire the real effect. Partition can be demanded any time, unless the indivisaires have agreed to remain in indivision. A partition may be blocked (see articles in Code). The normal operation of ownership occurs during a situation of superficies. In this case, the presumption that the landowner and immovable are the same is rebutted. Harel v 2760-1699 Quebec Inc  Facts: Harel wants to be declared undivided co-owner of the matrimonial home. Harel’s husband, Peeri was subject to a loan repayment and a judgment was issued against his half of the house. The house was seized and sold. Harel did not know of her legal situation until after the sale. Issue: Can Harel make a claim to half of the sale value of the house under a.1022? Held: Yes, as it was within the 1 year time period. Reasoning: An indivisiare has 1 year to act on the sale of his share to another (which is a sufficiently long period of time to discover the sale and to keep the shares within the group). The defendants claim that this sale was ordered by a court. 1022 and 1023 were designed to allow indivisaires to protect their interests by paying off debts of their co- owners. The wife had the right to acquire the share Banque Nationale had acquired from her husband by reimbursing Banque Nationale for the transfer price and expenses. Mme Harel never registered her rights and therefore she did not receive notice under article 1023. It makes no difference, however, since she can still exercise her right under 1022. Rationale: PERMANENT CO-OWNERSHIP OF AN IMMOVABLE Partition cannot be granted in these cases of co-ownership. The indivision is forced. The following cases are listed below: Common Walls There is a presumption of a common co-ownership of the common wall. The arrangement is permanent and cannot be divided. A common wall can divide two houses. Where one owner has built a wall on the property line (resting on the side of one), the other is able to acquire the mitoyenneté of the wall to rest his construction on it – akin to private expropriation. When the wall is abandoned, ownership reverts to the other owner. Meneghini v Zambito-Orazio  Quebec CA Facts: The parties owned adjoining lots that were separated by a wooden dividing wall that required major repair. A judgment ordered the defendants to pay their portion of the costs of repair fixed at $13 250. The plaintiffs seized the assets of the defendants in execution of the judgment. The same day the defendants effectively waived their right in the dividing wall. They then contested the validity of the seizures on the grounds that their debt was extinguished by their waiver of joint ownership of the wall. The plaintiffs claimed that the waiver did not relieve them of their responsibility for the costs since the waiver took place after the judgment and the seizures. No repair had been done when the application was heard. The plaintiffs claimed that, because of their failure to invoke the possibility of waiver in their defence, the defendants could not invoke it to oppose the seizures. At trial the defendants denied there they had an obligation to contribute to the repairs pleading that the wall was not a dividing one. Issue: What is the defendant’s obligation toward the plaintiff regarding the wall? Held: None, so long as the right of ownership to it is abandoned. Reasoning: The right of (co-)ownership is a real right and can be waived to oppose seizure. The judgment only declared the joint ownership of the wall and ordered the defendants to contribute to the cost its repair. The right to waive joint ownership in section 513 of the Civil Code of Lower Canada was available to any person who had the obligation to contribute to the maintenance of the wall, whatever the source of the obligation. The defendants could get out of their obligation by waiving their right to joint ownership under section 513. Rationale: By abandoning a real right over an object that is co-owned, one relieves oneself of the obligations bound to it by the arrangements of co-ownership. Groleau v SIPAM  Quebec CA Facts: Following the collapse of a wall on a neighbouring property, a City inspector inspected Groleau’s premises on June 2 1997 and advised that the wall had to be repaired. On June 13, Groleau sent a notice to Société advising that the repairs were necessary and that it had to share the costs. On June 16, Société replied that it had no intention of contributing to the costs, since it intended to renounce its common rights in the wall. The parties had begun discussions about repairing the wall in 1990 but not solution was found. Issue: What are the Societe’s obligations toward Groleau? Held: Societe had to pay part of the cost, but not half. Reasoning: The majority of the repairs done were necessary before Société began its process of renunciation. It therefore was not opposable to Groleau for most of the repairs done. Société had recognized since 1992 that (and consented) repairs were necessary. In these circumstances of urgency and necessity, where all of the co-owners admitted the need for the repairs, one of the co-owners who went ahead with the repairs in the face of the other co-owner's inaction could not be reproached for doing so and for claiming a proportional share from the other co-owners. Rationale: In an emergency, a co-owner can act to make the repairs to a dividing wall and the other co-owners are responsible until they renounce their right to it. It seems like the jurisprudence is contradictory. Common Immovable of an Accessory (Casebook p.352) Summary – Real Law of Property [Marler] Certain things by reason of an agreement or of a state of fact are destined to the perpetual service of two or more immovables, because they are indispensable accessories of the immovables they serve (e.g. irrigation ditches, passageways, courtyards, lanes, private roads, and wells.) In order to end the indivision, all indivisaires will have to end the agreement. a.1030 alludes to this case. Like a common wall, the proprietor may free himself by abandoning his right in the thing and ceasing to make use of it. Condominiums – Divided Co-ownership In a.521 CCLC, the provision stipulated that in a house where different stories belong to different proprietors, contributions to repairing and rebuilding must be done as follows: all contribute to the main walls and roof, in proportion to the value of his story; the proprietor of each story makes the floor under him; the proprietor of each story makes the stairs leading to the story. This article constituted a very rudimentary basis upon which to establish a complete regulation of all the matters necessary for the co-ownership of a building. From 1969 until the adoption of the CCQ (arts. 1038ff), very few amendments were brought to the original provisions treating the topic. To establish an immovable under this regime: 1. a declaration of co-ownership must be made by a notary [a.1059] 2. the declaration must be signed by every titulary of a real right (including accessory real rights) [a.1052]; the publicity of the declaration creates the co-ownership [a.1038] 3. the declaration must describe the fraction of the immovable – the process of subdivision must be made before the creation of the immovable is finished [a.1055, 3026] Once the declaration of co-ownership is made, the permanent legal status of the immovable is set. The obligations from this declaration are real (unless they violate the Charter of Human Rights of Quebec). This forms a legal person, calls a syndicate, to which all co-owners are a member, in charge of management. Co-ownership is divided where the right of ownership is apportioned in FRACTIONS, where each fraction contains a private, physically divided 5 portion and an undivided right to the public portions of the immovable. The right of ownership is used because ownership provides a legal incentive to ensure that the property is maintained. a.1043 states that ownership of fraction includes both divided ownership of a private portion and undivided ownership of the common portion. These portions are inseparable (a. 1048) meaning that one cannot be leased or abandoned without the other. Shares of common portions, like parking spaces or balconies, can be designated for the exclusive use of a co- owner in the declaration; however the remaining space is for common use (including left over parking) unless an indemnity is paid. a.1065 requires that co-owners seeking to rent their private fraction must notify the syndicate and the lessee must comply with the declaration. Private portions and public portions are identified via lot numbers. The fractions are evaluated in terms of relative value based on private portions. Market value is independent of relative value. The relative value is based on nature, destination, location, and dimension of the space, but not the use. The fraction is permanent unless there is an amendment to the declaration. 5 For the exclusive use of the owner (right of ownership). Fractions determine: (1) The proportionate share of the common portion (2) The voting rights of the co-owner at the meetings (3) The proportion that the co-owner must pay for expenses, operating costs and contributions to the contingency fund (4) In case of a prior hypothec on the immovable before the declaration, the fraction determines the share of the debt (5) Should the condominium be terminated and an indemnity issued (probably by insurance) then that indemnity is divided according to the relative value of each fraction. Destination of the Immovable The destination of the immovable specifies the use of the private portions. Any restrictions on a co-owner must be justifiable by the destination, characteristics or location of the immovable (a.1056). Co-owners are free to use their private portion and the common portions provided they do not disturb the rights/enjoyment of other co-owners, violate the bylaws, or affect the destination. Destination controls: 1. the use/enjoyment of individual co-owners (by the syndicate to forbid a co-owner from engaging in less than favourable conduct) 2. the restrictions imposed by the declaration or the syndicate (upon individual co-owners to restrict their rights). A change to the destination of an immovable requires the consent of 75% of the co-owners with 90% of the voting rights. Although the Code does not define destination, we can look to French law and jurisprudence to articulate the concept. EXPLICIT DESTINATION – global affectation of the immovable (as either a residential, commercial, industrial, professional, or mixed use property). The destination defines what use the co-owners may engage in certain areas. The declaration of co-ownership defines the destination, and not the syndicate. IMPLICIT DESTINATION – considers what particular features are the defining characteristics of an immovable including its location, the quality of its construction, the degree of luxury, etc. The real obligations cannot be excessive, unjustified, or arbitrary. The mechanism of destination allows the courts to consider “objectively” which limitations are justifiable. Some exclusions, such as prohibitions against noisy commercial tenants in a predominantly residential immovable would be justifiable; however, “newcomer clauses” that require syndicate approval of new co-owners or “restriction of competition clauses” offend public order and policy. Trillium Court v Johanne Ouellette  Superior Court Facts: Condominium co-owners filed an order directing Ouellette to undo the unauthorized changes made to her balcony and to restore it to its previous state. Ouellette decided to change the dimensions of her balcony without first obtaining the authorization from the administrators. Ouellette alleged that she discussed the changes with two administrators who agreed with the changes. However, the Board of Directors voted a resolution putting Ouellette in default of restoring the balcony to its previous dimensions. Despite this resolution, other co- owners modified their balcony and were not put in default. Ouellette claimed that the action against her constituted an abuse of process. Issue: Can Ouellette be ordered to undo the changes? Held: Yes. Reasoning: Ouellette was ordered to restore her balcony (a common portion) into its previous dimensions by April 30, 1999. The declaration of co-ownership clearly stipulated that Ouellette was not allowed to modify her balcony without first obtaining the authorization from the Board of Directors. a. 1056 CCQ states the imposed restrictions may be justified if they regard the character of the immovable. The administrators wished uniformity in the appearance of the building. The Board could thus regulate the changes that the co-owners wanted to bring to their balcony. The co-owners did not ratify the changes brought by Ouellette. Although the beauty/appearance of the building was insufficient to pass the judgment, if the injunction was not granted, the administrators would be inundated with different types of requests by other co-owners and would loose control over the administering of the condominiums. Rationale: Administrative Boards of condominiums have the authority to ensure order in the condominium and can make decisions to that effect. Talbot v Guay  Quebec CA Facts: Each party possesses an apartment in a building under divided co- ownership. The plaintiff receives an injunction to stop defendant from putting up an installation on his property because it blocks her view. Issue: Is the plaintiff’s request for an injunction valid? Held: Yes. Reasoning: One of the characteristics of this condominium is its proximity to the river and the possibility to have access to the river, if only a visual one. The particular advantage of the plaintiff cannot be denied to her for the sole reason that defendant and most of the other co-owners do not enjoy an identical or even equivalent advantage. The article of the declaration does not unduly restrain the rights of the co-owners, because it prevents all constructions, plantations, or installations which serve as an obstacle to the widest possible view, which is a characteristic and an aspect of the destination of the whole immovable. Rationale: The character of the immovable as a whole will help to dictate which actions taken by a co-owner will change the destination/character of the building as to impede the enjoyment of the building by others. Bergeron v Martin  Superior Court Facts: The plaintiff filed an injunction against defendant to stop her day care activities. The plaintiff complained that the defendant’s clients used the reserved parking, blocked access to the dwelling and that the daycare was noisy. The defendant had confirmed upon purchase that she would be entitled to set up a daycare. The plaintiff claims that the defendant’s temporary play structures in the courtyard, to which the plaintiff overlooks, were not approved. Issue: Is the plaintiff entitled to an injunction? Held: Yes, after 60 days. Reasoning: Common areas of a divided co-owned property can be used by everyone. Although co-owners can enjoy the premises freely, they must by law (a.1063) respect the rights of the other co-owners and the quality of the property. In the declaration of co-ownership, the building is designated for residential use only. However, the defendant has the right to use her condo as she pleases. Under a.1065 the court recognizes that there is a limit to one’s own enjoyment should that enjoyment interfere with that of the others. The fact that the other co-owner did not complain does not mitigate the problems of the plaintiff (like nuisance cases). When a daycare is established in a co-owned residence, the residence must be adapted to meet its needs, requiring the approval of the co- owners. A daycare operates like a business and not simply as a baby- sitter, since it requires organized and planned interaction with clients. The claims made by the vendor are not enforceable (invitations to buy). Rationale: Where the activities of a co-owner impact the enjoyment of another as to alter the destination of the immovable, then the other can request that those activities be altered. Kilzi v Syndicat du Boul. L’Acadie [SBA]  Quebec CA Facts: Kilzi an his family own 8 units in the condo. Kilzi wants to rent some of the units for long-term and short-term leases. Previous renting had occurred in the building, but as the building became a condo, the “neighbourhood” quality of the building became more stable to the benefit of the co-owners. By renting, Kilzi threatens that stability. Issue: Is Kilzi entitled to rent? Held: Yes, in part, but only for long-term (1yr+) leases. Reasoning: Although the act of co-ownership prohibits co-owners from running commerical enterprises out of their units, the agreement does not prohibit the renting of units, and even recognizes the responsibility of renters by ensuring that the co-owner sign a guarantee on their behalf. The defendants claim that renting would change “the destination of the immovable”. The court recognizes that this term is vague in meaning but that it is central to the determination of the rights of co-owners with respect to their own units balanced against the rights of the others in the collective. The issue then becomes: does renting one’s unit alter the destination of the immovable? A renter who uses the unit for residential purposes does not seem to interfere with the right of enjoyment of the other co-owners if the renter abides by the rules of the condo. The building is a calm and quiet residence, where short term renting would tend to disrupt that quality of the building. Rationale: Short term leases would affect the stable residential destination of the immovable. Wilson v Syndicat Le Champlain  Quebec Superior Court Facts: The syndicate modified the declaration of co-ownership to restrict certain animals from the public and exclusive portions of the condo. Issue: Can the plaintiffs seek an annulment of the change? Does the syndicate have the right to prohibit animals? Held: Yes. No. Reasoning: The defendants are not asking to annul the declaration, but rather to annul the modification to the declaration. The state of the law regarding destination of condos draws its basis from French law. Givord defines destination as: the conditions that compel a person to become a co-owner, including the nature of the agreement, the physical characteristics and the social situation of the immovable (genre of the immovable). Quebec Civil Law Ownership, as defined by a.947, is the right to freely enjoy, use, and dispose of property. Pierre Beaudoin calls co-ownership “quasi- absolute” meaning that there are limits to the exercise of the right. The court holds that the rights of the individual co-owner must be given a large/liberal interpretation. The concept of destination is meant to protect rights of individual co-owners. Vallee-Ouellet’s construction of destination: objective elements (situation/construction/luxury of immovable), subjective elements (conditions under which a co-owner would have bought the fraction – using objective criteria), collective elements (general interest of the proprietors). The right to have animals is part of the use and enjoyment of the condo. The residents want to be comfortable. There does not seem to be a link between preventing domestic animals and fulfilling the destination of the condo, as a luxury residential apartment. Subjectively, the plaintiffs added that domestic animals were allowed for an initial period of 13 years until changes to the rules. Therefore, this rule seemed to function for that time to protect the interests of the collective and therefore a stricter rule seems unnecessary. Rationale: The destination of the immovable should be assessed according to the objective, subjective, and collective elements. Only 1056 gives the criteria for the action of a syndicate since by itself, the right of ownership contains no restrictions. When the syndicate takes action to enforce the declaration, the syndicate must demonstrate “serious and irreparable prejudice” (a.1080). The syndicate/co-owner may apply for an injunction to resolve the prejudice. However, if someone is prevented from enjoying right of ownership, this should be sufficient to warrant action (a.976, a.1016). In both cases, serious and irreparable damages do not seem to be necessary. The 1080 regime does not provide for compensation – see a.752 of Code of Civil Procedure. “Serious and irreparable prejudice” seems to be appropriate for the forced sale (expropriation) a recalcitrant co-owner. Can a new co-owner claim to be bound by the real obligation (declaration) without having read it? Yes, provided it is registered. There is a presumption that a declaration is registered it is known (a.2941). The fact that the activity is permitted by law does not impact the violation of the rules of the condominium. In Bergeron, a day care is a legal activity, but it disrupted the enjoyment of another. Likewise, even if only one co-owner complains, and others do not, it is not a factor in the assessment of issue. The legislator could have structured the condominium where the occupants are shareholders of a company, with the right to occupy an apartment. In this case, the occupants have a personal right of enjoyment (similar to the right of a lessee). As a debtor-creditor relationship, the owner may decide on the content of the exercise of the personal right (which allows for more limitations and overrides the destination requirement in 1056). Again, the distinction between real and person rights appears. Management and Maintenance The co-owners constitute a legal person, called a syndicate, to manage the immovable. This legal person is created by the Code and not by incorporation (a.298-364). The syndicate has a patrimony (a.1070-1083). The immovable (private or public portions) is not in the patrimony of the syndicate, but the instruments of service/repair, the condo fees and contingency fund are. The syndicate may acquire a fraction of the immovable; however, the common portion cannot be separated. The common portions referred to in a.1076 relate to common portions outside the immovable and acquired by the syndicate. The obligations/liabilities include: costs to administer the immovable. The syndicate of co-owners can have general meetings at least once a year (a.1087-1103). The Board of Directors (a.1084), which only implements the decisions of the immovable and enforces the declaration/by-laws. The Board may delegate responsibility to a manager who administers the property of another. The use of an immovable might be shared by several co-owners (timesharing). Simple indivision (undivided co-ownership) will apply to this regime. This regime must block the possibility of indivision, by stipulating 30 years (maximum under the Code). Right of Superficies (P.386-388 DO NOT READ.) a.1110-1118 outlines the regimes for the right of superficies. This is a new article. The indirect reference to owning of land and what is above/below unless presumption is rebutted. Marler The CCQ codified what the doctrinal writing and jurisprudence regarding the right of superficies. Superficies is ownership of works, constructions, plantations on land of another. The SUPERFICIARY is the owner of the construction and the owner of the land is the owner of the sub-soil (tréfoncier). This amounts to a derogation from the presumption of singular ownership and accession of construction (a.951, 957). Immovable real rights are opposable to third parties. Marler speaks of superficies as a type of dismemberment, but now we call it ownership with a personal servitude. Morin v. Gregoire  Facts: Gregoire, the defendant, built a house on his brother-in-law’s land, with his verbal permission. The promise was gratuitous. Morin, the plaintiff, wants his brother-in-law off his land. Gregoire claims that they had a tacit agreement of superficial ownership. Issue: What is Gregoire’s legal right to the house? Held: Gregoire owns the house. Reasoning: Morin claimed that he did not renounce his right to the land, but that he simply he put up with Gregoire’s presence. However, court found that he renounced a right by giving permission for the chalet to be built. For a contract of gift to be legally binding: it must be notarized (1824 CCQ) The court holds that the transfer of the right was by natural obligation: binding in conscience, for relationships of proximity, like a family. Where parties act upon natural obligation they act in a permanent manner. Therefore, assuming that the agreement is binding: we can have two possible situations – one of ownership via superficies, one of servitude. Although ownership of land entails ownership of what is above and below it, this presumption is rebuttable. The court finds a tacit agreement for superficies and it considers: payment of taxes, 6 construction material, fencing, etc. as indications of ownership. Rationale: The right of superficies is recognized in Quebec. 6 Gregoire could have argued good faith possessor and entitled to compensation under accession, but he wants to stay on land and is not interested in compensation. Superficies used to be considered as a dis-membership of ownership in the former Code, but now, we consider superficies as a mode of ownership akin to indivision. The language of superficies is now based on the language of “servitude” – the relationship between two pieces of land. If we carry this application, we will limit the application of superficies, but the drafters felt that they had to depart from this analysis. Marler does not speak about servitudes. The essential characteristic is meant to be perpetual, however, the Code (1112) allows for superficies to be temporary. At termination, the tréfoncier can acquire the construction when the term (right to use the land) ends. Ownership is not terminated, but the right to keep the immovable on the land will expire. Ownership of the construction is not extinguished, only the servitude. The relationship between the superficies and the owner of the land, seeks to dismember the ownership of the land of the tréfoncier. A right of superficies cannot be granted until a construction is placed on the land. In 1110, the “object of the right of ownership”, we can presume that under article 951, the owner of the land is presumed to own the construction above it. Therefore, the owner of land/building can sell owner of land/building but allow the building owner of the building to have a right of superficies. Permission to build also amounts to the granting of a right of superficies (Morin), however, under article 1110, is there a right of accession? No, accession is a mode of acquisition, but by registering the real right in the immovable, the superficiary is protected. If no term is granted in the issuance of the superficies, the term will be perpetual. Stone v Desjardins  Quebec Superior Court Facts: Stone received permission to build a garage on government land. The government authorized a right of superficies. Issue: Is Stone’s contention that the hypothec on his garage is invalid justifiable? Held: No. Reasoning: The hypothec was registered on the immovable garage. Under a.1101, Stone is the titulary of the right of superficial ownership. The forestry law construes Stone as the owner. Rationale: A right of superficies is granted before the garage is built. This amounts to a transfer of a real right of enjoyment (personal servitude) from the government to Stone until the building is built. A right of superficiary can extinguish by non-use or renunciation, where the land remains empty with no construction – this is called extinctive prescription (after 10 years). The bare owner would benefit from this extinction. If there is a construction and it is not used, then ownership of the structure could be transferred via acquisitive prescription to another. Can a superficiary be a possessor? Sure, the possessor can have a “title” so long as the possessor is exercising a real right in fact. The superficiary would have possession over the building acting as “owner” and also possession over the land as “superficiary”. Real servitude cannot be acquired through acquisitive prescription (1181). Additional Notes: 1116. At the termination of superficies, the subsoil owner acquires by accession ownership of the constructions, works or plantations by paying their value to the superficiary. If, however, the constructions, works or plantations are equal in value to the subsoil or of greater value, the superficiary has a right to acquire ownership of the subsoil by paying its value to the subsoil owner, unless he prefers to remove, at his own expense, the constructions, works and plantations he has made and return the subsoil to its former condition. DISMEMBERMENTS A dismemberment occurs when two persons have a real right on an object, but those rights are different. In a situation of undivided co- ownership, both rights in the object are the same, meaning that it is not a situation of dismemberment. Dismemberments result in either a personal or real right of enjoyment tied directly to the object. Usufruct – involves the right of use and enjoyment, with an obligation to preserve the quality and quantity of the object by maintenance, the exercise of physical control that approximates ownership for a temporary period, without changing the destination of the object. The usufruct approximates ownership during its existence, and that is why it is 7 temporary. Where a dismemberment in a title is unclear, the usufruct becomes the default juridical consideration. Laroque v Beauchamps  Facts: St Denis left his wife, Beauchamps, a usufruct on his house upon his death, subject to paying his ex-wife $100/month. The plaintiff lent the owners of the building some money as a hypothec. She got a court order to declare her co-owner. Laroque wants to remove Beauchamps from the property. Issue: Is Beauchamp’s usufruct valid? Held: Yes. Laroque cannot expel Beauchamps from the property. Reasoning: It was in place before the loan was granted, therefore none of those proceedings affect it, and there is no other reason that it should be denied. The usufruct will last until Beauchamps dies. She must still pay the due on the property to the bare owner (real obligation). Rationale: Alienation by one titulary of a real right will not affect the other. A creditor can only seize the right that is hypothecated. At the end of the usufruct, the usufructuary can recover some of the cost of the additions made to the property but not much (a.1137 and 1153). The usufructuary has a real obligation to preserve the substance of the property by maintaining, and must abstain from acts that decrease its value. Dismemberments may be forfeited by endangering the right of the 7 Although usufructs can exist on other objects, the scheme was based on a dismemberment of an immovable real right. However, a usufruct can apply to a personal right and an intellectual right as well. bare owner. However, the Code does not compel either the bare owner, 8 nor the usufruct, to make major repairs. The usufruct must also pay all of the taxes/charges on the property. Banque Nationale v Gravel  Facts: In 1979, Gravel sells her house to adoptive daughter for $1, but retains (for life) a right of habitation. In 1982, the Bank obtains judgment against her, and the judge declares a hypothec on the house and orders its sale to satisfy the debt to the bank. Defendant contests this sale, saying that her right to habitation must be respected. Bank recognizes the opposability of the right of habitation, but claims everything else is a personal right. Issue: What is the nature of her right? Held: It is a right of habitation. Reasoning: We have an act of sale which creates the real right of habitation. Furthermore, the parties expressly agreed that taxes and other charges arising from the house were the obligation of the buyer. Gravel, therefore, can live in the house and enjoy its amenities as part of her real right. Considering all of these factors, it appears to the Court that the intention of the parties was to furnish the seller with an occupation for life and that this would be an obligation entirely upon the acquirer. Rationale: The right of habitation is a manifestation of the right of use and is opposable to others. At the end of the usufruct, the usufruct extinguishes and the full right of ownership is re-assumed in its full capacity. Emphyteusis - The CCLC, used the terminology “emphyteutic lease”, “lessee,” and “lessor”. In English, the term “emphyteutic lessee” remains for the person, but all references to the lease have been eliminated from the French text. It was imported from the feudal system where there was no distinction made between real & personal rights. This terminology is associated with the tenure system. In the CCLC, on the one hand, the contract considered the lessee as the temporary owner, but the bare owner could oversee the enjoyment of the lessee, creating an ambiguous situation, since the restrictions appeared 8 Does the risk, under a.990, get shared with the usufruct for damage as a result of the ruin of an immovable? more like a debtor-creditor relationship. Although the right in the immovable is “conveyed” – but this does not mean that an emphyteusis involves a transfer of ownership, only the right of emphyteusis is alienation of part of his right. Remember, all property can be “conveyed” or “transferred” so long as the right of ownership is not transferred. The CCQ resolves this ambiguity by calling emphyteusis a dismembership. Emphyteusis is necessarily a real right in an immovable and temporary (between 10 and 100 years). Historically, the lessee was obliged to ensure the productivity of the agricultural land. Today, it is a means of financing land-development, where the owner of the land does not wish to develop the land, but a developer is not in a position to purchase. a.1195 – like the usufruct, the lessee is getting the full enjoyment (use and fruit) of immovable. However, the lessee has the real obligation to increase the value, which distinguishes the usufruct from the emphyteusis, who must make repairs and invest in the immovable. This appears to be an onerous contract, unlike a usufruct which is likely an gratuitous contract. The lessee benefits from the increase in the value during the emphyteusis, while the bare owner recovers everything. In the end, the bare owner will acquire the construction that he does not have to fund. Emphyteusis is still an onerous contract, because payment, either pay annual payments or lump sum. However, if emphyteusis can be created by will, then it seems to conflict with the condition of onerous contract. The payment of the due acts as a recognition of superior domain of bare owner – not acting as an owner and likely cannot possess as owner. The contract is the title that can dismiss claims for possession as owner. In Westboard, the court had to consider who owns the immovable? The contract had not constituted an emphyteusis. The courts held that this was a debtor-creditor relationship and not a real right in the immovable. The whole financing of the operation collapsed, since a hypothec can only be issued on a real right. The substance of the real right can be found in the contract. Alta Mura Construction v Societe des Parcs  Facts: The province grants an emphyteusis on public land. The lessee’s business is not profitable and argues that the hypothec on the construction is unseizable. Issue: Is the right of emphyteusis seizable? Held: Yes. Reasoning: The court rejected the claim that the crown land is not seizable (public domain) and should extend to the right of the emphyteusis. The emphyteusis is a real right, meaning that it is property. That property is registered as a separate real right from the bare ownership in the immovable – such that the two rights exist simultaneously. It also rejected the claim that the emphyteusis was a product of a gratuitous contract with a stipulation of inalienability and therefore it is unseizable (a.1212, a.1215). If the contract is in the will, the legacy has the charge. The disappearance of the annual rent does not render the granting of the emphyteusis gratuitous. Rationale: The contract of emphyteusis is an onerous contract. Emphyteusis are also seizable by its creditors. HLP v Beauport  Facts: Beauport wanted to apply the municipal transfer tax as a transfer of the right of ownership, basing its opinion that the emphyteusis lessee owns the construction on the land and the lessee and owner would have a superficies. Issue: What is the nature of the right on the construction that he builds? Held: It is an emphyteusis. Reasoning: Some authors would hold that the emphyteusis lessee would be the owner of the construction. The court rejects the superficies during the period of ownership. a.1110 provides for the manners for establishing superficies: division of the right of ownership, renunciation of the right of accession, transfer of the right of accession. When someone dismembers their right of ownership, the bare ownership does not renounce the right of accession, as the right of accession is a benefit retained by the bare owner (who acquires the construction once the emphyteusis expires. Rationale: Ownership of the immovable and that which is incorporated to the immovable belongs to the bare owner. Sunlife v 137578 Canada Inc  Facts: Sunlife financed the construction of a lessee. Sunlife chose to take the immovable in payment of the hypothecary debt. Issue: Is the creditor, as titulary of the right, bound by the real obligations? Held: Yes. Reasoning: The contract stipulated that the lessee could not terminate or abandon the lease before the expiration date. This condition displaced the articles of the CCQ that allow a lessee to terminate his right. The lease also stipulated that the lessee’s creditors can take possession of the immovable – but in doing so, they must make good on the default. The contract also stipulated that the lessor can have the hypothec cancelled should the creditors refuse to perform. Sunlife, as hypothecary creditor, assumed both the rights and obligations of the lessee when Sunlife exercised its right of preference. Sunlife assumed the role of lessee instead of its debtor, Metro, and it cannot renounce the contract. Rationale: A creditor who acquires the right of the lessee has the same obligations as the previous lessee. 9 Real Servitude [a.1177] – a servitude is charged on a servient immovable (under a.900 such as building, construction, land, or plantation) in favour of another dominant immovable belonging to another owner. The charge represents the dismemberment and it becomes part of the title. It must be registered in order for it to be opposable for others who acquire the dominant land. The charge must benefit the dominant land, and not necessarily for the owner. Personal servitudes do not require ownership of an immovable. Once ownership over the dominant land is ceded, the former owner cannot benefit from the servitude – as the servitude is tied to the benefit of the dominant land. [a.1182] states that servitudes are not affected by the transfer of ownership of the servient or dominant land. The servitude can be a perpetual dismemberment failing a clause that sets the expiration of the term. A servitude can be extinguished by extinctive prescription. Real servitude is an “accessory” to the ownership of the dominant land and therefore it can last as long as the ownership does. A debtor of a personal right relationship cannot abandon his obligation, whereas the servient owner may abandon his right of ownership. [a.1185]. The owner of the servient land, charged by the title with making the necessary works for the exercise and preservation of the servitude, may free himself of the charge by abandoning the entire servient land or any part of it sufficient for the exercise of the servitude to the owner of the dominant land. Summary – The Law of Real Property [Marler]; [Mignault] No servitude can be established without a “juridical” title [a.1181]. In establishing a servitude, the servitude must consist of a description of the dominant land, the servient land, and the nature of the service. The servitude must be clear/unambiguous to show which land is dominant and which land is servient. 9 see p.196, 197 on abolition of feudal tenure The court will presume that once a servitude is granted, all that is necessary to fulfill the service will also be granted, but the owner of the 10 dominant land will be presumed to pay expenses. A servitude may come into being when a land is divided and one partition is alienated. A servitude pertains to a “service” on the other’s land, such as a right of passage. A servitude never requires a servient land or its proprietor to do something. A servient land will generally suffer from the dominant land (but will not have to do anything). The servient must not obstruct the right of the dominant such that the dominant cannot exercise his right. a.1177 states as follows: (1) The charge requires the servient owner to tolerate certain acts of use (positive servitude by the dominant owner), or (2) The charge requires the servient owner to abstain from exercising certain rights of ownership (negative servitude on the servant owner). Therefore, an obligation on the servient owner cannot qualify as a real servitude. The abolition of feudal tenure now exclude any obligation to act on the owner of the land. These servitudes are negative in character since they do not require the servient owner to do anything. Contiguous property is not a necessary requirement, but is generally the case. A servitude can exist by destination, where one owner alienates part of his land to another but maintains a servitude on the alienated lot. One cannot acquire a servitude by acquisitive prescription (possession). It must be formed by a juridical act. The title must be valid (cannot be defective). Auger v Grenier  Facts: Auger sold land to Grenier on the condition that the land preserve the residential character of the surrounding environment. The service must be granted to the land – this excludes personal servitudes and obligations. Issue: Is the stipulation a servitude? Held: No. Reasoning: 10 The servitude may stipulate an obligation on the servient owner to perform an act to facilitate the servitude. This is an accessory obligation on the servitude [a.1184, 1185]. For example, the servient landowner may be required to clear a path for the dominant owner. This is another example of a real obligation. The title will indicate whether a condition constitutes a servitude. It is up to the person claiming the servitude to prove its existence. The only indication in this title that would suggest a servitude was perpetuity. The condition is a personal obligation between co-contractors that affects the use of the lots. Should a subsequent buyer down the chain of title break with this obligation, the plaintiff can file for an injunction or for damages, but this has nothing to do with a service in his neighbour’s land. Rationale: Servitudes are charges to the land. Perpetuity is not sufficient to establish a servitude. Simply because a condition is said to be a servitude does not make it so. Cadieux v Hinse  Facts: Cadieux, le requerant, demande the droit d’acheter le lot 16, contigue à un lot que lui appurtenant. Cadieux et Morin se sont engages dans un contrat qui stipule que si une des parties veut vendre son lot, elle doit proposer à l’autre l’achat de ce lot à un prix inferieur à la somme convenue (right of pre-emption/first refusal). Morin a loué son lot à l’intimée, Hinse, pour une durée de 99 ans. Cadieux demande l’annulation de ce bail, pour pouvoir acheter le terrain de Morin. Issue: Est-ce que le contrat confère un droit reel (servitude réelle) ou un droit de créance/personnel entre les deux parties? Held: Le contrat confère un droit de créance. Reasoning: Le juge explique qu’une servitude réelle existe entre deux immeubles. Alors si Morin ne propose pas la vente, Cadieux ne peut pas user de son droit. Le benefice est indirect pour l’immeuble – correspondent à un droit créancier. Parce que le contrat n’indique pas les autres forme d’alienation comme la location, Cadieux ne peut donc pas se valoir du terrain. Rationale: First right of refusal is a contractual obligation and not tied to the land. Rather, it is an obligation linked to another person. Whitworth v Martin  Facts: The appellant and respondent were owners of neighbouring properties, neither of which had access to a public road. However, both parties had for a long period of time used a private road, the Upper Road, as a means of access. In order to reach his property from the Upper Road, the respondent had to traverse the appellant's property, which he, and previous owners, had been doing for many years. In 1988, the appellant cut off access to his property. The only way for the respondent to then access the Upper Road was by foot, requiring him to leave his car on another neighbour's property. Issue: Is Martin allowed to restrict access? Held: No. Reasoning: The lower court found a right of way for the respondent on the basis that his property was effectively enclosed under section 540 of the Civil Code of Lower Canada. The appellant argued that the respondent's property was not completely enclosed and that a right of way to a private road was not protected under the Code. The trial judge was correct in concluding that the respondent's land was effectively enclosed. Land did not have to be completely inaccessible to be considered enclosed for the purposes of section 540; access merely had to be difficult or impracticable, which it clearly was. The Code protected access not only to a strictly public highway, but also to roads used by the public. Rationale: A servitude need not exist to provide access to a public road. Critique: The court held that as the access road had been used for over 30 years, a right of way had been established by acquisitive prescription – this is not possible under the Code. Metro-Richelieu v Standard Life Facts: Sun Life financed a shopping centre with a hypothec. The shopping centre entered into a contract with Metro, with a provision that included a prohibition on the part of the shopping centre to allow other grocery stores (restraint of trade clause). Metro claims that the clause is a real servitude opposable to the shopping centre’s creditor, Sun Life. Sun Life contends that the provision is a personal right that is not opposable. Issue: What is the nature of the provision? Held: Personal right. Reasoning: The court must look at the nature of the charge to determine whether the provision qualifies as a real servitude. Finding that it did not confer a benefit on the land (linked to the personality of the owner), the charge was a personal right relationship between owners. The provision conferred a benefit for Metro, but as owner of the grocery store and not on the land itself. Once the land becomes used for something else, the provision would not apply. Since Sun Life was not in privity of contract with Metro, the obligations do not extend to it. Courts have generally tried to limit non-competition clauses, which are contrary to public order. Real servitudes that are perpetual do not place temporary or spatial limits on the competition. As Sun Life took the mall as payment for its obligation, Sun Life becomes proprietor/owner. The real rights registered before Sun Life’s hypothec are opposable to Sun Life; however, personal rights are not. Rationale: A real servitude must confer a benefit on the land. The owner of the land would benefit indirectly from the servitude. The owner of the dominant land cannot compel the owner of the servient land to perform an active obligation unless it is accessory to the service. Additional Notes: Real servitude does not fit with the characterization of the superficiary. The owner of the superficiary must have some right to the land to keep the building there. Does the right to use the land fall within the realm of real servitude? This seems to be a condition of keeping the construction, as it does not benefit the construction, as otherwise the regime of superficies would fall apart. A superficiary seems to have a right of enjoyment on the land. a. 1193: If the mode of the servitude is not followed on the ground, and another manner is carried out, that manner can be prescribed. After 10 years of doing the servitude differently, then the servitude will be said to be effected that way. In Whitworth, this manner of accessing the public road could not be modified since the prescription period had transpired. Courts will be very hesitant before finding for a real servitude – because it imposes a permanent restriction on ownership. Courts will tend to find lesser characterizations (personal servitude, personal right) as not to limit the debtor’s right of ownership (see Auger). Are there numerous clauses of real rights? Since exclusive ownership is thought to confer all of the benefits of the object to the owner, any other real rights would seem to be lesser rights (dismemberments) Real Servitudes Continued a. 1193: If the mode of the servitude is not followed on the ground, and another manner is carried out, that manner can be prescribed. After 10 years of doing the servitude differently, then the servitude will be said to be effected that way. In Whitworth, this manner of accessing the public road could not be modified since the prescription period had transpired. Courts will be very hesitant before finding for a real servitude – because it imposes a permanent restriction on ownership. Courts will tend to find lesser characterizations (personal servitude, personal right) as not to limit the debtor’s right of ownership (see Auger). The right of way (a. 997) seems to impose a real obligation on the owner when the other’s land is enclosed. Are there numerous clauses of real rights – personal servitude? Since exclusive ownership is thought to confer all of the benefits of the object to the owner, any other real rights would seem to be lesser rights (dismemberments). a. 405 of the CCLC articulated the structure of real rights (either ownership, a personal servitude, or a real servitude). It would seem like it might be possible to recognize real rights of enjoyment that are different than usufruct, use/habitation, emphyteusis. Is the right of the superficiary in the land a real right of enjoyment? The following case highlights how the regimes in the Code are not strict – and they can be modified. We saw that in the Gravel case, the court recognize that the payment of charges were on the bare owner, when they are normally on the user. Matamajaw Salmon Club v Duchaine  HL on appeal from SCC, QCKB Facts: The Matamajaw river is non-navigable (title grant predates 1918). No duration was expressly stated in the contract. Stephen transferred his land to Blais in a contract with the condition that Stephen retain the fishing rights to it perpetually. Those rights were transferred to the appellant MS Club. Issue: What is the nature of the fishing right? Is it transferable? Is it perpetual? Held: It is a perpetual real right, akin to ownership. Reasoning: This was not considered a personal right, since the contract of sale/exchange stipulated an exchange of real rights, which excludes a lease situation. Defining the Nature of the Real Right At the lower court level, the court found that the right constituted a perpetual dismemberment of the owner’s real right of ownership. Iddington, dissenting at the SCC level, held that it was a perpetual right (akin to ownership or a perpetual real servitude) because of what the parties had paid for it and because this arrangement was what the parties had intended. The Code provided a mere framework or convention for the system of real rights, but it is not absolute in its enumeration of them. At the Privy Council, the court held that land and the fishing right were separate subjects, each capable of being owned. The Privy Council looks back to pre- abolition of tenure (it did not take into account the consequences of the adoption of the Roman concept of ownership). Title to take the fish is akin to take the product of the river. As a result, the fishing right is like a right of ownership and that regime gives perpetuity and transferability. Rationale: Quebec jurisprudence, through an interpretation of silence in the CCLC, revealed that non-numerated real rights can exist in an object, distinct from personal servitudes, in that they are perpetual. Critique: Normally, we consider that a person cannot hold a perpetual dismemberment because it is too large an encroachment on ownership. The majority of the SCC held that it must be a right of enjoyment (usufruct), because it was assignable to Stephen but it should have extinguished upon his death as does a usufruct. The court excluded both the real servitude and personal right (since it was transferable by the creditor without debtor’s consent). Ownership must be a jus in re, and must bear upon a material thing. We know that the provision does not create a real servitude since it does not establish a benefit from a particular land. The JCPC does not account for the abolition of tenure system or the framework of the civil law. The majority of the SCC also held that the owner of the land does not own the fish. Fish are not fruits, as they are res nullius. One cannot establish a personal right of use/enjoyment, when the right is not exercised on collection of the fruit. Therefore, the provision seems to establish a right to use the property for fishing for life. A usufruct is supposed to have the use and enjoyment of the 11 property. It is much more extensive than the limited right of the immovable in this case. See p.100 – Mignault, a majority justice, who put forward a position that a limitative enumeration of real rights. For him, it is the only manner for him to recognize the right in this case as a real right. The civil law may now have to accept the perpetuity of a usufruct of fishing. The real right must bear on the object – being the bed of the land and the bed. It seems that the right is really a real right of enjoyment of the land to fish. Because the right to enjoy the right is so limited, perpetuity maybe acceptable since it does not preclude with the owner’s right in his land too much and the policy reasoning of de facto ownership does not apply. Quebec (P.G.) v Club Appalaches Facts: QC expropriated some land on which CA had been granted hunting and fishing rights and the necessary access rights. Issue: What is the characterization of this right? Held: It is a real right of enjoyment. Reasoning: Is it possible to create a perpetual real right of enjoyment? Yes, however, the rights of usufruct are generally not perpetual because (1) the right of usufruct being so extensive, a perpetual right of usufruct is basically ownership and (2) the default position of dismemberments is 99 or 100 years maximum. The right can be extinguished by non-use – whereas a right of ownership is not extinguished by non-use but it is transferred. Rationale: Fishing rights, if granted as real rights of enjoyment, are personal servitudes (right of enjoyment) and therefore it is transferable. Real obligation – the titulary of the real right is under an obligation so long as the titulary exercises the right. Real obligations form part of the title. Real obligation 11 The right of use is not transferable. are owed to “real” creditor, who is also the titulary of real right (for example, the owner of a dominant land). These tend to facilitate the relationship between titularies of real rights. Publicity of Rights a.2934 all personal and real rights in an immovable must be registered. This regime is not susceptible of modification for public order. Publication of right allows them to be opposable against third parties and gives them effect. Only with a condominium does publication give effect to validity. A registered titulary is presumed to know other rights already registered. Trusts People can create a trust to relieve children, those of unsound mind, and others from the burden of managing property. A trust separates the administration of the property from its enjoyment. In common law, neither the trustee nor the beneficiary owns the property, although each have an interest in it. The trustee holds the legal title and the beneficiary holds the equitable title. Generally, the trust is equated with the fund and the trustee can administer the property (and can even sell the land) so long as the fund is retained. In civil law, it was left to the court to decide what the legal situation of the trustee and beneficiary were. To make a trust under the CCLC: (1) a.981a: property is transferred from the settlor to the trustee. (2) a.981b: the trustee is an administrator (seems to be like a real obligation). (3) a.981d,e: that the trustee is owner without abusus and can be replaced (the ownership is not “absolute”). The powers do not transfer at death. (4) a.981g: that the trustee may be remunerated, where owners are generally not paid to be owners (5) a.981i: that the trustee is not personally liable. It seems that there is a big gap between having title and all of the aforementioned articles, which do not correspond to ownership per se. The revision of the Code involved creating a proper regime that could function with the existing regimes, such as ownership, in civil law. The Code expanded its conception 12 to allow the trust to exist in situations other than gift or will (but in onerous situations). Why did Quebec not adopt the standard of a legal person and adopt a separate patrimony? Corporations are created with a measure of formality and legalism, which lawyers want to avoid. a.2 CCQ – is the patrimony divisible? Certain assets were submitted to a particular legal regime and not applicable to the principal regime (for example, matrimonial property). We should not confuse division with appropriation, as they are not equated. NOW, we can dissociate the patrimony from personality, as exception to the general rule. We recognize the trust as a juridical universality (see a.2644) to establish a link between property and obligations. The trust, as a separate patrimony, ensures limited liability for the trust, the settlor, trustee, and beneficiary. What do we need to have a trust (a.1261)? Settlor (constituent) – human or legal person. Juridical act of transfer – there must be a title at the origin of the trust. There must be a contract, such as a will. The will will have the same effect at death as an act in life, but it will have no effect until the testator dies. A gift is an act in 12 Quebec civil law rejects the concept of fiducia from Roman Law. This involves a contract of sale, where the acquirer obliges himself to use the property in the manner that the vendor stated, and then transfer the property at a given point. which a settlor can constitute a trust. A contract by onerous title that transfers title (such as a sale, exchange, or innominate contract) is valid. Purpose – (see a.1256ff) for personal use where trusts are established by gift or will, private use or social utility such as a foundation. FOR FOUNDATIONS, there are no beneficiaries. Property – the trust has to contain some combination of real, personal or intellectual property, since a promise to give is worthless. The hope of right cannot be used, but the guarantee of a right (to be paid, for example) can be used to form a trust. A dismemberment may be incompatible, since it may expire. Trustee – none have a real right in the trust property, but the trustee is an administrator of the property of another. The trustee accepts the transfer and binds himself to realize the purpose thereby creating the patrimony. The trustee has powers to administer the property. Royal Trust v Tucker  SCC Facts: Royal Trust is in possession of the father’s trust property. The plaintiff asked that all of the assets be transferred to her – demanding that the trust be annulled because the beneficiaries did not exist at the formation of trust. Issue: Is the trust valid? Held: Yes. Reasoning: The doctrine contemplates different conceptions of the trust property as it relates to the concept of ownership. (1) If the beneficiary has title to the trust property then the issue of trust would be settled, since ownership would move from settlor to beneficiary. (2) If the trustee has title to the property the issue is resolved because the beneficiaries need not be alive when the trust is formed. When the trust is formed, the property is owned by the trust (quasi- personification of the trust). The trustee is akin to having a dismemberment when the property is “conveyed” to the trustees. We have seen this language before – with emphyteusis. The trustees have all of the power of an owner without having a title. They are “de facto” owners but they cannot benefit from the use, enjoyment, or destruction of the right (cannot gain a material benefit from it). They have a “sui generic” title. Trustees can manage the trust freely but can be replaced. The beneficiary is seen as a creditor. Rationale: The trustee is akin to the properties owner, although it does benefit materially from the trust. In Crown Trust v Higher the court held that “trust deed” was not a trust but a contract. Therefore, the provisions of the CCL-C did not apply. Crown Trust was found liable from a breach of its obligations and forced to repay Higher and the other investors. Summary – L’acte constituent d’une fiducie [Cantin-Cumyn] The creation of the trust patrimony is similar to the creation of a company. None of the constituting agents or beneficiaries have full ownership rights. Role of the Parties – the trust can be formed by order of the court, contract, or will but it requires the consent of the trustee and the settlor. This involves a transfer of property from the settlor’s patrimony to the trust. The settlor can have control over the trust while the settlor is alive as a sort of trustee. It appears unlikely that the settlor can also be the sole beneficiary of the trust as well. The trustee can administer the property and is the only personage that carries through its course. When a trustee is derelict in its duty, the court can replace the trustee. Constituting Act – The trust is considered as a “modality of a legal act akin to a substitution”. A trust can be created by a free title or an onerous title. A retirement/pension fund is an example of an onerous trust, where the beneficiary employees will give money to the trust that will redistribute the income back to the beneficiaries upon retirement. A trust can also be formed to guarantee a debt (surety). It can also be formed for private utility such as a non-charitable private purpose. Bank of Nova Scotia v Thibault  SCC Facts: One of the features that BNS advertised for its RRSPs was their unseizability and flexibility for its customers. Thibault set up the RRSP that describes BNS as a “trustee” and Thibault’s wife as the beneficiary. Thibault had an outstanding obligation and a creditor sought to seize part of his RRSP. Issue: Are the funds invested in the self-directed retirement savings plan exempt from seizure? Held: No, they can be seized. Reasoning: The plan is not an annuity, like a life insurance plan. If the insurer can benefit from the annuity then the annuity is not protected from seizure. The goal of an annuity is to protect dependants/family members. The annuity is different from a trust, because the settlor must pay out the annuity to benefit from it. The plan is not a trust. The trust involves the transfer of property from one patrimony to another. Thibault did not divest himself of the property in favour of the trust. The transfer must be irrevocable meaning that the property has been alienated. The trust fulfills a purpose. In this case, upon maturity/retirement, the assets are liquidated and the beneficiary receives the annuity. When dealing with a trust, there is not the same obligation to pay out annually as with the annuity. There is an obligation to make periodic payments. The trustee has exclusive control over the administration of the patrimony. The property belongs to the trust but the personal rights flowing to the beneficiary are seizable. The settlor cannot use the trust to hide his assets from the seizure. Rationale: A trust must benefit a beneficiary, and is not a legal mechanism to protect assets from seizure. Additional Notes - Review: The examination will test familiarity with the code, the methodology of the civil law and knowledge of the law of property. Structure of the argument must be clear and use the appropriate terminology. Start with the civil code and consider the doctrinal writing to explain and give theory/historical background. Use jurisprudence to provide examples. BE CRITICAL AND DECISIVE. Acknowledge other points-of-view. Length has no merit – be rigorous and concise. Although there may be some room for contract and the code, the rules of public order may govern relationships. For example, calling the trustee an owner provides no protection for the beneficiary. There are three questions of different weight (3h30). What is property? Not all rights are property. Freedom of contract is very limited when dealing with rights outside of the patrimony. Book IV really deals with real rights, more specifically the right of ownership and its 13 modalities and dismemberments. A dismemberment causes a diminishing of the right of ownership. An immovable real right will be opposable when it is registered. The trustee acts as owner, but is not. The trustee administers the property of another with powers of administration. The superficiary may have a personal servitude in the land – which can be a registered real right and can exist even when the object is not on the land. To create a real servitude, the title will have to exist for the regime to apply. This regime may not be favourable when a building is not built yet. When a contract has an emphyteusis, the ownership does not have to pay – that is, no transfer of rights will exist. When a contract of superficies exist, then there will be an exchange at the end of the contract (either the soil owner or the immovable owner will acquire ownership of the other). When a superficies ends, ownership is not extinguished, but it is transferred. Essentially, the right in the soil expires for the superficies to expire. Usufruct and emphyteusis are both dismemberments (personal servitude) of ownership and real rights. An emphyteusis requires an obligation to invest, which is necessarily onerous. It can only be granted on an immovable. An emphyteusis also lasts for a minimum duration. A usufructuary has a real right to use and enjoy the property of another subject to obligations (personal servitude, necessarily temporary). A substitution exists, for example, when a testator leaves his property to his wife, the institute, and then it is transferred to another, substitute. The 13 Hypothec is an accessory real right and it does not factor in possession. property will be delivered from the institute to the substitute after a certain time. This is not a dismemberment, since the institute owns the property. The substitute will have an eventual right to the property substituted. When the substitution is supposed to open, then the institute keeps the property indefinitely. The beneficiary of the trust has the position of a creditor, with no real right in the immovable at all. ABORIGINAL PROPERTY RIGHTS The language of Aboriginal rights is a mixed one. Constitutional documents, such as the Proclamation 1763 and Constitution Act 1982 employ a language of protection and negotiation; whereas the Indian imposes a paternal order on Aboriginal affairs. The language of coloured in the doctrine of terra nullius and discovery which through symbolic appropriation, European Crowns acquired North American territory. However, in practice, those powers signed treaties with Aboriginals for trade and war. The Proclamation offered the protection of Aboriginal nations, but set out how the lands would be acquired. However, only the Crown is entitled to the land. In the Native tradition, there are no “rights” in land. Their conception is closer to that of res communes: land cannot be appropriated, and must be preserved for future generations. In Eastern Canada, there were many nomadic societies at the time of colonisation, with no permanent establishments; however, euro-Canadians attached rights in land to agricultural activities. The Proclamation reserved the entire territory for the Native population, effectively prohibiting private grants of land. The Indian Act 1851 had the goal of converting Aboriginals into agricultural Christians. Eventually, the reserves would be appropriated by individual owners and nullify their existence. The Act stipulates that there are to be no grants without first liquidating Native title: section 24 restricts transfers, prohibiting them to non- band members; s. 20 provides that a Certificate of Possession is needed to possess land in a reserve; s. 88 says that “common law” is applicable to Indians in the provinces unless inconsistent with the Act. The Act gave no recognition of sovereignty, nor did it affirm the treaty obligations of the federal government (treaties, which themselves were abusive). Although the Constitution assigns jurisdiction over land and Aboriginals (objects of the law) to the federal government, much of the title to the land belongs to the provinces. In the St. Catherine case 1889, court characterized native title as a “personal” right in the nature of a usufruct. The usufruct is a dismemberment, therefore there must be an owner “above”. The word “usufruct” is there, but this is substantially different because it is inalienable, unseizable, and not limited by time. We COULD call this a statutory usufruct, and it seems that bare ownership lies with the province (i.e. if the band ceases to need or use the land, it returns to the province). Collective Land Rights – reserve is a tract of land with is owned by the Crown but set aside for use by a “band” (as defined by the Indian Act). The community precedes the individual. 1. Access is denied to non-members (land-transfers to non-members are void). No one can acquire land by prescription. 2. Protected all property against seizure (the idea was to protect immovables since the reserve could be bought up; non-Aboriginal creditors can only seize off-reserve property and therefore it is hard for Aboriginals to get credit). Therefore, this condition forces Aboriginals to live on reserve or gain capital from society. 3. Inalienable except to the Crown (the certificate of ownership is similar to ownership under a special regime). However, if a band cedes its title to a provincial titulary, the provincial government will sell its underlying title to the 14 federal government . Individual Land Rights – possession of land can be allotted to an individual, and that certificate of possession can be sold to another member of the band or back to the band. However, all “individual transactions” must be approved by the Minister of Indian Affairs. 1969 White Paper advocates far reaching changes in the administration of Indian Affairs; called for the elimination of special status by dismantling Indian Affairs, repeal Indian Act to fully integrate Aboriginals into mainstream society, transfer responsibility to provinces & transfer control of lands to Aboriginal peoples. This proposal faced intense criticism from Aboriginal groups. In 1973, the court found in Calder, that Aboriginal title stemmed from their independent existence on the land, prior to contact. Using the Van der peet test, Aboriginals could make a claim to rights, only for those practices which existed before contact. Those which arose after contact were not recognized. The court faced a problem of evidence, and it th fossilized Aboriginal society to a period akin to the 16 century. Had the rd courts recognized sovereignty, then they would have nearly legitimated a 3 order of government. This test was later revised and broadened to one that required Aboriginals to demonstrate a claim to land based on control over territory. Practices of the pre-contact period were not as paramount; however, Aboriginals could not abuse their exclusive claims on a territory by distancing their use of it too far from their traditions and practices. The James Bay Convention tried to resolve how the Natives see their relationship to the land with the “Western” conception of rights. When the Hydro project was proposed, it was realised that Native title would be affected, and Native groups were (at the trial level) successful in obtaining an injunction until an assessment was done as to the extent of this affectation. The objective of the Convention was to balance development with cultural factors. Native groups renounced title and approved the project in exchange for the recognition of rights, monetary compensation, and control over their own affairs. Title was divided into 3 categories: 1. land transferred in ownership to the community/group (constituted into a land-holding corporation recognized as owning the land), which could be transferred to the province in order to alienate, but only to the province. The corporation can determine how the land is used. 14 There is a distinction between state as legislator and state as proprietor. 2. exclusive hunting, trapping, and fishing rights, akin to a dismemberment, while the province still owns the land. The “land- holding corporation” holds these rights for the community, and the Natives can set their own rules for hunting season, etc. 3. areas with no activity which are purely Crown lands, with Natives and non-Natives having the same status. With fishing and hunting, Natives may go further, but they do not have any EXCLUSIVE right. As such, the Native interest was “translated” into rights-based speech. This is useful because if we say the word “ownership” we can know what level of exclusion is envisaged. Application of Private Law in Quebec Quebec law has the additional difficulty of translating common private law rulings to its own (such as the “usufructury” relationship described). The Indian Act does not employ civilian notions of law, such as possession. Most of the reserves in Quebec pre-date the Indian Act. The parts of seigneuries that were used by Aboriginals cannot be characterized by the Indian Act. An Example of Opposability “droit de suite” - the titulary of a real right can exercise his/her right over the thing no matter whose hands it finds itself in. This attribute aids the hypothecary creditor: if an immovable subject to a hypothec is alienated by the debtor, the hypothecary creditor can seize it from a third party acquirer. On the other had, a third party acquirer of a debtor’s immovable NOT subject to a hypothec can not be bothered by creditors unless fraud is involved: the immovable has left the reach of the non- secured creditors by leaving the debtor’s patrimony (the non-secured creditor does not have a droit de suite, not holding a real right. “droit de préférence” - the power of a titulary of a real right to exclude from usage of a thing those who can only claim a personal right or a more recent real right. Again, this aids the hypothecary creditor, who are paid before non-secured creditors. Between hypothecary creditors, the “older” the better (prior tempore, potior jure). 1. Suppose A buys the land from X in 1980. B has a servitude of view (real right) on the lot, which he requires from X in 1975, thus predating the purchase by A. C has a usufruct on the land from A in 1985. D acquires a servitude of passage from A in1990 (A and C must agree to grant right to D). A cannot dismember his property once it conflicts with another real right. A cannot ask B to close to window, because when A bought the land, he could have seen that B had a pre-registered right. D’s right is not opposable to C. Had C granted the right of passage to D, then the right is not opposable until the usufruct ends. 2. F is also a creditor of A since 1985, G since 1990, and H since 2000. But A goes bankrupt in 2003 and the contracts that A forms with F, G, and H are valid. A cannot enter into new obligations. A’s right can be seized, by his creditors. C and D can continue to exercise their right, because their rights are inopposable to F, G, and H. F, G, and H can only claim from the proceeds of sale from the property of A. The date at which the claims are established are irrelevant and they will each gain their relative proportion of the debt owed to them [a.2646]. Being ordinary creditors, no creditor has a better position than another. 3. Consider that A has a personal relationship with E, who is a creditor, where the source of the personal right is a loan, completed in 1980, for the purchase money for the land. The creditor can get a guarantee or a HYPOTHEC on the land. It is like a mortgage, where the lender has a guarantee that the obligation of the property will be fulfilled. [a.2647] Prior claims and hypothecs are not ordinary, but preferred creditors. Suppose E has an unpaid balance of $75 000 of a $200 000 mortgage. Then E will have his claim satisfied first, leaving the balance to be divided up by the 15 ordinary creditors in proportion . C will also be forced to lose his usufruct because it was registered after the mortgage. B’s right is opposable to the hypothec and will remain on the title. Preferred creditors have an ACCESSORY REAL RIGHT – a right to be paid, but it is not a real right in the object per se. Additional Notes: When a general regime conflicts with a specific regime (ie. article 1026 and article 1108) then the specific regime applies. 15 F, G, and H are all in the same position to make a claim, irrespective of the dates of that claim.